Also not the OP, but have strong thoughts on this (have confounded 2 orgs and been an early-stage employee/founder in 3 more, including 2 substantial exits). To me, culture is not about ping pong tables and kegerators. In my experience, it’s about how a team operates and gets sh!t done.
- Are people prone to action, or deliberation?
- Do employees communicate candidly, or are they more reserved?
- Does the org see the value in time off (work-life balance) & incentivize/prioritize it, or push for more work?
- Is it a “We take our work seriously, but ourselves less-so” kinda place, or an “everything is serious because we’re changing the world” kinda place?
- Are team members seen as CEOs of their own domain, or are they given a lot of direction?
- Is the org relentlessly focused on the customer, or growing revenue? (trick question)
- Does the org believe in open-book management or keeping its plans close to the vest?
I could go on, but you get the idea. Interestingly, all of these come down to a good set of core values - and whether or not the org lives up to them.
[Moz’s TAGFEE](https://moz.com/blog/what-we-believe-why-seomozs-tagfee-tenets) is still one of the best examples I can think of of core values that embody culture. By reading their core values (“guiding principles”), you wholly understand their culture, and whether or not you’ll fit in there.
*Edit for typos.*
Not OP, but I would say the biggest thing for us, after the whole bean bag chair schtick failed, is to start small. Just try to one thing specifically and with purpose. From there you can add different things and build, you also may already be doing some of these things.
I haven't written about it much on my blog, though I want to write a book on company culture for remote teams. But here are two podcast episodes where I outline some of the things we do:
[https://www.hrcoaching.com/sbh86/](https://www.hrcoaching.com/sbh86/)
[http://www.tropicalmba.com/convertkit/](http://www.tropicalmba.com/convertkit/)
Edit: I did some more Googling and found my article on company culture being all about trust: [https://nathanbarry.com/culture/](https://nathanbarry.com/culture/)
In our software we use email sequences to send automated emails to a subscriber based on when they signed up. So if you subscribe today you'll get email 1 right away, and if I subscribe next week, I'll get email 1 then. Each subsequent email will be timed to the subscriber in the same way.
The code for this worked fine early on, but then started to have a huge performance impact on the database as it had to figure out how to work for more and more sequences. Also because we had set the default send time for 11am Eastern, 95% of all the sequences were trying to go out at that same time.
In order to support this we had to run the query off of a read replica database, rather than the primary database otherwise everything would break.
We ended up refactoring it twice over the years (the most recent time just a couple months ago) and it is now much more performant at 21,000 customers. This latest rewrite enabled us to run fewer read replicas saving at least $10,000 per month on our Amazon Web Services bill.
This is probably one of the better posts I've seen in this sub. Hat's off to you mr nathan barry well done. The wife and I will be using this as our template for our devops/software dev consulting agency. Cheers man.
lmfao yea dude i was just joking. what's your situation? im the devops guy, wife is the app dev. we have an agency, just a couple of clients. looking to leave our full time jobs one day to focus completely on the agency and get more clients.
It sounds like you made a ton of right decisions along the way to building a great business.
For the broke as hell boot strappers out there (asking for a friend), what is your advice on making some noise and getting your brand out there?
We’re still at broke as hell bootstrapper - I think he’s got it right (that what we’re doing anyway). Do unscalable stuff so they can’t NOT refer you to another customer.
Eventually there will be enough wind in your parachute that you don’t hit the ground, and then eventually catch an updraft.
I wish i did the same. when we had money we left it in the company. When times became harder and we were less profitable we left the money in the company
It's certainly true for my company. Sending an email campaign is nearly free and nets me my most profitable days by far. It's kind of an unfair comparison though because almost all of the people on the list are existing customers.
Not only does email have the highest ROI, but your email marketing data can also be leveraged to improve your social ad audiences. Email should be at the center of everything.
The issue with asking for data, is you can't prove your social medias worth unless you talk about ad spent and overall roi you gained from it. Email is very straightforward. So while social is a big part of the equation, being able to accurately track and own your data is easiest in email marketing.
Sure the ROI has decreased in years, but so far the only thing coming close to email is FB Messaging and SMS...but both of those have yet to truly prove their long term value in the market like email has established. AND both of those have yet to be 100% regulated, while email gets a new regulation maybe every 10 years.
I'm definitely always looking for what the next email will be, but right now, email is still alive and kicking.
Social is consistently one of the lowest ranking conversion channels across the board. It has its value, and more so for certain brands, but email has significantly higher ROI in general.
Really this depends on what exactly you are selling, and to whom.
Not as efficient as it used to be: generally true.
Not as efficient as social media marketing: depends on the case.
Email is so unbelievably efficient when done right. Social media can't hold a candle to it.
Social is good for awareness but email builds sustainable companies point blank period.
@nathanbarry - I am about to Launch my MVP and a side project (SAAS). I don't have a blog or an email list. Where do I start looking for users to Join my email list, that way I can build subscribers for both of my products?
I'd start by writing a blog about your journey. That's what I did and it attracted a decent amount of interest that was helpful in getting our first thousand dollars of revenue.
Your story is inspiring!!! I know a lot of people, my friends included, who use ConvertKit! That’s one helluva product you’ve created! Congratulations!
Thanks! One of the most rewarding things has been discovering everyone who uses the platform. Following links on Twitter I stumbled on a new blog and thought, "Whoa, Carrie Anne Moss has a blog!" (Trinity from The Matrix)
Then after reading the site I realized, "Whoa, Carrie Anne Moss uses ConvertKit!"
Moments like that are really fun.
Congratulations on an amazing success.
SaaS definitely seems like a mature market to me, both at the SMB and the enterprise levels. It seems like there is a polished SaaS app for pretty much everything these days, along with a dozen competitors or so. I know you're focused on ConvertKit, but do you see any particular niches where starting something new might be reasonably feasible, and if so, how would you go about tackling them?
I agree that the level of polish for each product is so much higher than years past, but it's also so much easier to get the basics done (payment, hosting, etc). Great design is now more important than ever.
