Bootstrapping To $1M ARR By Building Something I Needed
Hello! Who are you and what business did you start?
Hi everyone, my name is Mark Thompson and I am the co-founder of PayKickstart. I started the company back in 2016, completely bootstrapped, in order to create a better way for businesses to sell online.
Our flagship product, PayKickstart, is unique shopping cart and affiliate management solution, which helps subscription-based businesses, accept payment, maximize recurring revenue, and increase customer lifetime value.
We’ve recently broke $1MM in ARR and have doubled in size year-over-year.
What's your backstory and how did you come up with the idea?
Since becoming an online Entrepreneur back in 2009, I have created over 25 different digital products and sold over $20 million dollars of various training/coaching programs and software. Needless to say, I’ve learned a thing or two when it comes to selling online.
Over the past decade, I noticed that the solutions available to help me sell my products and power my businesses, were simply outdated, archaic and were not keeping up with the high standards customers have when purchasing something online.
Once you are willing to accept imperfection, it will help you get to market faster, be able to adapt quicker and ultimately build a thriving business.
After switching between four or five different shopping carts, we realized a common theme - lack of flexibility, minimal functionality and profit leaks everywhere! For example, we sell a variety of different types of software (SaaS, desktop) and training. For our SaaS products, we require an API that allows for flexible billing and checkout process. For our desktop apps, we require a licensing system to properly secure each install. For our training programs we required seamless integrations with membership services like Wishlist and FreshMember, to properly add a customer to the correct membership level. Not to mention, conversion boosting functinoality like 1-click upsells, order bumps, coupon code management, etc...
There is not a one size fits all when it comes to an ecommerce platform.
It’s how and why we even built PayKickstart in the first place - out of sheer necessity. In the early days, we didn’t even have a name for it. It was just our internal shopping cart to sell our various digital goods.
In the first two years of using our own solution, we increased our revenue by 30%. By cutting out per-transaction fees that previous shopping carts were charging, adding revenue-boosting functionality like order bumps, 1-click upsells and coupon management - it was like the training wheels came off our bike!
Before we knew it, we had colleagues, partners and influencers asking us “Hey! I just purchased your software and WHOA, I was blown away at the checkout experience. What are you using to do that?”. That was our “a-ha moment”!
The moment we knew that the frustrations surrounding selling online were real. That other online businesses were struggling to scale and grow because of the same challenges we faced years ago.
That’s when PayKickstart was born!
Lucky for us, we were able to reinvest a good chunk of our profits from other products we sold, back into turning PayKickstart from an internal solution, into a real business - a solution that other businesses could utilize. We also had a fantastic team of designers, developers and support staff surrounding us.
Take us through the process of designing, prototyping, and manufacturing your first product.
As you can see below, the system we started with and what it is today is night and day. The first iteration was literally just a way to add our products, set a price and create a checkout link.
It took approximately six months to build the first iteration of our internal shopping cart. Again, just the basics - checkout page functionality and payment gateway integration.
Then we started adding more functionality.
Coupon management. Affiliate tracking. 1-click upsells. Licensing. New checkout pages. 3rd party integrations (payment gateways, email auto-responders, fulfillment services, etc…). Each new feature provided more flexibility, more revenue, more profit.
We would average around one new feature per month. So it took around 2 additional years to get the platform to the point where we were self-sufficient (not relying on Infusionsoft to handle the affiliate tracking).
We used the platform internally for around 3 years before we opened it up to early beta vendors. The beta group tested the system for around 6 months - providing feedback, bugs and suggestions. After the core functionality was solid, we felt confident to open it up to the general public - this was around the end of 2016.
Describe the process of launching the business.
Given the fact that our solution dealt with the life-blood of businesses, their money. We had to be super cautious in the early stages. At first we invited around ten or so vendors that we knew to give PayKickstart a test-drive. Of course, that came with a huge warning that while we were using it to sell our own products and services, this platform was still in the early beta stages.
As the first ten starting using the system, we prepared our team to “be on high alert”, ready to take an influx of bugs and feature requests. Oh, and they did! Luckily for us, we had been building software for years and we were as best prepared as we could be - addressing the most critical bugs first and working our way down the list. Over the coming months, we started slowly inviting more and more vendors to start selling, using PayKickstart. With each new vendor, the core framework started to become bulletproof - increasing our confidence that we were ready to start scaling.
We started working on and launched the first iteration of the website. We created a webinar to introduce everyone to the platform and teach them the real business challenges it solved. Things were smooth sailing ...well...until our first big promotion to our internal email list. We had been getting great feedback from our initial vendors, however we overlooked one major thing - to get a business to switch from their existing shopping cart to ours, is not necessarily “easy”, especially if they have never heard of us before.
