From an idea to exit: How I launched, marketed and sold my first SaaS


(Kaloyan Yankulov) #1

Back in 2016, I posted here about how I validated my startup idea.

2 years later, I launched, marketed, grew and sold that startup – my first micro SaaS – HeadReach.

It wasn’t the success of my life.

We failed to build a great product. But I’m grateful for all the experience I gained. Thus I’m sharing it with you.

It’s a long post. You can download it as an eBook from the original article.

Summary

Back in late 2016, we launched HeadReach, a sales tool for lead generation. It’s a SaaS that helps you find emails of people you want to sell to. Think of it as LinkedIn plus emails minus the high price tag.

In 3 months we grew the product to a bit shy of $2,000 in MRR and a few thousand users.

Just as we started growing, in February 2017 Google emailed us that they’re closing the Site Search API – the primary “technology” we use behind HeadReach to find leads.

Google didn’t close our product – we managed to scale back to a different 3rd party API. However, dropping that bomb was anything short of a sobering glass of cold water for us.

It’s not a sustainable business strategy to put all your eggs in one basket by relying on a single 3rd party API.

After the Google bomb, we tried to build our own proprietary tech. We put a hard and persistent fight with data scrappers but never figured out how to index data on a large enough scale without spending too much cash.

After exploring a myriad of possible alternatives, databases, and partners, we decided to put the project in zombie mode due to the technical difficulties.

Zombie mode – a walking dead project. When the product is operational, but you don’t actively work on it.

About a year later we approached LeadFuze, one of our competitors and overall amazing entrepreneurs, and we sold the HeadReach user base and marketing assets to them. They have solved that technical barrier and managed to build a sustainable business in the field, so it was just natural to sell to them.

Staying true to our core value of transparency, I’m going to share with you the entire HeadReach journey with all the triumphs and downfalls.

I’m using a lot of these strategies and tactics to start my new SaaS – Encharge.

The HeadReach timeframe

From an idea to the acquisition, this is how the HeadReach journey looked like time-wise.

The Y-axis displays actively paying customers. The X-axis is the timeframe in quarters.

The HeadReach numbers

Some lifecycle numbers and unit economics for HR:

  • Total revenue generated: $18,453 - Excluding income from the LeadFuze acquisition.
  • Total expenses: $15,316 - Our marketing was completely organic, but we have marginal expenses for APIs. Also, this includes expenses for contractors.
  • Funding: $10,000 - Self-funding from our previous startup.
  • Total customers: 230 - For the whole lifecycle
  • Total registrations: 7299 - Including trials and paid customers
  • Total GA users: ** 56,664**
  • Visitor to trial CR (conversion rate): ** 12.88%**
  • Trial to customer CR: ** 3.15%**
  • Churn rate: Around 12% - High churn rate due to the business model of the product and the low-value customers we attracted.
  • CAC (Customer acquisition costs): 0 We haven’t relied on paid acquisition.

Coming up with the idea

The initial idea for HeadReach was very different from what the final tool became.

Being a content marketer, one day I said to myself that there should be a tool that generates marketing opportunities for each of your content pieces. Automagically!

Next day I was already working on validating this idea.

The idea:

HeadReach is an online tool that generates reliable outreach lists with targeted prospects and promotion opportunities.

Validating the idea

Instead of building an application prototype I decided to focus on customer interactions as the shortest way to gain knowledge and validate the riskiest hypothesis.

I watched an interview with Rob Walling, co-founder of Drip, and one of his concepts, really stuck with me. If I had to paraphrase it was something like:

A working software piece is not an MVP. It’s a prototype.

An MVP is more like:

The shortest route to the activity that generates the most knowledge for you and the most value to the customer.

At this point we wanted to test the biggest risk for the idea: would people care enough about this information to pay us money?

In other words, instead of building software that generates data automatically I had to create lists with the data manually. We took off everything unnecessary for our MVP and created the 1st ever version of HeadReach – a concierge service for outreach/promotion lists.