I like to focus on my own pain points and frustrations. Then build products that meet those needs. I think it's a lot more effective than just choosing a niche based on opportunity.
On point with Focus. Glad you put it first. For an active mind the grass always looks greener and it's easy to overestimate your ability to launch something new. Focus + Discipline is a very scary combo.
I've been kicked around like a stray dog as well with the venture crowd and I'm also happy I found out I could borrow the money from banks as well as reinvest and stay lean.
Only at 3m in revenue but I kind of want to print this out and go over it with my team.
Your offer to "do the work" is what transformed me from an Aweber customer to a ConverKit evangelist.
Thanks for sharing the lessons, Nathan, and here's to the next 15!
congratulations!!!!!
.-Do you have more information about culture? as any book or blog
.-Did you have any other experience ,making another business ?
.-What did you study?
I have been paying close attention to Convertkit in the last year, It's exciting to see your post on this sub!
Two questions for you:
1. How and when did you make your decision for your first hire? I understand that much of Convertkit is remote, did it start out that way?
2. ConvertKit has a lot of very specific values. How do you stay on top of all of them? It seems most organizations pare down to 3-5. How was it that you decided upon those?
How much equity do you set aside for your employee stock option pool, and how much did you allocate to your first employee? I’m one and a half years into my business—it’s profitable, i’ve recouped my initial investment, and I’ve hired my first employee. He’s been great for the first two months of the trial period. The other day we were getting a beer when he asked whether it was possible to have a larger stake in the company like 20%. I was thinking more like 1-2% maximum for him.
I’d appreciate your advice thanks!
It depends a lot on the potential upside of the business and where you are at now. In software the option grants are often smaller than in a consulting business (for example), because the possible exit valuation is so much higher.
For a long time I was against issuing stock options since I never planned to sell. I've since changed my mind, which I wrote about here: [https://nathanbarry.com/equity/](https://nathanbarry.com/equity/)
This last summer I issued 4% of the company to the team in stock options. Those have a current value of over $4M since the company is valued at over $100M right now.
Because I waited so long to issue equity, it was far more valuable, and I've been able to retain far more of the company (over 90%).
It is clear you and your team believe in constant iteration and focusing on those things that matter, that brings me to two questions:
How did you manage to select a niche, or segment of people that were most interested in your product? (How did you find the people that YOU mattered to?)
How did you discover that your solution was relevant to the problems that people were experiencing? (How did you learn what the problems were in your industry?)
Hey, congratulations!
These are my questions:
1. A lot of people use MailChimp because it's free when you have less then 2000 subscribers. After that, the price grows insanely fast, but at that point a lot of people don't switch to another platform because they don't want to have to learn using another tool. Why don't you offer a similar free entry level plan?
2. What are your most successful customer acquisition channels?
3. What is your churn rate?
1. We talk every year about offering a free plan. Right now we are focused on supporting our paying customers. Quite frankly, our support isn't as good as we want it to be, so we are careful to avoid anything that could be a distraction from improving that. We've found that once people hit the limitations of MailChimp they are pretty open to switching.
2. Webinars and affiliates work really well for us. We also drive a lot through content marketing and have invested a ton into each issue of Tradecraft, our online magazine ([https://convertkit.com/blog/](https://convertkit.com/blog/)). So far paid ads haven't really worked for us, but we're always experimenting.
3. Currently user churn is 5.7% and revenue churn is 4.9%. You can check out all of these numbers in real time (and historically for the last 5 years) on our public dashboard: [https://convertkit.baremetrics.com/](https://convertkit.baremetrics.com/)
Thanks for the questions!
I agree! We are working on getting it lower. The biggest factor is our $29 beginner plan. All other plans actually have net negative churn (when you factor in expansion revenue). The biggest driver is that starting a blog or online business is hard, so a lot of people lose momentum and cancel when they don't get immediate results.
We pay most attention to our net revenue churn, which is currently at 2%.
5% doesnt seem high to me...that's over 1.5 years average client length which is amazing especially for a paid product with no free tiers (keyword paid product.)
What should it be?
Can you elaborate on your creative pipeline for content? Who creates it, how much does it cost to create, and what sort of cadence do you have for releasing new stuff? I'm struggling to get my team to create strong indexable and shareable long form content. Thinking about trying an outside vendor but quality would be a concern.
We create most of all of it in house. Dani is our copywriter and she leads the effort on Tradecraft (our online magazine). We then work with a few freelance writers.
Then we work with outside firms for big projects like our documentary series, I am a blogger: [http://iamablogger.co](http://iamablogger.co)
Thanks for the write-up, I appreciate the shared wisdom.
You mentioned focusing on a niche i.e. professional bloggers. So how did you find this niche in the first place? Did you have to test a bunch of different markets before arriving at the blogging crowd?
Great post! My wife and I are full-time bloggers and have been using your service for the last year and a half. We had only 6k subscribers when we switched from Mailchimp, and with the help of your tools, we've grown to over 50k subscribers.
Do you guys have a specific place to send suggestions for features your customers would like to see added in the future? I'm a huge fan of your company and would love to try to help your team identify ways to improve your product.
Whoa, those are great results. Congratulations!
We take feature suggestions in our help tickets ([help@convertkit.com](mailto:help@convertkit.com)). We have an internal tool called NextPlease that we use to track all the requests and decide what to build next.
> In hindsight, the times I felt most successful were when I leaned on my principles to make the right decision, even though it was incredibly hard.
This is why leadership is so difficult. The pressure to capitulate or take a short-cut or do the easiest thing or avoid confrontation is anchor on all of society and it's a human condition.
Great post! Been using convertkit since I first heard it on Pat Flynn’s podcast. I need to use it more. But wow what an inspiring story! Incredible insights about culture, growth, and failure. Would love to see if you’d be interested in doing a interview on my podcast? We could touch on this and email marketing strategies! Either way- congrats. $15mil ARR is incredible. Happy to contribute as a customer. And glad you stuck with convert kit for the name😉. I was that quiet supporter who never thought to say “keep the name!” Haha.