To help overcome the fear of switching, we make it easy for vendors to import/migrate their existing subscriptions over to PayKickstart. After the vendor connects their payment gateway, they can head to our Import Subscriptions area and map the existing subscriptions from the gateway into PayKickstart - literally taking 30 seconds to complete.
We also added live chat support to help new vendors get onboarding and migrated over to our system. This helped overcome any obstacles or challenges standing in the way with the migration process.
Our API also supports the ability to move your PayKickstart-powered subscription to another payment gateway, if the vendor feels that it is not the right solution for their business. This was another way to help remove the fear, knowing that if they ever needed to, they can access those subscriptions and move them to another platform.
We opened the pricing up at $99/mo for the Professional plan and $149 for the Premium plan. We also sold a $997 deal on a webinar, that would give them one full year of our Premium plan, plus a bunch of additional bonuses.
After gathering some feedback, we realized that many vendors wanted a lower priced plan so they could test the waters and get comfortable with PayKickstart before switching their entire business over. So in mid 2017 we added a $29/mo plan that had limited functionality.
Given that the platform has matured and evolved a lot since 2016, we are in the process of grandfathering in all of the existing vendors at their current pricing, however we will be doubling our pricing and adding thresholds for how much a vendor can process without receiving additional fees. This is meant to help generate expansion revenue, targeting larger power vendors who are processing a large volume of sales each month.
Since launch, what has worked to attract and retain customers?
It just goes to show you what focus, determination and the ability to overcome obstacles can do to your company. Since launching the site, we did whatever it took to get that initial customer base - private demos, podcast and video interviews, guest blog posts - you name it.
Using a cold email outreach sequence, we would send a three email sequence to people who use one of our integration partners (ie: email autoresponder, webinar service). In this email sequence we would request that they either sign up for the trial or schedule a time for a private call. Here is a look at one of our cold email outreach sequences that we send via MailShake.
Guest blog posts
We were confident that if we could build that initial customer base and provided over-the-top customer support - they would be our top brand ambassadors. And that’s what happened. While the initial group of 25-50 new vendors was small, it started a snowball effect. They started telling their friends. Their friends started telling their friends. Now we had something we didn’t have before - social proof!
I felt one thing we have always done extremely well, has been listening to our customer base. If you’ve ever created a piece of software before, you realize it is never perfect. It’s like a living organism - it’s always evolving. Each and every month we could continue to add new features our customers wanted. Which meant that each and every month, our platform was getting stronger and stronger.
How are you doing today and what does the future look like?
Fast forward to today, we currently are right around breakeven. The majority of our expense has been in development (with 8 full time developers) and on infrastructure (server resources, PCI compliance/security).
While our YoY growth has doubled each year, our biggest challenge we currently face has been churn. At first, our focus was on finding product market fit, however while we were signing up a fair number of new vendors, we noticed many were not sticking around.
Churn originally started around 25%, however we have started implementing a number of things to combat churn.
#1. Quick Start Guides
Vendors can download this quick start guide, that is a series of screenshots and explanations on how to add your products into PayKickstart and start selling
#2. 14 Day Bootcamp
The 14-day bootcamp sends the vendor one email each day during the free trial. Each day provides a new training video, walking through a different part of the platform.
#3. Knowledge base
We also made the Knowledgebase articles more accessible. Instead of going right to our live chat agent, which was bogging down our support resources, we first nudge them to try and find a KB article first before contacting us.
By adding these three support resources, we have been able to reduce churn to around 17%.
While that number has improved, it is nowhere near where we want it - ideally close to 3% is our goal.
Another challenge we have faced is our free trial to paying customer percentage has been low, around 40%. We would like to get that up to at least 60%.
We are in the process of revamping the entire website and UI experience. Over the past three years, the platform has evolved a lot. We’ve been adding new features and functionality that our users want, which has lead to the UI getting bulky and overwhelming for new users specifically.
We’ve broke the revamp up into four core areas:
#1. The Website
We are restructuring the website hierarchy and navigation to make it easier for prospects to better understand, exactly what we do and who we serve.
#2. The Free Trial Flow
Currently, we require a credit card on file to sign-up, however the new free trial flow will not require a credit card on file (more on this in the next point). Our goal here was to remove as many barriers as possible and get them inside the app and selling as quickly as possible.
#3. The In-App Onboarding Experience
Part of the reason our churn is so high, as been new vendors getting confused as to where they needed to go first to get their products added and start selling. Immediately after sign-up, we are implementing a new in-app onboarding experience that will walk them through three key steps they need to take, to start selling. This experience will help get them to what we call “first value”. We’re confident that once a new vendor makes their first sale, they will see the tremendous value PayKickstart brings to their business.
