Lessons Learned from 5 Years of SaaS… and $1 Million in Revenue

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On January 1st, 2009, we billed the very first customers for our brand new app, Freckle Time Tracking. That day, we grossed $288. The first month, $1,500.

On Dec 1, 2008, we launched to the world.

A few weeks prior, we started teasing posts on our blogs, and put up a squeeze page with a mailing list signup.

For the previous 3 months, we’d been building — one, sometimes two, days a week.

I had wireframed the most critical, core interactions on paper, one hungover day in late June, 5 months before.

The previous February, in a moment of clarity, I finally resolved to fucking finally create a product business, and kick consulting the curb.

In 2004, I decided that software as a service was the key to the business I wanted, after seeing what Basecamp was doing for 37signals.

In 1998, when I was 14, I came to the conclusion that my ideal career would be to found and sell a bunch of companies in a row, because I loved starting projects and hustling and making money.

Back to the present…

Three days ago, Freckle turned 5 years old.

It’s been a twisty, long-ass road, my friends.

That first year, Freckle grossed $27,334. Really kind of pathetic. It earned so little, we struggled to focus on it. We had to fill in the gaps with consulting and ebooks and workshops, a la Be Your Own Angel.

This year, Freckle will cross $1,000,000 in lifetime gross revenue. (In 10 days, we project!) In November, we beat our best month ever by 11.1%. Six people rely on our business for their main source of income.

On the one hand: I can hardly fucking believe it. On the other hand, it seems inevitable, unsurprising, even boring. Maybe I’ll hit up the liquor store later for some champagne because, weirdly, we forgot to celebrate.

So what should I write about it?

For weeks, I’ve been asking myself that question. Five years! A 5th birthday. At my & Thomas’s wedding, in September 2008, our friend Patrick wished for us to “Have many beautiful brain babies.” Well, Freckle isn’t our first brain baby — but if it was a real baby, it’d be going to kindergarten now.

That’s crazy. Crazy.

How on earth could I distill all the crap I’ve learned — good crap, bad crap, surprising crap, boring crap — into one little post? It defies possibility. (Not least because I’m famously long-winded.)

Well, in my writer’s block I asked for help — and my friend Nick offered me a guiding question:

What’s the most important thing you wish your readers would understand?

Well, the first thing that comes to mind is: You need to create something people actually want, by focusing on customers who pay for value, and understanding them, and serving them. But derrrrp, I write about that all the time.

And, in fact, that — these steps — are actually sub-parts of what really matters the most of all:

  • The willingness to do “the same thing” for years.
  • The investment mindset.
  • The maturity to avoid the twisted and self-punishing satisfaction of the adrenaline rollercoaster.
  • Learning, and remembering, that it’s not about you.

The will to let go of your fantasized Entrepreneur as Hero! movie, to ditch the 4-act dramatic structure, and let the reality of your experiences unfold as they will, and take them as they come.

These are the absolute rarest ingredients of success.

Because they’re the opposite of what the tech industry tells us.

The more you soak in the tech industry, the more you’re absorbing the idea that novelty, thrills, tough problems are what make life worthwhile.

When I was that 14-year-old, dreaming of a string of businesses started then sold… well, that said a lot about me. I loved to start new projects all the time. I rarely finished anything. The thrill was in the start… and in the fantasizing. The newer, the harder, the better.

Later, I had many new clients each year; and after that, I took and then quit 3 jobs in less than 27 months.

I was a hummingbird, and the world was a sea of incredible flowers. Flit flit flit.

But flower-hopping won’t reliably get you to $1,000,000 in lifetime revenue.

Building a real business takes endurance. And when I say “endurance,” don’t you conjure up that tired & busted caricature of Entrepreneur As Ironman. Don’t you believe it.

Stress and overwork are the Farmville model of building a business. Endurance isn’t about working extra hard, or extra long, it’s about incremental progress.

When people write dramatically about the struggles of starting up, they get it all wrong. The most deadly struggles aren’t external — the things that are hardest are not “the market” or “the money” or “the tech” or “the infrastructure.” Nope.

