As of this month, we’ve now been working on Outseta for 3 years. While our regular company updates focus largely on product updates, this one is intended to pull back the curtain and provide some insight into how much it costs to build a modern SaaS business, how we’ve allocated equity amongst our team, and what we’ve done from a marketing perspective to grow our user base. Our strategy across these dimensions has been singularly focused on building a company that’s lean, healthy, and sustainable.
Dave, Dimitris, and myself have yet to pay ourselves any salary and continue to earn sweat equity in Outseta based on the time we’ve invested in building the business. Our lead designer, James, earns a combination of cash and equity for his time spent working on the company.
You can see where we ended 2019 from an equity allocation standpoint below—Dimitris and Dave both own about a 35% stake in Outseta, my own is around 28%, and James’ is just north of 2%.
It’s cheaper than ever before to build software—3 years into building Outseta, we’ve spent $66,326 on the business. Our biggest expense, consulting services, is the salary we pay James for design work. Forte fees are payment processing expenses that have grown significantly over 2018 as we’ve processed more subscription payments. Finally, we increased our marketing spend in 2019 by testing some paid advertising channels, attending MicroConf for the first time, and sponsoring Indie Hackers meetups.
Collectively we’re really happy that we’ve been able to bring such a robust software product to market over the past three years for such a relatively small sum. Of course this is only possible because we aren’t paying ourselves any salary—if we value our time at $100 per hour and tally up all of the time and money we’ve invested into the business, the cost of building Outseta over the past three years comes to $1,157,000.
I think this is a really interesting figure because Outseta is a much more robust product (it’s essentially 3-4 different software products) than your typical SaaS app. Needless to say, this is strong evidence that you don’t need millions and millions of dollars in venture capital to build a large scale SaaS application.
Just as in 2018, our marketing strategy in 2019 focused primarily on “free” customer acquisition channels—mainly email prospecting and content marketing. About 75% of our new account sign-ups find us after reading content that we’ve published.
The growth that we’ve realized in website traffic and account sign-ups has happened very organically—we’re continuing to focus on customer success first, unit economics second, and then growth. With over 500 new account sign-ups in 2019 we focused on working with this cohort of companies to incorporate their feedback and make them successful with our product. We also have some strong early indicators on the unit economics side—we spent $11,650 on marketing in 2019 which generated 548 leads for an average cost per lead of $21.25. While it’s premature for us to calculate a meaningful customer lifetime value, we think this cost per account sign-up bodes really well for the future.
Content marketing and email prospecting aside, we did add some new elements to our marketing strategy in 2019.
In May we joined Stripe’s Partner program, and almost immediately this became one of our better sources of leads. Outseta is now recommended as part of Stripe’s sign-up workflow for new customers that want to work with a Stripe Partner rather than directly with Stripe’s API. We also launched a new version of our home page specifically to better serve traffic coming from Stripe.
In 2019 we sponsored Indie Hackers meetups in Barcelona, Melbourne, San Francisco, Austin, Toronto, Vancouver, Victoria, British Columbia, Brighton, England, and Lagos, Nigeria.
I joined a number of online communities that are rich in SaaS founders. They include:
It’s worth noting that I’m not doing any direct marketing or selling of Outseta in these groups, but just by having a presence, sharing content, and trying to be helpful to other groups members a number of good sales opportunities have come our way.
Here’s a look at where our new account sign-ups have come from as we’ve focused on these marketing channels.
As a product, Outseta matured significantly in 2019 and we started to get “Wow, this is exactly what I need” reactions from early stage SaaS founders who evaluated to product. In 2020, we’ll continue to take our existing product functionality a bit deeper and continue to focus on removing roadblocks from the onboarding process to get customers setup for success as efficiently as possible. We also plan to gently accelerate investments in growth at a pace that’s healthy and sustainable—reaching profitability is well within our sights.
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