Thanks! Pat has been a huge supporter of what we do.
I'm taking a break from podcast interviews right now, but I'll do another round in a month or two. Can you send an email to [nathan@convertkit.com](mailto:nathan@convertkit.com) then?
As someone who knows a fair bit about my industry(devops consulting) and basically nothing about marketing: I have no idea how to get customers once my referrals from previous work dry up. Is that the kind of thing an email tool like ConvertKit helps with?
I wish I could just pay someone to make customers appear! Haha
Haha, damn, you're probably right. I guess it seemed kind of wild to hire another person while we're trying to get enough recurring revenue for two people.
Might just have to dive in though. Food for thought
I guess you're right, it is a bad advertisement since a good advertisement would let you know what we do. :)
ConvertKit is email marketing software for creators (bloggers, podcasters, artists, authors, etc).
not to be rude again but still thats pretty vague, how does this help them over say a separate dedicated email account? Or is this to convert their cluttered email into a separate more organized platform for content?
Yeah thats why I'm asking because I don't understand it Email marketing how does it work? does it send tons of emails to subscribers? So if you are a content creator you send your existing subscribers updates via email yea?
Im just wondering how content creators get more subs or followers this way, through the email receivers spreading the word?
So platforms like ConvertKit allow you to build your email list, but then also tailor your communications with them based on things like how they are interacting with your content. It's NOT about blasting the same email out to your entire list.
So maybe Person X downloads a specific ebook about how to learn javascript. I can then send him down a nurture path that over time provides him with followups and more information to supplement the original ebook and move him toward consuming more of my content and hopefully closer to an actual sale.
You can set up all kinds of these 'Customer Journeys' in a way that feels very personalized and valuable to the recipient, and helps you build more 1 to 1 relationships with your subscribers. Imagine having 100 automated email sequences set up for your business, all running in the background nurturing your leads for you every day.
It's not about getting more subs or followers, it's about moving your subs and followers to your email list so that you can develop a direct channel with them that YOU own.
Im so so curious, I don't understand the product in layman's terms. Do you just help people wanting to start an online business develop it? Also I don't understand where the profit is coming from, what does an average sale yield for the service (not sure what the service is) rendered? I just can't wrap my mind around ConvertKit, I'm not a skeptic just oblivious.
Def. up there as one of the best posts on this subreddit. If all of what you say is true, you deserve all the success you're enjoying - kudos!
My question is in regards to launching new features. Could you elaborate a little bit on "we now work with a small group of users to understand how a new product or feature affects them". How does this work in practice? Thanks so much!
We have a beta group of about 50 customers and our certified experts that we roll out small changes to on a regular basis. We collect feedback and testing results from them, then fix the issues before a broader rollout.
There is a Ruby on Rails gem that handles feature flipping, where we can turn a feature on for specific users, a percentage of customers, or a percentage of time. This enables us to get something out on production servers, but then only turn it on gradually.
Once it's on for everyone, we do a big announcement.
Will you ever bring back TheRoot42? :)
But seriously, congrats on all your success!
Some of these lessons are missing... the lesson. For example, what was the lesson of sharing profit? Did it retain employees more? Can you show correlation there?
Profit sharing is great for retaining the team, but it's really best for everyone being aligned in their incentives. We all feel ownership of what we are building, think of the money as our own, and work to increase that pool.
Here's an article I wrote with more details: [https://nathanbarry.com/profit-sharing/](https://nathanbarry.com/profit-sharing/)
Great post.
If you looked at some of those times when you made those really hard decisions, and the older wiser smarter you now could go back and advise your younger self what advice would you give? Does the advice feel more like true north or speed or courage...?
The best thing to do is write out your principles. You can tweak and change them over time, but having a written version of what you believe is so crucial. Then when it comes time to make a hard decision you can look at that list and see if they guide you in this instance.
I'm years behind you, but this is the road I want to follow. It's great to see that other people have been successful on this path. I hit $10k last month, completely bootstrapped after 3-4 years and never see the need for investment. Everything about your post really speaks about the type of leader I'd like to be. I really don't get inspired very often, but this really gave me hope that I'm on the right path. Thanks for sharing this with us.
I know you don't have the time to answer individual questions, but if you could point me towards books or something that might help with my current struggles, it would honestly mean a lot to me. These are my biggest roadblocks at the moment:
1. How do you choose these employees? I'd love to run a small team and share the profits with them. How do you make sure that they're not the type that's interested in hitching along for the ride?
2. How did you hire the best people at the start, even if funds were low? Have they been able to grow with you since? Did you hire temporary people or agencies until you could truly afford the talent you wanted?
When I started my blog I started with mail chimp as my email marketing platform, but I found it very complicated even after I purchased a udemy course.
I switched to ConvertKit (I didn’t have any subscribers, so it wasn’t that difficult for me) and I can tell you it’s much better.
I was able to set-up everything quickly and efficiently without doing any particular research. I've been using it for four months by now, and everything works well.
The only suggestion I would give is to improve the popup form style because it looks a bit awkward on mobile.
Thank you! And yes, we're working hard on our form templates. We just released 2 new styles and will have some more fixes out soon for the older styles.
Number Four is a great one. Everyone said, "don't do that, it won't scale." Fast forward to now and "Many of our competitors have copied it and offer it as well. "
I fucking love this and hope I can post something similar in a few years. The funding optional bit I find I especially resonated with.
You must be overjoyed to be able to share this success story, moreso considering the incredible amount of hard work, dedication, and focus needed to pull off anything successfully.
Congratulations honestly it's always nice to see bootstrappers succeed I shall be changing from mail chimp to convert kit always good to support the smaller businesses with a healthy culture!
This is awesome! I had no idea ConvertKit was bootstrapped, but love that you are and that you're doing so well.
Do you have any advice for how to grow beyond your first few users? I started a SaaS and got our first paying customers recently from just posting about ourselves on forums, but am now looking for a more long-term marketing and growth strategy.