A friend of mine Karl , a creator of a popular marketing blog (and as of recently, co-founder of MRR media), suggested that I should make an outreach list for one of his posts. In exchange, I would receive the first testimonial for HeadReach.

I put together this list: https://docs.google.com/spreadsheets/d/1xp0xEuv6uKhYOomn4ymC-XXzkK3nO22SXIpG0XVH04U/edit#gid=0

Also, I designed a simple landing page for the MVP with a single CTA.

How we define success?

Now as we had an example list and a working landing page, we had to decide what is our goal for this MVP.

For the HeadReach MVP, we agreed that 20 paying customers in 2 weeks is a great validation result.

A rule I still respect to these days:

** Always define what the expected outcome of your marketing campaign is.**

It has to be quantifiable and time-specific.

Good examples:

  • 20 paying customers in 2 weeks
  • 500 trial registrations
  • Nurture 5% of our email subscribers to become paying customers

Bad examples:

  • Improve acquisition
  • Nurture leads into customers
  • Increase CLTV

Marketing the MVP

In the first 24 hours of marketing the MVP we achieved:

  • 7% CR on the landing page
  • 15 paying customers
  • 20 lists - some customers purchased multiple lists.
  • Around $400 in revenue. We were silly enough to underprice our lists which ultimately cost us more money than we made in the validation process.

As a side effect, one of the top SEO players (Nick Eubanks) hired me to create an outreach list for him which brought another $200.

People cared about this data!

What I used to market the MVP?

3 channels:

  • My previous email list (500 subscribers)
  • Facebook groups
  • Direct outreach marketing to influencers with cold emails or DMs.

Long messages and personalized videos work great with Facebook groups. This is the video that I posted to one of those groups: https://www.facebook.com/plugins/video.php?href=https%3A%2F%2Fwww.facebook.com%2Fheadreach%2Fvideos%2F791370460996146%2F&show_text=0&width=560

For influencer marketing, I used a simple, custom-tailored message. Nothing fancy but it works wonders:

Hi Nick,

Thanks for accepting my friendship request. I’ve been reading a lot of your stuff on SeoNick. Haven’t got a chance to get to your eBook yet, but hopefully, will do that soon.

I’m just testing an idea for a tool that creates 1-click content promotion strategies. You can check it out here: headreach.com

Would love hearing your opinion on this if you have 2 minutes to check it out?

The goal of this tool is to make content outreach ridiculously easy. Imagine 1-click content promotion.

You simply chuck in your URL and — Huzzah! — You get thousands of outreach opportunities. Hours of painstaking list building transformed into a neat content strategy in seconds.

At the moment, the validation is all manual. I’m personally creating the list instead of an automated tool. You can see an example list here:
https://docs.google.com/spreadsheets/d/1xp0xEuv6uKhYOomn4ymC-XXzkK3nO22SXIpG0XVH04U/edit#gid=0

Let me know?

Doing customer development

February 2016

With some initial validation for HeadReach, we were confident enough to move forward with building a prototype for the tool.

A big mistake startup guys do at this stage is that they consider the validation process done and dusted. They seal their leads list, put it to the side and disappear in the shadows of their computer cave for a couple of months to code their new, uber innovative product. Wrong!

Customer development is a long and tough process. The purpose of the leads you’ve collected in the beginning is not to have a list for the sake of having a list. It’s to build a relationship with them and use them to guide your product creation.

Ask them questions, jump on calls with them, show them what you’re working on with wireframes and prototypes.

Here’s an email I used to send to all of the people that bought the list from HeadReach MVP phase:

Hey,

I’ll do my best to provide the 2nd list over the next week.

As I mentioned, we’re currently working on a tool that automates this list, and would be greatly helpful if you find few minutes to answer my questions below. We need SEO experts opinions!

  1. What’s your biggest pain with doing outreach now?
  2. What did you find most valuable in the list?
  3. Was anything missing in the list that you wanted to see?
  4. Could please check out this concept screenshot of the tool we’re building, and let me know what you think - is there anything unclear with the interface on it?
  5. Would you pay $29 per list for a tool that generates the same quality of results as the manual list we made for you?