The real struggle, and the real reward, is internal:

  • the struggle against emotions and beliefs that will cripple and sabotage you
  • the struggle to separate overwork from results, and stress from importance
  • the struggle to repeatedly turn the focus to your customer, and not yourself

When you do the math on our lifetime $1,000,000 mark — well, looking backwards, our yearly average revenue is nearly 8 times that first year’s sad little take. That’s the power of compound growth.

That’s the reward of making mistakes, but learning from them, and coming back to the boring, important stuff.

Yeah, we took our simple little software for granted. Yeah, we distracted ourselves with more “fun” projects, a second, more “ambitious” SaaS. Yeah, we tried to make things artificially hard so we could feel that sense of accomplishment. Yeah, we thought we wanted to grow fast, and we planned for it and made decisions to support it, only to get there and realize we hated it.

So we stopped distracting ourselves. We shut down the other app. We brought our attention back to what mattered, and what made us, and our customers, happy.

We remembered that things could be so good without being hard. That it’s about our customers, the impact we can help them create, the way we can support and spend time with the people we care about.

How did we ever forget?

It’s the boring stuff, the daily stuff, that makes it all worthwhile

I agree wholeheartedly with with Steve Jobs on this point:

So when these people sell out, even though they get fabulously rich, they’re gypping themselves out of one of the potentially most rewarding experiences of their unfolding lives. Without it, they may never know their values or how to keep their newfound wealth in perspective.

On the surface, this stuff looks and sounds boring — Drudgery? Repetition? But it’s not. It’s really, really not.

Getting to watch the business grow, and make happy customers, to know that you shaped it, you gave it life, you made something that helps people, and that means you can live a comfortable life, provide for and spend time with your family, create jobs for likeminded people… that’s a bigger reward than any momentary thrill of the Tech Du Jour.

The business itself, the relationships with its customers, becomes something you love, and want to protect, to see continue.

In the years since we launched, Freckle has touched and helped people all over the world, from huge NGOs to itty bitty freelancers to Belgian construction companies to the dev & design shops I designed it for. We help make their work lives a little less stressful, and a little more profitable. If you multiply those “little” improvements by the thousands of people who use Freckle, it really adds up.

Freckle has given us, and the people who depend on us, financial comfort and peace of mind.

We don’t win awards. We don’t get on “30 under 30″ lists. Nobody “important” cares about us, or our “little” app. And that’s just how we like it. We’ve got no obligation to anyone but our customers and our consciences.

When you’re in it for the long haul, you’ll find that prestige is empty. All the notoriety in the world matters less than one happy customer email in your inbox.

And, when you do it right, nearly every business problem is a chance to not only become a better business owner, but also a better person.

Happy Birthday, baby.

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PS — If you want specific steps & tactics…

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Discussion

  1. Daniel Lang

    Thanks Amy for this post. One question though: do you really consider Freckle to be a success?

    I mean, I get that you learned a lot along the way, had fun and everything – but financially? $1M isn’t a lot of money in 5 years. I’d say that for an engineer like you, there are much easier and less risky ways to earn more.

    Not saying that I could have done better or anything. I’m honestly interested in your own opinion as a business owner about the financial success of it.

    Reply
    • Amy Hoy

      Dude, I can’t even imagine how you can read my blog and not realize what a load of horseshit just came from your mouth. :)

      Reply
    • Mike Booth

      Not that it’s the most important point, but thinking strictly like an accountant:

      Amy and company did not “make $1m in five years”. They made $1m in revenue in five years. They also made an entire company, and a product, and a customer base, which they still have, and which have a value all their own, and which combine to crank out more revenue every month, at a steady clip.

      And that’s just the tangible assets. Freckle also has a relationship with a valuable audience, and a reputation, and various other things.

      And remember (the graph is right up top as a reminder) revenue starts out at zero and ramps slowly. So, barring disaster, the next five years will be much more profitable than the first. That’s what the “investment mindset” is all about.

      Reply
      • Amy Hoy

        Mike, life’s more fun when you’re a pottymouth ;) Just kidding. Thanks for weighing in with more facts!

        Also, guys… Freckle isn’t our only product. And if you figure out that it grossed $1m in 5 years, and the first year was only $27k, how much do you think we’re making per year now? Remember, I just said we beat our best month ever by 11.1%.