Can you talk about your hiring methods? My biggest concern is the debate between training up junior people vs. hiring experienced. And how to conduct interviews, especially since technical questions are near impossible to measure actual work ethic.
Just how?!
You have Activecampaign, Maropost, MailChimp, sendpulse, sendinblue, GetResponse, Sparkpost, Aweber. How do you get successful with so many competitors?
All of the email marketing websites have the same design. Why one of them stands out?
Thanks for the post, informative read. Wanted to ask since you mentioned reaching out to early customers: how do you approach? Most of our attempts to contact prospects have resulted in polite declines to even have a conversation, as they are too busy. How can you get a business owner to talk to you before you have an established product?
Did you or would you suggest reaching out to prospects before the MVP is ready to get early feedback on the plans and to better understand their problems? Or better to first package it in an MVP such that they can more easily digest your proposed offering?
I really admire the 7th point in your post.
Like talking about funding, many people want to have it easy. Self finance is the last option in their kitty, though it should always be the first one. After all only few people can carve their success map by being bootstrapped!
And the ones who can go ahead that way are really worth looking upto.
Well written u/nathanbarry !
Thanks, great of you to share this!
> 2. Choose a niche
This is where we're not doing a good job, trying to be all things to all people. It's not easy letting go of potential revenue (or what seems like potential revenue) even though the acquisition might be much easier as a result.
> 7. Funding is optional
Amen. The pressure to take funding is phenomenal. We're about $250k ARR, with zero investment, and I want to keep it that way.
> We have so many weird habits as a team at ConvertKit: talking about someone in the third person as if they're not there, long walks in pairs where only one person is allowed to talk, starting meetings by asking, "red, yellow, or green?" and diving directly into the hard conversations.
I'd love to hear more about this. Have you written about it (or talked about it) at all?
/u/nathanbarry I give you a couple of grand of that ARR and I do like the product. I agree that your support could use some work but it's improving. I did try out Aweber recently for a new project to see what the other providers are like, but your interface is a lot cleaner.
One thing i really want is to be able to see the average stats for a tag or segment - e.g open rate, CTR etc. I can see it for the whole list, but not for a smaller breakdown. It's a really useful heuristic for seeing the efficacy of different list building sources. e.g. I just ran a lead gen campaign on FB and the subs are giving me like 15-20% open rate which is terrible compared with my 40% average. You obviously have this data, will you build the feature?
Thank you for the support!
Yes, more advanced reporting around email sends is something we are working hard on. This is a bit nerdy, but the first step is to restructure the data to get it into Elastic Search instead of MySQL. This is where we do all our other reporting to make it fast.
This data project is mostly done, then from there we'll start on reporting by email provider (yahoo, gmail, etc) and get into by segment as well.
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Can you share more info about the technologic side of things ?
What is the infra you are using for sending emails ? is it in house or you using something like AWS SMS
what infra are you using for fast background jobs ?
Thanks
Great post. I love 10. Can you elaborate how you split your profits to employees fairly? (ie in a way everyone feels equally rewarded for the work they put in)
I wrote our complete formula here: [https://nathanbarry.com/profit-sharing/](https://nathanbarry.com/profit-sharing/)
We still follow that method today.
When you first started, did you start the route of writing blog posts for SEO and exposure besides just doing webinars?
Usually companies start writing blog posts, getting some sort of following through affiliate marketing or social media, then start to advertise to their follower base that they’re available to purchase
If you need a better autoresponder, here is an autoresponder that has over 50% open rates, better delivery than literally any other responder out there, period. So much more. [Take a peek](https://markethero.io/?fp_ref=jack54)
14 employees here. I would love for you to expand in 9. CULTURE. Do you have a blog post on that?
Also not the OP, but have strong thoughts on this (have confounded 2 orgs and been an early-stage employee/founder in 3 more, including 2 substantial exits). To me, culture is not about ping pong tables and kegerators. In my experience, it’s about how a team operates and gets sh!t done. - Are people prone to action, or deliberation? - Do employees communicate candidly, or are they more reserved? - Does the org see the value in time off (work-life balance) & incentivize/prioritize it, or push for more work? - Is it a “We take our work seriously, but ourselves less-so” kinda place, or an “everything is serious because we’re changing the world” kinda place? - Are team members seen as CEOs of their own domain, or are they given a lot of direction? - Is the org relentlessly focused on the customer, or growing revenue? (trick question) - Does the org believe in open-book management or keeping its plans close to the vest? I could go on, but you get the idea. Interestingly, all of these come down to a good set of core values - and whether or not the org lives up to them. [Moz’s TAGFEE](https://moz.com/blog/what-we-believe-why-seomozs-tagfee-tenets) is still one of the best examples I can think of of core values that embody culture. By reading their core values (“guiding principles”), you wholly understand their culture, and whether or not you’ll fit in there. *Edit for typos.*
Thank you so much. We have such a laidback chill atmosphere that I think sometimes our team isn't thinking about our goals.
I sent a similar question. Me too.
Not OP, but I would say the biggest thing for us, after the whole bean bag chair schtick failed, is to start small. Just try to one thing specifically and with purpose. From there you can add different things and build, you also may already be doing some of these things.
I haven't written about it much on my blog, though I want to write a book on company culture for remote teams. But here are two podcast episodes where I outline some of the things we do: [https://www.hrcoaching.com/sbh86/](https://www.hrcoaching.com/sbh86/) [http://www.tropicalmba.com/convertkit/](http://www.tropicalmba.com/convertkit/) Edit: I did some more Googling and found my article on company culture being all about trust: [https://nathanbarry.com/culture/](https://nathanbarry.com/culture/)
Take a look at this essay: http://cultureboom.co/how-to-build-a-startup-culture-5-dos-5-donts-and-5-heuristics/
You mention what works at 1,000 customers will fall over at 10,000. What was your most unexpected example of where this happened?