Thank you for your time!

It’s pretty straightforward. The idea is to keep the potential customers in the loop and identify what the #1 most important feature for them is.

Identify potential buyer personas.

At this stage, you should have a rough idea of whom you’re going to sell to.

Here are the buyer personas for Encharge (our new product):

The personas will drastically change as you launch and grow your product, so think of them as a hypothesis and adapt them as you go.

Collect your feedback in a repository

Once you start getting some insights from potential customers, make sure to put everything in one place.

This is the Customer Development repository I currently use for collecting feedback for Encharge:

It’s an Airtable document, and by far I think it’s the best way to collect and organize feedback. It’s a database of your potential customers, their feedback and which persona they fall into.

Download a template of that document below from here: https://airtable.com/universe/expskk6i2hTkw3lrL/customer-development-repository

I recorded a quick video to show you how to use the template:

https://youtu.be/bOJBYR_W6lw

The repository has 5 tabs:

  • Feedback - a list of all feedback sessions. For convenience, each session is named with Interviewed person’s name - Stage that he was interviewed in, but you can use another convention.
  • People - a list of people that have been interviewed.
  • Companies - companies of the interviewees.
  • Features/complains - notable feature or complains from people.
  • Personas - a list of potential buyer personas so you can link specific people to personas.

Pre-launching HeadReach

March 2016

With some validation and customer feedback collected, we started to work on the product.

I wrote a massive eBook on outreach marketing that I used to collect pre-launch leads for HeadReach. It’s quite similar to what I’m currently doing to grow the pre-launch audience of Encharge.

With the HeadReach acquisition, LeadFuze now owns the rights to this eBook so you can download it from their website. Where you can also see the landing page, I used to generate pre-launch leads.

The eBook helped us generate quite a lot of buzz and some pre-launch traction:

  • 1280 subscribers in 3 weeks
  • 550 organic Twitter followers.

Unfortunately, we never really got to leverage social media subscribers at HeadReach, but the pre-launch subscribers were an early driving force for HeadReach.

You can copy a lot of the marketing tactics we used for the eBook launch to kickstart pretty much any email list.

We did a few things right:

Excellent landing pages

I created 2 pre-launch landing pages – one landing page for the eBook and another one for the HeadReach product itself.

This was the landing page for the product:

And the one for the eBook (dissected).

A blitz marketing campaign

The second thing we did great was what I call a Blitz marketing campaign.

Blitz marketing - a very intensive marketing campaign in a short period of time.

While methods like SEO rely on slow, methodical growth, blitz marketing is all about going heavy in a short period of time. For the HeadReach pre-launch that was 2-3 weeks.

With Blitz marketing, you can also be more liberal in the ways you share your content. Since you aim to get the best possible results in the shortest period, it’s entirely OK to re-publish the same content on multiple channels and outlets even without a canonical link (something that would be considered a heresy in the SEO world.)

Some of the channels that we hit hard at the pre-launch included:

  • Reddit (798 sessions)
  • Facebook – mainly from groups (742 sessions)
  • ProductHunt (595 sessions)
  • BetaList (530 sessions)
  • Medium (348 sessions)
  • and my personal blog (in Bulgarian)

And the marketings tactics we executed:

  • Integrating a viral share loop
  • Re-publishing content on external channels (Medium, Reddit forums, groups, and other communities).
  • ProductHunt (that’s for the eBook, not the actual product launch on which I talk more later)
  • BetaList
  • Writing content on my personal blog

Integrating a viral loop

For the eBook, we used a tool called Gleam. Gleam helps you run giveaways, rewards, and other cool widgets to help you collect more emails.

While their focus is giveaways, they have an app called “rewards” which is a more advanced social payment platform. Think “Pay with Tweet” but with much, much more options and flexibility.