Included with our new in-app onboarding experience will be a hyper targeted email sequence, which will dynamically nudge them along the onboarding flow if they fall out.
#4. New App User-Interface
As I mentioned previously, we continued to add new features and functionality. This lead to new options getting thrown in random places inside the app. We have taken a step back and completely redesigned the platform from the ground up.
Before we did this though, we went on a fact finding mission, surveying all of the users to find out what they liked and more importantly, what they didn’t like about the platform. Where could we improve? What areas were confusing? This was our blueprint for what areas we needed to focus on.
With three years worth of data and customer feedback, we are hoping that this four-part plan will introduce a new era for the business and the platform. Our goal is to resolve the churn issue ASAP, so that we can then ramp up lead generation and other sales related initiatives.
Through starting the business, have you learned anything particularly helpful or advantageous?
For every software business, there is always the ongoing battle between sales/marketing and development.
The sales/marketing guys want things done yesterday and the development team wants to ensure the stability and security of the platform before going “feature happy”. This leads to longer ETAs on the development roadmap and how quickly you can get to market with new ideas.
We’ve learned that the stability of our infrastructure is always priority number one. While new feature requests seem to be endless, we understand we simply cannot accommodate all of them. This is why we have learned to better prioritize new requests and focus on the high priority, high impact features.
Obsess over your target audience. You would be amazed how many people want to start a business, without even understanding who their target audience is.
We’ve also learned that new features at some point needs to take a back seat, if the user experience is flawed. If you cannot get your customer to first value or if you fail to properly identify the target audience you are after, it kills your LTV of a customer.
One aspect of our business that has contributed to immediately social proof and building our footprint online has been a focus on review sites like Capterra, G2 Crowd and FinancesOnline. We recently ran a campaign where a customer would receive a $25 Amazon gift card if they left a review on our Capterra profile. We found that the traffic to these review sites is extremely high quality with buyer intent. They obviously are shopping around and researching your company and the competition. This is an ongoing effort of ours, to continuously build up our reviews on many of the top review sites.
A situation that has sidetracked the progress of the platform, have been the new laws and legislation that have passed recently, particularly in the EU countries. Things like GDPR, SCA, and PCI Compliance are things not only we need to address, but every online shopping cart has to. Even though its added resources on our part to ensure we are compliance, I think it will help ensure the buyers information and data is safe and secure.
What platform/tools do you use for your business?
At PayKickstart, we have tried to minimize the number of tools we use to run our business. If there isn’t a specific reason or purpose for a tool, we get rid of it.
As you can assume, we use PayKickstart to handle everything related to our checkout process and affiliate management. We use ClickFunnels and OptimizePress to create our front-facing sales and landing pages. We process payments with PayPal and Stripe. Our help desk is powered by FreshDesk, with Intercom as our live chat and in-app notification system. We love Jira, as our project management solution. We use Hubstaff as our time tracking/employee management solution. AWS and Github for our code management. And that’s really about it.
What have been the most influential books, podcasts, or other resources?
I would say the handful of books that have served as a bible for the way I manage and run my business today would have to be The Lean Startup by Eric Ries, Zero to One by Peter Thiel and Good to Great by Jim Collins.
These books have provided the framework for not only how to build a sustainable, long term business but how to avoid many of the mistakes and the reasons why the majority of startups fail.
Advice for other entrepreneurs who want to get started or are just starting out?
It feels like every week, I have someone coming up to me for some type of advice or wisdom for how they can get started. Usually my suggestions are the same…
Do something you’re passionate about.
Starting any business is NOT easy (or everyone would do it, right?). There will be challenges and bumps along the way and unless you are truly passionate about your industry and business, you won’t have the perseverance to overcome those obstacles that get in your way.
Obsess over your target audience.
You would be amazed how many people want to start a business, without even understanding who their target audience is. Knowing your customer personas is critical, as it drives almost every decision you make along your journey.
Take imperfect action.
Most Entrepreneurs have the tendency for everything to be perfect. This leads to a tremendous amount of wasted energy and time. Once you are willing to accept imperfection, it will help you get to market faster, be able to adapt quicker and ultimately build a thriving business.
Are you looking to hire for certain positions right now?
We are always looking for hungry, driven individuals to join our team.
If you are a developer, sales professional, have experience in quality assurance or support feel free to submit your resume to [email protected] and we are happy to review it and see if there is a good fit.
Please provide a two minute video introduction that explains more about who you are and why you are excited about the potential opportunity.
Where can we go to learn more?
There are a few places you can go to learn more about myself and PayKickstart.
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