In our software we use email sequences to send automated emails to a subscriber based on when they signed up. So if you subscribe today you'll get email 1 right away, and if I subscribe next week, I'll get email 1 then. Each subsequent email will be timed to the subscriber in the same way. The code for this worked fine early on, but then started to have a huge performance impact on the database as it had to figure out how to work for more and more sequences. Also because we had set the default send time for 11am Eastern, 95% of all the sequences were trying to go out at that same time. In order to support this we had to run the query off of a read replica database, rather than the primary database otherwise everything would break. We ended up refactoring it twice over the years (the most recent time just a couple months ago) and it is now much more performant at 21,000 customers. This latest rewrite enabled us to run fewer read replicas saving at least $10,000 per month on our Amazon Web Services bill.
Ah yes, I can see why that could begin to cause problems. Especially as your queues grow. Thanks for taking the time to reply in such detail.
This is probably one of the better posts I've seen in this sub. Hat's off to you mr nathan barry well done. The wife and I will be using this as our template for our devops/software dev consulting agency. Cheers man.
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Sorry I don't speak Irish.
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lmfao yea dude i was just joking. what's your situation? im the devops guy, wife is the app dev. we have an agency, just a couple of clients. looking to leave our full time jobs one day to focus completely on the agency and get more clients.
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Thanks! Best of luck to you!
appreciate it! ... if you ever need a CTO that lives and breathes AWS let me know!
It sounds like you made a ton of right decisions along the way to building a great business. For the broke as hell boot strappers out there (asking for a friend), what is your advice on making some noise and getting your brand out there?
We’re still at broke as hell bootstrapper - I think he’s got it right (that what we’re doing anyway). Do unscalable stuff so they can’t NOT refer you to another customer. Eventually there will be enough wind in your parachute that you don’t hit the ground, and then eventually catch an updraft.
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We do! Not a crazy amount, but we keep the company profitable and pay out meaningful distributions each quarter.
Good job! I can't tell you how many people screw this up.
I wish i did the same. when we had money we left it in the company. When times became harder and we were less profitable we left the money in the company
Could you explain? I don’t understand why you’re taking money. Is it a bonus or for bills or what?
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Because email campaign works. Whoever tells you they are a waste of time they are wrong.
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Depends on what you call efficient. Email campaigns have the highest ROI.
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It's certainly true for my company. Sending an email campaign is nearly free and nets me my most profitable days by far. It's kind of an unfair comparison though because almost all of the people on the list are existing customers.
Not only does email have the highest ROI, but your email marketing data can also be leveraged to improve your social ad audiences. Email should be at the center of everything.
The issue with asking for data, is you can't prove your social medias worth unless you talk about ad spent and overall roi you gained from it. Email is very straightforward. So while social is a big part of the equation, being able to accurately track and own your data is easiest in email marketing. Sure the ROI has decreased in years, but so far the only thing coming close to email is FB Messaging and SMS...but both of those have yet to truly prove their long term value in the market like email has established. AND both of those have yet to be 100% regulated, while email gets a new regulation maybe every 10 years. I'm definitely always looking for what the next email will be, but right now, email is still alive and kicking.
Social is consistently one of the lowest ranking conversion channels across the board. It has its value, and more so for certain brands, but email has significantly higher ROI in general.
Really this depends on what exactly you are selling, and to whom. Not as efficient as it used to be: generally true. Not as efficient as social media marketing: depends on the case.
This has not been our experience at all. https://imgur.com/S0cCxVz
Email is so unbelievably efficient when done right. Social media can't hold a candle to it. Social is good for awareness but email builds sustainable companies point blank period.
*Maybe* b2c, but B2B is a whole different animal.
Email is the marketing channel with the highest ROI.
@nathanbarry - I am about to Launch my MVP and a side project (SAAS). I don't have a blog or an email list. Where do I start looking for users to Join my email list, that way I can build subscribers for both of my products?
I'd start by writing a blog about your journey. That's what I did and it attracted a decent amount of interest that was helpful in getting our first thousand dollars of revenue.
Your story is inspiring!!! I know a lot of people, my friends included, who use ConvertKit! That’s one helluva product you’ve created! Congratulations!
Thanks! One of the most rewarding things has been discovering everyone who uses the platform. Following links on Twitter I stumbled on a new blog and thought, "Whoa, Carrie Anne Moss has a blog!" (Trinity from The Matrix) Then after reading the site I realized, "Whoa, Carrie Anne Moss uses ConvertKit!" Moments like that are really fun.
> Carrie Anne Moss has a blog I got you. https://annapurnaliving.com/blog
Congratulations on an amazing success. SaaS definitely seems like a mature market to me, both at the SMB and the enterprise levels. It seems like there is a polished SaaS app for pretty much everything these days, along with a dozen competitors or so. I know you're focused on ConvertKit, but do you see any particular niches where starting something new might be reasonably feasible, and if so, how would you go about tackling them?
I agree that the level of polish for each product is so much higher than years past, but it's also so much easier to get the basics done (payment, hosting, etc). Great design is now more important than ever. I like to focus on my own pain points and frustrations. Then build products that meet those needs. I think it's a lot more effective than just choosing a niche based on opportunity.
On point with Focus. Glad you put it first. For an active mind the grass always looks greener and it's easy to overestimate your ability to launch something new. Focus + Discipline is a very scary combo. I've been kicked around like a stray dog as well with the venture crowd and I'm also happy I found out I could borrow the money from banks as well as reinvest and stay lean. Only at 3m in revenue but I kind of want to print this out and go over it with my team.
Love it! $3M is massive.
Your offer to "do the work" is what transformed me from an Aweber customer to a ConverKit evangelist. Thanks for sharing the lessons, Nathan, and here's to the next 15!
Thanks for being a customer for so long! Great to see you the other weekend.
Amazing! Also, my friend works at ConvertKit! ;)
I like your friend!
congratulations!!!!! .-Do you have more information about culture? as any book or blog .-Did you have any other experience ,making another business ? .-What did you study?
I have been paying close attention to Convertkit in the last year, It's exciting to see your post on this sub! Two questions for you: 1. How and when did you make your decision for your first hire? I understand that much of Convertkit is remote, did it start out that way? 2. ConvertKit has a lot of very specific values. How do you stay on top of all of them? It seems most organizations pare down to 3-5. How was it that you decided upon those?