        But really, the point is: Money alone isn’t my bar for success. Money is useless except for what you can use it for. I have the life I want: I live where I want, I travel when & where I want, I work as much as I want (which is 2-3 days a week), I work with whom I want.

      • Derrick

        The math says your revenue is growing about 100% annually, any investor or business owner in the world (less Daniel) would jump all over that kind of sustainable growth over a five year period .

      • Thibaut Assus

        Never forget guys that 1.000.000 revenue in 5 years is something like 200k a year in REVENUE which means 16.666 USD MONTHLY on average… which means that as for today, freckle is approximately (at least) 200 times worth his monthly revenue (3.333.200 USD) if you compare it to buying appartements (200.000 USD => 1000 USD in revenue which is amazing).

        Tell me if someone knows how to create a 3 333 200 USD (minimum) GROWING value faster than Amy & Thomas ?

        Can you imagine how much freckle will be worth in say… 5 years ?

  2. Derrick Grigg

    Great read and 100% agree. Down in the trenches on something that doesn’t feel significant can be tedious, but the end result can be extremely rewarding. I look at all the big tech ‘I sold for xxxxx’ or ‘we got xxxxx investors’ as techs version of Hollywood. It’s not reality for most and for those in it you quickly get passed by. Having just launched my first SAAS, http://www.pageproofer.com I can relate to what you went through and hope that in a few years I can relate to where you got.

    Reply
  3. Brent

    To build a subscription recurring revenue business, work when you want to and not have to answer to ‘THE MAN”?

    Are you kidding? The value of that === PRICELESS.

    Way to go. Rawk. Congrats.

    Reply
  4. Stuart @ Gleam.io

    Great journey, thanks for sharing.

    I guess people only want to know when you have huge growth after you’ve raised you latest Series B round & don’t seem to care as much about the successful bootstrap stories.

    We’ve been boostrapping since 2009, this is project 7 for us but we’re finally getting traction. If it was all about the money I would have given up a long time ago :)

    Reply
  5. Robert Oschler

    Thanks Amy for pointing out the horrid “sacrifice your life on The Altar of The Entrepreneur” myth that is leading tons of people astray everyday. Your comment:

    “Yeah, we tried to make things artificially hard so we could feel that sense of accomplishment. “

    Made me smile. When I finally got that same message a few years back I asked myself a very important question that I feel most entrepreneurs are incapable of asking themselves:

    How is that everything I need to get done in a day to keep my business alive magically fills my entire day (and not less or more than)?

    The answer is, if you had less time to get things done you’d find a another way to do it or you would hire the people necessary to get it done. So the real reason the life of an entrepreneur is completely consumed is because we secretly want it to, as per your “entrepreneur as hero” point. Being horrendously busy makes a nice myth, shields us from thinking about the other pains or stresses of our lives, and feels like some Faustian bargain with the Universe where we trade the quality of our lives for success. Unfortunately the Universe isn’t listening, and our customers only care about the simple things you elegantly point out in your article.

    Thank you for telling the truth. However, I fear the shield of denial most entrepreneurs desperately cling to is impenetrable.

    Robert.

    Reply
  6. Steve

    Amy, I really like the way you approach things. The anniversary of your business is a big thing. I can relate, I had a service business and the truth be told the journey, the relationships, and the teachings are the gold. I’ve closed my doors but, I have that book of knowledge to use on my next venture. Congratulations on your success. I wish you 5 more….Great Article

    Reply
  7. Ryan Glover

    Really glad you shared this :)

    It’s nice to know that “the investment mindset” works and that you have the numbers to back it up. Are you willing to share profit on your revenue, or maybe even, what you invested profit back into?

    Reply
  8. geoff

    Amy, a belated happy birthday to Freckle. Many happy returns. You’re post had me nodding and smiling a lot. The paragraph where you talk about getting you made something that helps people, and that means you can live a comfortable life, provide for and spend time with your family, create jobs for likeminded people… especially struck home as that is a great motivation for any entrepreneur. It’s something that we get excited about with our own startup. Good luck with continuing to grow Freckle into the teenage years and with your other ventures.

    Reply

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