Listen Up! IH – Episode 17
“It takes way longer than you think, and it’s worth it if you keep going.”
That’s Nathan Barry’s advice for aspiring IndieHackers.
As of today, ConvertKit makes **$28.3M in Annual Recurring Revenue.**
Their tag line is – “Whatever you make, make it known with ConvertKit”.
And Nathan has made his journey known to the world right from day one.
He has been “working in public” long before #BuildInPublic was a trend.
ConvertKit is an “open startup” and for the last 8 years, its numbers, such as revenue and churn rate, have been available publicly for all to see.
Nathan has also written extensively on his blog about the wins and losses during his journey of building a profitable SaaS company.
He thinks of #BuildInPublic as a mission more than a marketing strategy.
Back in May 2021, Nathan was interviewed on the IndieHackers podcast by Courtland Allen.
They discussed why he builds in public, his idea that a company can only have 4 value propositions, and how ConvertKit positions itself in a crowded market.
The Building In Public Mission
Usually, bootstrapped companies stop sharing their numbers publicly after they hit the $1M revenue mark.
At that stage, #BuildInPublic becomes more of a disadvantage than an advantage. They are giving away too much information to their competitors.
This one-sided flow of data can do more harm than good.
Nathan Barry knows this, but he still shares ConvertKit’s numbers publicly.
On its baremetrics page, I can find business-critical information like –
- ConvertKit’s Average Revenue Per User (ARPU) is $64;
- They have 36,634 active customers;
- Their new subscriptions are down 8% Year on Year;
- Their Monthly Recurring Revenue is up 0.8% YoY.
There is a Livestream of up to 22 parameters that anybody in the world can track, including their competitors.
But for Nathan, sharing these numbers openly is about leaving a trail of breadcrumbs for later entrepreneurs to follow.
Any new bootstrapper would love to check out this information, especially the fact that 4 months in, ConvertKit was doing $2500 MRR.
But 15 months into ConvertKit’s journey, revenue actually declined to $1300 MRR.
At the time, Nathan was finding it hard to grow ConvertKit.
A friend even advised him to shut the company down. (read the full story of the first 2 years of ConvertKit’s journey in this older IndieHackers interview)
Nathan’s ability to push through those points and emerge to a point today where the company is doing over $2M MRR is inspirational for all Indie Hackers.
It gives them hope and strength during tough times.
Nathan builds in public as a mission to help other founders.
This is how he describes it –
” For us, our mission at ConvertKit is to help creators earn a living. Partially that’s in building the software that we build, the training, education, everything else. But I think of it as being able to leave, our public metrics are leaving breadcrumbs for every other founder who will follow us.”
For new founders, data is easily available for very early-stage companies who are building in public.
Data is also available publicly for really big companies which are publicly traded, like Salesforce or Shopify.
You can look at Shopify’s SEC filings if you wanted to, but they won’t help you much in starting your own SaaS company.
But no data is available for companies that are in the middle, which are neither too small nor too big.
ConvertKit wants to fill that gap.
So should YOU Build In Public?
We all know the benefits of Building In Public.
Social Proof, accountability, and building an audience – a marketing strategy to get your initial users.
But according to Nathan, it’s not worth it if you are doing it for those reasons, it’s too much effort without enough returns.
This is his view on it –
“I would not recommend that companies share their numbers publicly unless you’re doing it for a mission perspective.”
In fact, on the baremetrics’ open startups page, ConvertKit is the largest company that’s sharing its number openly.
Every other company is doing a fraction of its revenue.
Indie Hacker Arvid Kahl has written a detailed analysis of why companies stop sharing their numbers publicly once they get big.
It’s a must-read post if you’re planning to #BuildInPublic for the long term - Too Many Eyes
Only 4 Value Props
According to a Harvard Business Review article, there are only 4 value propositions that work for companies and benefits customers.
- Best Quality
- Best bang for the buck
- Luxury and aspiration
When Nathan was wondering where ConvertKit fit in this model, he tweeted about it and got interesting answers.
Funnily enough, Chipotle fits all 4 value propositions.
But what value props does ConvertKit have?
Nathan is quick to admit that ConvertKit cannot be a “Must Have” product purely because of the industry it operates in.
There are plenty of email marketing companies in the industry, many of them much cheaper than ConvertKit.
Nathan wants to hit the “Best Quality” and “Aspirational” value proposition, and definitely not the “best bang for buck” value prop.
ConvertKit’s paid plans start at $29 a month, which is expensive compared to Mailchimp that starts at $10 a month and also has a more generous free plan.
But Nathan believes that when you’re going for the best quality, you shouldn’t worry about being a little expensive.
Positioning ConvertKit in a crowded market
ConvertKit positions itself as “your favorite creator’s favorite marketing tool”.
That’s the aspirational part of the value proposition.
They recently acquired FanBridge, a Fan Relationship Management (FRM) platform, to gain market share in the “email marketing for musicians” industry.
They moved from the 4th spot to the 3rd spot in that space after this acquisition. With only Mailchimp and SalesForce ahead of them now.
They feel people’s favorite creators are musicians, and if many popular musicians use ConvertKit to send emails to their fans then that strengthens their position as being the “favorite marketing tool of your favorite creator.”
Another interesting way Nathan positions ConvertKit is that they want to become the guide instead of the hero.
They want to be Yoda instead of Luke Skywalker.
A lot of companies miss out by positioning themselves as the hero, while in fact, they will benefit more if they made their customer the hero.
Substack is an email solution that falls for this.
Almost all Substack publications look and feel the same.
There are so few customization options that you feel like Substack is the hero of the story, and the writer is just a sidekick.
Being a guide can be a useful north star for SaaS companies.
2 good questions all Indie Hackers should ask themselves-
- What Value Proposition does your company provide? Where does it fit in the 4 Value Props model?
- Are you the Guide or the Hero in your customer’s journey?
Advice to Indie Hackers
Nathan’s advice to Indie Hackers is not to give up too early, have the patience to enjoy the fruits of compounding –
“I think the biggest thing is that it takes a long time. When you look at compound growth of any kind, you have to give it enough years for it to compound.”
“The thing that most founders end up doing is that they ended up selling early, moving onto the next project, giving up too soon”
“it takes way longer than you think, and it’s worth it if you keep going.”
- How Small Actions Lead to Compound Gains | Indie Hackers – The podcast that inspired this post
- The Story of ConvertKit: From $0 to $968,000 in Monthly Revenue | Indie Hackers
- Ladders of Wealth Creation by Nathan Barry – The roadmap to building wealth, from info product to SaaS empire.
- The Web App Challenge – How ConvertKit started as a public challenge back in 2012.
- There and back again: the story of renaming ConvertKit – Story of a failed rebrand that cost them $500K
- Too Many Eyes: Why Bootstrapped Companies Stop Being Transparent (Eventually) | Arvid Kahl
- Value Propositions That Work | HBR
- The Open Startups Initiative | Josh Pigford | Baremetrics
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Thanks to Seth King for editing this post