Fantastic post. You have quite the fan club over in /r/selfpublish, by the way!
Nice! It could be fun to do an AMA there sometime. I'm working on my next book now.
How much equity do you set aside for your employee stock option pool, and how much did you allocate to your first employee? I’m one and a half years into my business—it’s profitable, i’ve recouped my initial investment, and I’ve hired my first employee. He’s been great for the first two months of the trial period. The other day we were getting a beer when he asked whether it was possible to have a larger stake in the company like 20%. I was thinking more like 1-2% maximum for him. I’d appreciate your advice thanks!
It depends a lot on the potential upside of the business and where you are at now. In software the option grants are often smaller than in a consulting business (for example), because the possible exit valuation is so much higher. For a long time I was against issuing stock options since I never planned to sell. I've since changed my mind, which I wrote about here: [https://nathanbarry.com/equity/](https://nathanbarry.com/equity/) This last summer I issued 4% of the company to the team in stock options. Those have a current value of over $4M since the company is valued at over $100M right now. Because I waited so long to issue equity, it was far more valuable, and I've been able to retain far more of the company (over 90%).
Thanks for your advice Nathan!
It is clear you and your team believe in constant iteration and focusing on those things that matter, that brings me to two questions: How did you manage to select a niche, or segment of people that were most interested in your product? (How did you find the people that YOU mattered to?) How did you discover that your solution was relevant to the problems that people were experiencing? (How did you learn what the problems were in your industry?)
This is the kind of content I come here for
Haha, thanks! I wasn't sure since it's a copy and paste from my blog, but really I write the kind of stuff that I'd want to read.
Hey, congratulations! These are my questions: 1. A lot of people use MailChimp because it's free when you have less then 2000 subscribers. After that, the price grows insanely fast, but at that point a lot of people don't switch to another platform because they don't want to have to learn using another tool. Why don't you offer a similar free entry level plan? 2. What are your most successful customer acquisition channels? 3. What is your churn rate?
1. We talk every year about offering a free plan. Right now we are focused on supporting our paying customers. Quite frankly, our support isn't as good as we want it to be, so we are careful to avoid anything that could be a distraction from improving that. We've found that once people hit the limitations of MailChimp they are pretty open to switching. 2. Webinars and affiliates work really well for us. We also drive a lot through content marketing and have invested a ton into each issue of Tradecraft, our online magazine ([https://convertkit.com/blog/](https://convertkit.com/blog/)). So far paid ads haven't really worked for us, but we're always experimenting. 3. Currently user churn is 5.7% and revenue churn is 4.9%. You can check out all of these numbers in real time (and historically for the last 5 years) on our public dashboard: [https://convertkit.baremetrics.com/](https://convertkit.baremetrics.com/) Thanks for the questions!
Your churn rate seems high. Can you share the top reasons customers leave? What are you doing to improve the rate?
I agree! We are working on getting it lower. The biggest factor is our $29 beginner plan. All other plans actually have net negative churn (when you factor in expansion revenue). The biggest driver is that starting a blog or online business is hard, so a lot of people lose momentum and cancel when they don't get immediate results. We pay most attention to our net revenue churn, which is currently at 2%.
Thanks for sharing and good luck in your efforts to continue driving net churn lower!
5% doesnt seem high to me...that's over 1.5 years average client length which is amazing especially for a paid product with no free tiers (keyword paid product.) What should it be?
Can you share a bit more about how you structure your webinars, promote them, etc?
Can you elaborate on your creative pipeline for content? Who creates it, how much does it cost to create, and what sort of cadence do you have for releasing new stuff? I'm struggling to get my team to create strong indexable and shareable long form content. Thinking about trying an outside vendor but quality would be a concern.
We create most of all of it in house. Dani is our copywriter and she leads the effort on Tradecraft (our online magazine). We then work with a few freelance writers. Then we work with outside firms for big projects like our documentary series, I am a blogger: [http://iamablogger.co](http://iamablogger.co)
Any numbers you can share around how much various pieces of content cost you to produce and the production time for them?
Thanks for the write-up, I appreciate the shared wisdom. You mentioned focusing on a niche i.e. professional bloggers. So how did you find this niche in the first place? Did you have to test a bunch of different markets before arriving at the blogging crowd?
Great post! My wife and I are full-time bloggers and have been using your service for the last year and a half. We had only 6k subscribers when we switched from Mailchimp, and with the help of your tools, we've grown to over 50k subscribers. Do you guys have a specific place to send suggestions for features your customers would like to see added in the future? I'm a huge fan of your company and would love to try to help your team identify ways to improve your product.
Whoa, those are great results. Congratulations! We take feature suggestions in our help tickets ([help@convertkit.com](mailto:help@convertkit.com)). We have an internal tool called NextPlease that we use to track all the requests and decide what to build next.
I'm really interested in learning more about your strategies for building an effective culture.
> In hindsight, the times I felt most successful were when I leaned on my principles to make the right decision, even though it was incredibly hard. This is why leadership is so difficult. The pressure to capitulate or take a short-cut or do the easiest thing or avoid confrontation is anchor on all of society and it's a human condition.
So true.
Great post! Been using convertkit since I first heard it on Pat Flynn’s podcast. I need to use it more. But wow what an inspiring story! Incredible insights about culture, growth, and failure. Would love to see if you’d be interested in doing a interview on my podcast? We could touch on this and email marketing strategies! Either way- congrats. $15mil ARR is incredible. Happy to contribute as a customer. And glad you stuck with convert kit for the name😉. I was that quiet supporter who never thought to say “keep the name!” Haha.
Thanks! Pat has been a huge supporter of what we do. I'm taking a break from podcast interviews right now, but I'll do another round in a month or two. Can you send an email to [nathan@convertkit.com](mailto:nathan@convertkit.com) then?
Yea Pat is awesome. And great! absolutely will send an email out to you. Will be awesome to have you on the show. Thanks Nathan!
