Welcome to another monthly income report.
You can find all my income reports here: http://www.it-engelhardt.de/income-reports/.
November was a great month and I will be hard pushed to keep my MRR level. I already see some people churn and have to find a way to stop that.
Before I get into the details here are a few things I want you to know about my income reports:
- I publish income reports for two reasons: a) Accountability helps me push forward. b) I know that most of us compare ourselves to “famous” people like Patrick McKenzie, Brennan Dunn, Nathan Barry and others. I am no stranger to that and it is hard to feel good comparing yourself to them. Well, compare yourself to me and you’ll feel better instantly
- I will only cover what I make from LinksSpy – no consulting, no day job
- I am terrible at accounting – so most numbers (especially expenses) are not 100% accurate.
- I have an agreement with Nathan Powell of nusii.com that I will stop income reports by the time I hit $1,000,000 annual run rate. According to Nathan that should happen sometime in June 2015 – we’ll have to see about that.
Last Month’s Revenue
In October I had increased my MRR to $593.50 from 22 customers. It was a month of great growth (~ 85% over the previous month), mainly due to a great blog post I had published in September.
At the end of October I attended MicroConf Europe in Prague (I took some notes for you to indulge in) where LinksSpy was promoted by one of the speakers and subsequently ended up on ProductHunt. That drove a load of signups that were still in trial at the end of October.
This Month’s Revenue
Of the 50+ signups “only” 24 ended up converting to paying customers. That conversion rate is slightly lower than what I usually see, but that is to be expected considering the audience. People on ProductHunt like to try out things – that doesn’t mean they actually have use for a service like LinksSpy.
Those new customers brought LinksSpy up to $1392 MRR from 46 customers, which equals a whooping 134% increase in revenue.
OK, just kidding. But that is fricking amazing! And this time I think all that growth is NOT because of a software bug – yay!
Here’s a nice MRR growth graph taken from FirstOfficer.io:
That looks satisfying
Due to the way LinksSpy is set up my costs are really low. It was one of my design goals to keep most things running on Heroku‘s free tier. This is partly because I’m really cheap and – more importantly – because I didn’t know how well LinksSpy would do and I was afraid of catastrophic failure.
- $36 to Heroku for database, SSL and Papertrail
- $53.87 in Stripe fees
- $49 for Drip
- $215 for one blog article per week – written by my content marketing genius (this is the average for one month of the weekly rate of $50)
- $116.92 for Retargeting with Perfect Audience
- $55 on FacebookAds
- $5 for email / Google Apps
- $618.4 for a developer (including hiring process/test project for 2 developers)
- $5 for a fiverr gig to design a picture for my Facebook ads
If I didn’t miss anything (which I probably did), the total costs were $1,154.19. YAY! The first month I spent more than $1,000…
For the time being, I don’t plan on making any profit from LinksSpy. I want to focus on growing it as fast and as big as possible, thus I’m re-investing everything back into LinksSpy.
LinksSpy made roughly $235 in profit this month. I already spent that on a new explanatory video for LinksSpy, which should hopefully be ready by christmas.
I didn’t make a ton of progress in November. At least it didn’t feel like it. But luckily I have my business journal (hat tip to Brennan Dunn), which tells me that I did quite a few things more:
- I hired a great developer (I think he’s better than me – so he’s a perfect hire)
- Refactored the backend, so it can handle the load from having 2x more customers
- Optimized Retargeting campaign: Moved to Facebook Sidebar ads, removing subscribers from target list, added conversion goals
- Added FAQs to the signup process and improved the design of the process
- I worked on building two new marketing assets (ultra mega hyper top secret ) to be released in December/January
- I added a drip email campaign for users in the trial phase
- I refactored the data export, which now supports more filters
Optimizing the retargeting campaign lowered the cost per click (CPC) from ~$25 per click to a CPC of just $1.79 – that’s an amazing improvement right there!
I don’t feel like the Facebook advertising is working right now, but I hope to figure this out eventually. I got a great head-start because a friend shared his targeting settings with me.
I am currently promoting the drip email campaign through the Facebook ads, which I think is the right strategy.
The hiring process for my developer took quite a bit of time (It was a 5 step process, including Skype interviews, live coding and test projects). Currently he is adding features to some open source gems I use, but eventually he will be contributing to the main LinksSpy application. He is working for 5 hours a week, which is about as much time as I invest into developing the application.
The marketing assets will hopefully help me to further grow LinksSpy.
What to Focus on Next Month
December is going to be a slow month: Christmas is going to take its toll – which is fine by me. I am looking forward to spending some time with my family and my wife.
I am trying to set up some customer interviews and see what my customers really need/want. I did one in November, which was really amazing and got me started on some ideas, but I need to hear other customers voicing the same problems before I actually go about implementing those ideas.
Additionally, I want to finish my two marketing assets. One is ready to ship as I am typing this report, but I still need to set up the marketing campaign for this.
The same can be said about the second marketing asset: It still needs a lot of work/content creation and I need to figure out which marketing I want to do for this for maximum effect.
Biggest takeaway: Remarketing on the display network sucks – big time. Facebook sidebar ads work much better for retargeting – at lest their CPC is 1/20 of the display network.
Other than that, I don’t have much insight this month. I just kept on doing a mixture of improving the application and some light marketing. Not enough marketing now that I think about it… I have to focus more on that.
November was out of this world. I thought that October was great, but November just blew that right out of the water.
I learned a few things and did some preparatory work for my marketing. Not bad overall, but nothing too exciting.
I am quite happy with where LinksSpy is right now – to be honest it has exceeded my wildest dreams. At the same time I feel anxious about everything: My guesstimate for churn is around 10-13% (law of small numbers), which means I need to get a lot of new customers to just keep my MRR level. That in turn makes me think I will fail horribly; I will disappoint everyone around me and be ridiculed forever.
Don’t get me wrong: I am grateful for where I am with LinksSpy now. I feel very lucky for having crossed the $1,000 MRR barrier with such ease. But at the same time I have to acknowledge the problems lying ahead of me. I need to find a way to reduce churn and I need to radically improve my marketing.
I have learned a lot – which was immensely fun. Nonetheless, I still have much more to learn. I need to understand my customers better and have to find a way to deliver more value more consistently. So stay tuned, this won’t be the last income report