My initial thought was that we should ask for:

  • Email
  • A Tweet
  • Twitter follow
  • And a referral

A whole 4-step sign-up process to get the eBook. I was wrong. Only about 3% of all users were able to reach the latest step and download the eBook. Most of them were giving up after the 3rd step.

We took off the referral step asking only for an email, a tweet and a follow. Conversions went up drastically to about 8% of the people completing all actions.

You can also look into more powerful tools for viral sharing like UpViral. I’d recommend UpViral for more advanced marketers or people that do giveaways on a regular basis. It offers some power features like sweepstakes, landing page and email A/b testing, lead fraud detection, one-click email sign-ups (think UTM links), advanced reporting and a lot more.

Recycling on Reddit

If you don’t know already – Redditors hate you. They’re very sensitive to any kind of promotion and are looking for the smallest opportunity to ridicule your manhood with sarcastic comments.

Here’s how to do Reddit better:

  1. Write an excellent content piece.
  2. Post it on Reddit. You have to publish your best content inline, i.e., as a text post, not an external link.
  3. Get your friends to upvote your posts to get a little bit of initial traction. Important: do not send them to the exact post URL (deep-linking) as you risk getting shadow-banned. Send them to the Subreddit instead and make them find your post and upvote it from there.
  4. Don’t be discouraged and don’t get in confrontations if you meet an angry Redditor.
  5. Recycle your post and publish it in different subreddits. I had the exact same post get 0 upvotes in one subreddit and 124 in another. Be careful not to overdo this! I’d say no more than 3-4 subreddits and do it gradually - 1 per day. Republishing your post on too many subreddits will get you banned (don’t ask me but I know.)

Using these steps, I managed to beat my personal record on Reddit and got a post with over a 100 upvotes, 50 comments, and a solid 9.40% email subscribers CR.

Launch the eBook on ProductHunt

By the time, I launched my outreach marketing eBook on ProductHunt I had already collected about 400-500 email subscribers.

I sent them a quick email to review my eBook on PH (instead of upvoting it):

Books get much less attention on PH than products, but that’s also a good opportunity to stand out and become a number one book for the day.

This was a neat move that generated a couple of hundred pre-launch leads more.

BetaList

Posting HeadReach on BetaList resulted in a few hundred subscribers for the HeadReach beta.

These days I’m not a huge fan of BetaList. We’ve submitted a couple of other products on their site but never really got any good leads from there. It felt like most of the leads are curious startup guys who don’t have a business. Unless your audience is startup guys, you might be better looking to pre-launch somewhere else.

Facebook

Facebook was the second channel with the most views to the HeadReach website when pre-launching. Majority of the Facebook views came through Facebook groups.

Facebook is a channel that I’ll be heavily relying on when pre-launching Encharge, as well.

Building HeadReach

After the traction from our pre-launch campaign – about 1500 emails in total at 25% landing page CR – we got down to developing the product.

My co-founder put together a development roadmap:

We spent the next few months trying to build the tool we promised.

April 2016

April was spent mostly looking for someone to help us with development. Finding a suitable developer in our country proved to be quite hard. We even tried UpWork.

Tip on using UpWork when hiring people: make sure to avoid agencies. Freelancers are generally cheaper than agencies, but often it’s hard to tell them apart on UpWork.

In the end, we managed to attract my former co-founder who is an also great dev, although with a colorful personality that I’d describe as anything short of scandalous. Without diving into too many details, I’ll say that he was living in a religious sect at the time of this story.

Mistake from that month: Not having enough focus
We were building too many features. Even on that roadmap, you can see a whole set of 6 features. We should’ve focused merely on feature #1.

Expenses from that month:
$101

Mostly marketing expenses for marketing the eBook and having the email list:

  • Gleam.io
  • ActiveCampaign
  • Yumpu eBook preview
  • Hosting
  • MXToolBox (blacklisting monitoring)
  • Quoo (content promotion)

May 2016

May was a bit weird. We’ve been 1 month into building HeadReach, but my co-founder was still running our previous business.