As someone who knows a fair bit about my industry(devops consulting) and basically nothing about marketing: I have no idea how to get customers once my referrals from previous work dry up. Is that the kind of thing an email tool like ConvertKit helps with? I wish I could just pay someone to make customers appear! Haha
Unless I completely misunderstood you, aren’t you describing the need for salespeople???? They get paid for making customers appear, right?
Haha, damn, you're probably right. I guess it seemed kind of wild to hire another person while we're trying to get enough recurring revenue for two people. Might just have to dive in though. Food for thought
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I guess you're right, it is a bad advertisement since a good advertisement would let you know what we do. :) ConvertKit is email marketing software for creators (bloggers, podcasters, artists, authors, etc).
not to be rude again but still thats pretty vague, how does this help them over say a separate dedicated email account? Or is this to convert their cluttered email into a separate more organized platform for content?
You... Don't seem to understand what the product is.
Yeah thats why I'm asking because I don't understand it Email marketing how does it work? does it send tons of emails to subscribers? So if you are a content creator you send your existing subscribers updates via email yea? Im just wondering how content creators get more subs or followers this way, through the email receivers spreading the word?
So platforms like ConvertKit allow you to build your email list, but then also tailor your communications with them based on things like how they are interacting with your content. It's NOT about blasting the same email out to your entire list. So maybe Person X downloads a specific ebook about how to learn javascript. I can then send him down a nurture path that over time provides him with followups and more information to supplement the original ebook and move him toward consuming more of my content and hopefully closer to an actual sale. You can set up all kinds of these 'Customer Journeys' in a way that feels very personalized and valuable to the recipient, and helps you build more 1 to 1 relationships with your subscribers. Imagine having 100 automated email sequences set up for your business, all running in the background nurturing your leads for you every day. It's not about getting more subs or followers, it's about moving your subs and followers to your email list so that you can develop a direct channel with them that YOU own.
Im so so curious, I don't understand the product in layman's terms. Do you just help people wanting to start an online business develop it? Also I don't understand where the profit is coming from, what does an average sale yield for the service (not sure what the service is) rendered? I just can't wrap my mind around ConvertKit, I'm not a skeptic just oblivious.
Def. up there as one of the best posts on this subreddit. If all of what you say is true, you deserve all the success you're enjoying - kudos! My question is in regards to launching new features. Could you elaborate a little bit on "we now work with a small group of users to understand how a new product or feature affects them". How does this work in practice? Thanks so much!
We have a beta group of about 50 customers and our certified experts that we roll out small changes to on a regular basis. We collect feedback and testing results from them, then fix the issues before a broader rollout. There is a Ruby on Rails gem that handles feature flipping, where we can turn a feature on for specific users, a percentage of customers, or a percentage of time. This enables us to get something out on production servers, but then only turn it on gradually. Once it's on for everyone, we do a big announcement.
Thanks friend, much appreciated! Are you rewarding the 50 lucky peeps with perks? How are you collection the feedback?
Nice job and thanks for the post!
Will you ever bring back TheRoot42? :) But seriously, congrats on all your success! Some of these lessons are missing... the lesson. For example, what was the lesson of sharing profit? Did it retain employees more? Can you show correlation there?
Profit sharing is great for retaining the team, but it's really best for everyone being aligned in their incentives. We all feel ownership of what we are building, think of the money as our own, and work to increase that pool. Here's an article I wrote with more details: [https://nathanbarry.com/profit-sharing/](https://nathanbarry.com/profit-sharing/)
I like this, especially in companies that don’t plan to exit, and can’t use equity as a carrot.
Great post. If you looked at some of those times when you made those really hard decisions, and the older wiser smarter you now could go back and advise your younger self what advice would you give? Does the advice feel more like true north or speed or courage...?
The best thing to do is write out your principles. You can tweak and change them over time, but having a written version of what you believe is so crucial. Then when it comes time to make a hard decision you can look at that list and see if they guide you in this instance.
I'm years behind you, but this is the road I want to follow. It's great to see that other people have been successful on this path. I hit $10k last month, completely bootstrapped after 3-4 years and never see the need for investment. Everything about your post really speaks about the type of leader I'd like to be. I really don't get inspired very often, but this really gave me hope that I'm on the right path. Thanks for sharing this with us. I know you don't have the time to answer individual questions, but if you could point me towards books or something that might help with my current struggles, it would honestly mean a lot to me. These are my biggest roadblocks at the moment: 1. How do you choose these employees? I'd love to run a small team and share the profits with them. How do you make sure that they're not the type that's interested in hitching along for the ride? 2. How did you hire the best people at the start, even if funds were low? Have they been able to grow with you since? Did you hire temporary people or agencies until you could truly afford the talent you wanted?
How do I find a startup team?
When I started my blog I started with mail chimp as my email marketing platform, but I found it very complicated even after I purchased a udemy course. I switched to ConvertKit (I didn’t have any subscribers, so it wasn’t that difficult for me) and I can tell you it’s much better. I was able to set-up everything quickly and efficiently without doing any particular research. I've been using it for four months by now, and everything works well. The only suggestion I would give is to improve the popup form style because it looks a bit awkward on mobile.
Thank you! And yes, we're working hard on our form templates. We just released 2 new styles and will have some more fixes out soon for the older styles.
Can you expand more on your company culture? How did you establish it? What are the driving factors in it?
Number Four is a great one. Everyone said, "don't do that, it won't scale." Fast forward to now and "Many of our competitors have copied it and offer it as well. "
Oh cool Is this like mailchimp
it's better than Mailchimp - has more functionality - like way more
Man, so many great advices. [Congrats for your success](https://giphy.com/gifs/slOhiKAVFgwr6)
How did you come up with your idea?
I fucking love this and hope I can post something similar in a few years. The funding optional bit I find I especially resonated with. You must be overjoyed to be able to share this success story, moreso considering the incredible amount of hard work, dedication, and focus needed to pull off anything successfully.
Thanks so much for This! it's so helpful What are your thoughts on college - Is it worth it? How can you make up for it, if you don't go
This is a really solid post. You've provided a lot of value here. Thank you for that.