Although we had saved $10k for getting HeadReach of the ground, we were afraid to close our previous business, yet.

Juggling between 2 projects is tough. If I had to re-do this again, I would’ve turned off the light of our previous business much sooner.

Expenses for that month:
$683. The first expense for a development contractor.

June 2016

We dedicated June to VC and angel investors. We were pondering with the idea of finding external funding to help us with developing HeadReach faster.

We got rejected by 10 different accelerators.

I won’t go into too much detail as this topic is worthy of having its own article, but investors weren’t a good match for us anyway. We pretty much lost that month going for the wrong thing.

Expenses for the month:
$481

Trying to pre-sell HeadReach

July 2016

With a demo video of our scrappy prototype, I started showing HeadReach to a small number of early adopters, the loudest and most vested ones. I didn’t want to blast the whole email list as we weren’t sure if what we’re showing is relevant. We didn’t have an account or billing systems set up, but I was fiercely doing my best to pre-sell the product.

Unfortunately, we never obtained the fruition of our hopes with our pre-selling efforts. We didn’t get a single pre-order.

With our pre-selling hopes crushed we got back to building the product.

A solution pivot

August 2016

From March 2016 up until our public launch in November 2016 we were building the product. And when I say building, I mean we spent 80% of our time figuring out HOW to build it.

Lead generation is a tough field to get into. Scrapping large volumes of data from locked-in sources like LinkedIn is reserved only for the savviest and most financially favored companies. We were neither of those.

We were forced to make a significant product or “solution” pivot — we had to dramatically limit the feature set of HeadReach to only finding contacts of prospects. That was the only way we could get this thing off the ground.

A pivot is a “structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth.”

Types of pivots:

You can read more about the startup pivot pyramid here.

First product feedback

September 2016

In September we had a product demo for HeadReach, but it was so bad that even the core features were barely working.

To make matters worse, at this point our pre-launch leads were getting very cold. If there is one thing I learned about nurturing leads is that you should keep them warm by sending at least one email every week or more often.

No communication with your leads in 3 months, and you can consider your email list dead.

To figure out how to position our future beta and better segment and orchestrate the beta invites, we’ve put together a survey. A great thing about the surveys in Iterate is they record the answers even when someone leaves the survey un-submitted.

The survey was also helpful to identify sales messages to use in my communication with potential clients. I’m literary using answers from the survey in the copy of my landing pages.

For example:

Would become our final USP:

Why think about sales copy when your clients can write it up for you?

Without wasting too much time I showed the first demo of the tool and emailed 15 early adopters:

https://www.youtube.com/watch?v=zXfqV1V16xQ

Results from the first product demo

Almost 5 months after we decided to develop HeadReach and we finally received some good feedback and some strong signals from people interested in buying the tool:

We continued developing the product.

Closed Beta launch

October 2016

Around October 2016 we had some sort of a working closed beta with a basic account system set up on WordPress and WooCommerce. Pretty unconventional setup for a SaaS but it was the fastest way to market for us. As I look back, I wouldn’t recommend it unless it’s necessary.

Initial feedback

I’ve sent an invite to a small number of selected early adopters asking them to try the tool.

Responses came in quite fast.

It wasn’t what we expected. People were divided evenly between two camps, both with equally bad feedback.

The first group complained that the software was simply not working, which was not a surprise. That first version of HeadReach was terribly buggy and under-developed.

The second group was disappointed that the product is not what we’ve promised in the pre-launch campaign. I.e., not very happy with our solution pivot.

It was terrible. Our closed beta was a fail. No one became a paying subscriber.

We didn’t know what we got wrong.

With 1500+ leads and zero paying customers for our Beta, we were really up the creek. We were desperate for a breakthrough in our market or the technology.

A breakthrough

There’s a limit on the number of characters in this posts (32k characters)… so I had to to cut the post in half :confused: Sorry…

But you can read the rest of the story on my original post here.
Hope you find it useful!