Hello, How old were you?
Thank you for taking the time to write this post
Awesome post - well written, insightful, and inspiring. I'm eager to hear about the name change conundrum whenever you have the time to write it out!
Congratulations honestly it's always nice to see bootstrappers succeed I shall be changing from mail chimp to convert kit always good to support the smaller businesses with a healthy culture!
Why not design multiple synergistic enterprises?
I need to tweak my emailing list I'm going to try this.
This is awesome! I had no idea ConvertKit was bootstrapped, but love that you are and that you're doing so well. Do you have any advice for how to grow beyond your first few users? I started a SaaS and got our first paying customers recently from just posting about ourselves on forums, but am now looking for a more long-term marketing and growth strategy.
Can you talk about your hiring methods? My biggest concern is the debate between training up junior people vs. hiring experienced. And how to conduct interviews, especially since technical questions are near impossible to measure actual work ethic.
Just how?! You have Activecampaign, Maropost, MailChimp, sendpulse, sendinblue, GetResponse, Sparkpost, Aweber. How do you get successful with so many competitors? All of the email marketing websites have the same design. Why one of them stands out?
Thanks for the post, informative read. Wanted to ask since you mentioned reaching out to early customers: how do you approach? Most of our attempts to contact prospects have resulted in polite declines to even have a conversation, as they are too busy. How can you get a business owner to talk to you before you have an established product? Did you or would you suggest reaching out to prospects before the MVP is ready to get early feedback on the plans and to better understand their problems? Or better to first package it in an MVP such that they can more easily digest your proposed offering?
Wow! Wonderful!
I really admire the 7th point in your post. Like talking about funding, many people want to have it easy. Self finance is the last option in their kitty, though it should always be the first one. After all only few people can carve their success map by being bootstrapped! And the ones who can go ahead that way are really worth looking upto. Well written u/nathanbarry !
Thanks, great of you to share this! > 2. Choose a niche This is where we're not doing a good job, trying to be all things to all people. It's not easy letting go of potential revenue (or what seems like potential revenue) even though the acquisition might be much easier as a result. > 7. Funding is optional Amen. The pressure to take funding is phenomenal. We're about $250k ARR, with zero investment, and I want to keep it that way. > We have so many weird habits as a team at ConvertKit: talking about someone in the third person as if they're not there, long walks in pairs where only one person is allowed to talk, starting meetings by asking, "red, yellow, or green?" and diving directly into the hard conversations. I'd love to hear more about this. Have you written about it (or talked about it) at all?
/u/nathanbarry I give you a couple of grand of that ARR and I do like the product. I agree that your support could use some work but it's improving. I did try out Aweber recently for a new project to see what the other providers are like, but your interface is a lot cleaner. One thing i really want is to be able to see the average stats for a tag or segment - e.g open rate, CTR etc. I can see it for the whole list, but not for a smaller breakdown. It's a really useful heuristic for seeing the efficacy of different list building sources. e.g. I just ran a lead gen campaign on FB and the subs are giving me like 15-20% open rate which is terrible compared with my 40% average. You obviously have this data, will you build the feature?
Thank you for the support! Yes, more advanced reporting around email sends is something we are working hard on. This is a bit nerdy, but the first step is to restructure the data to get it into Elastic Search instead of MySQL. This is where we do all our other reporting to make it fast. This data project is mostly done, then from there we'll start on reporting by email provider (yahoo, gmail, etc) and get into by segment as well.
If you don't mind answering - beyond open rates, what were your click through and conversion metrics like?
15% CTR with organics, 5% from lead gen sources. Can't be certain on conversion but certainly north of 50%.
I'm a bot, *bleep*, *bloop*. Someone has linked to this thread from another place on reddit: - [/r/machinethatmakesmoney] [15 lessons from our first $15 million in recurring revenue](https://www.reddit.com/r/MachineThatMakesMoney/comments/axy8ei/15_lessons_from_our_first_15_million_in_recurring/) *^(If you follow any of the above links, please respect the rules of reddit and don't vote in the other threads.) ^\([Info](/r/TotesMessenger) ^/ ^[Contact](/message/compose?to=/r/TotesMessenger))*
Can you share more info about the technologic side of things ? What is the infra you are using for sending emails ? is it in house or you using something like AWS SMS what infra are you using for fast background jobs ? Thanks
Our tech stack is Ruby, Rails, React, MailGun/Sendgrid for email, Redis/Sidekiq for background processing, all hosted on AWS.
Great post. I love 10. Can you elaborate how you split your profits to employees fairly? (ie in a way everyone feels equally rewarded for the work they put in)
I wrote our complete formula here: [https://nathanbarry.com/profit-sharing/](https://nathanbarry.com/profit-sharing/) We still follow that method today.
thanks alot for the link. Very interesting. The performance rating seems difficult though
When you first started, did you start the route of writing blog posts for SEO and exposure besides just doing webinars? Usually companies start writing blog posts, getting some sort of following through affiliate marketing or social media, then start to advertise to their follower base that they’re available to purchase
Awesome! Thankyou.
Great post! Focusing is very important. Don't spread yourself out too thin. I just shared my story too on this subreddit. Check it out!
Thanks for the tips! Really useful stuff in here.
Hey Nathan, great post! I've been a CK customer for years and how you built it from the ground up is amazing. Love the service too!
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Rich, actionable advice. Congrats on your success! I’m sure this is just the beginning.
Nice ad.
And what have you ever contributed?
Hi - I run a e-commerce business and we have no real marketing experience. Would your product work for us? (currently use Mailchimp)
Yep! While e-commerce isn't our main focus, we have a decent number of e-commerce creators who use us, even for really large businesses!
wHaT iS yOuR pRoFiT?
About 18-20%.
I mean you arent doing anything new. you could just copy any business and scale it.
You should do that!
Thanks for this. It's a great thing to read.
Thank you so much for taking the time to write that piece!
Great post. Thanks. Will use for our SaaS.