1,783 karma · joined December 1, 2010
I still remember the day I walked into Brian Smith's office in late 2010, at what would be my last corporate job, and he started talking to me about how we needed to start working on our own passive-income businesses, "like this patio11 guy on Hacker News." Your openness and transparency empowered me to pursue the path that I began pursuing back then. Without your transparency, I can't imagine how I would have found my way from that corporate gig to where I find myself today.
Thanks also for your willingness to work with us early on when we had to do special feature development to support your use-case. Those features ended up being a differentiator for us and helped us snag some really valuable clients since, and I'm not sure those businesses would have been so patient waiting for us.
Thanks again!
Over two years ago I was working on Stripe web hook emails for a client and spending way too much time tuning, tweaking, and maintaining them. Every little improvement was yielding even greater conversion rates and more money in the bank. At that point, I suggested that instead of paying me so much to maintain the in-house dunning system on their behalf, I could create a service that did the same thing but better, and charge them $200/mo instead. The plan was to subsidize the cost of development by selling the product to friends who were having the same problem. I've been working on it and growing it ever since.
I'm really proud of some of the incredible companies and brands I've had the opportunity to work with in the last two years, (some of them are listed on the new product homepage,) but I'm also really pleased to now be able to put the product into the hands of Matt, Joelle, and Ken and let them take it's growth from this point forward.
Happy to answer any questions anyone may have!
For anyone interested in digging in deeper on some of the lessons we've learned, I posted a bunch of thoughts on Quora earlier this year: http://qr.ae/RFWy23 . Otherwise, feel free to reach out to me directly at andrew@churnbuster.io .
(I think the advantage this approach has over the one you've suggested is that the product is always capable of making money even from the very beginning, just on a smaller scale at first. I think this is a critical feedback mechanism so that folks know whether what they're developing is actually useful to folks.)
Jay, if you're around on this thread, I'd love to hear what sort of questions you were fielding from Naval.
And while we're at it, it also needs to treat any stains, otherwise you may make them worse. :-)
Just as a heads up, on Roo's landing page there is one screenshot has a typo on the button. "Rread More." :-)
Very clever of you to think to email customers before their credit card expires. :-) We had the same idea and it was a feature in the original release of our product, but after several months we actually found that only about 30% of cards set to expire actually started failing payments within two months of hitting the expiration date, and after two months failure rates just return to normal. So, even with a healthy 50% conversion rate on the email campaign, we were only retaining about 1.5 customers per 10 that we sent 3 emails to. Furthermore, the email notifications to the customers who very likely didn't need to receive the email were triggering cancelations from some customers as they re-evaluated their purchasing decision in front of a "you owe us money!" email instead of a sales page promoting the benefits they're receiving. :-) For that reason, we no longer send out these emails by default. There are still some businesses where this makes sense, but they're definitely the rare exception and not the rule.
Furthermore, we found that a very decent chunk of failed payments (maybe 15-30%?) will sort themselves out automatically with no intervention if you just try them a few times over a few days. Again, no need to email these customers and waste their time unless there is a time sensitive delivery that needs to go out or something similar.
So, for those two reasons we choose to wait until the third failed payment attempt before we start emailing the customer. But once we hit that third failed payment attempt, we really go to town trying to get in touch with the customer and get them current. We've got all sorts or tricks up our sleeves for this, including a real person with a great British accent who will call customers on the phone.
Happy to answer any questions you or anyone else may have about solving this problem. It really isn't something many subscription service providers think about when they're building their business. Feel free to reach out any time at andrew@churnbuster.io .
As for the "not signed in for months" part, I recommend you not assume someone wants to cancel their account just because they haven't signed into the service in months and their payment information randomly goes bad. Let them tell you this. Depending on the service you provide, people may use it seasonally, but pay each month for you to keep their data on hand. (I've used Basecamp this way before, although now they let you pause your account for up to 6 months.) Sometimes people use services that are "set it and forget it" where the user doesn't actually need to sign into the service to receive value from it. The absolute worst would be for a customer of any type of service to have their account closed for non-payment with no notice whatsoever.
That's really just the tip of the iceberg for thoughts that we've got on this subject, so feel free to reply or email me at andrew@churnbuster.io if you've got any other questions.
As the author of the Koudoku gem[1] that Pete mentions, I'd encourage people familiar with it to keep a close eye on Payola as well. Given Pete's technical excellence, great implementation choices, and broad experience with different types of Stripe integrations (my primary interest has been SaaS products,) Payola could very well supersede Koudoku when he tackles the subscription side of things.
On the email side, we've got a lot of optimizations and reporting baked into our service that most folks would find too difficult or time consuming to implement and maintain if they were doing this on their own. As a result, even folks who already had a standard "email customer when payment fails" webhooks implementation get much better results using Churn Buster. (For example, https://twitter.com/citadelgrad/status/499015554209185792 .) They also completely eliminate their administrative overhead and relating to failed payments. :-)
I hope you'll take us for a spin! Email me at andrew@churnbuster.io if you've got any questions or if you'd like to schedule a Skype call to talk about it.
Normally you'd expect Churn Buster to implement this background behind-the-scenes card account updating itself, but the reason we don't is that the trend and expectation in the industry is, or is becoming, that the actual payment gateway themselves provide this service, because they're by far in the best position to do it at scale. For example, Braintree already does this and I think you'll see more and more payment providers doing it down the road, including Stripe. (I could be wrong, but I don't think so.)
The best possible “last job” to have before doing independent consulting is at a consulting firm that doesn’t just do staff augmentation. You'll learn almost everything you need to here that will help you avoid major mistakes in your own business. Don’t do anything shady here (e.g. stealing clients, etc.) and when you’re ready to leave, leave on good terms. (My old boss and I are still friends, we travel together, and he was the first customer for my SaaS product.)
Whether you work for a consulting company or not, you’re ready to leave when you’ve got two contracts from other developer friends who have too much work and want to refer some leads to someone who can help them. One of your initial contracts should be for a long-term engagement, as this helps manage your cash-flow risk. If you’re working for a consulting company, I can’t recommend you work on your own contracts at the same time… but I think you’re in the clear if you’re lining them up and you make a clear break from one to the other.
To leave your company on good terms and potentially gain a valuable source of work, you can offer to contract yourself back to the consulting company you already work for at whatever rate they typically pay outside contractors. (For the consulting company I left, this was $95/hour, which was the lowest rate I was willing to take at the time and only for contracts that were very advantageous to my business, e.g. regular, long-term work.) This can really help them if you were a "rock star" and were keeping important clients very happy.
If your pipeline is a little weak through word of mouth, reach out to consulting companies and agencies to see if they need any help on the deals they’re closing. This is easier for them than hiring new people especially if they’re not sure demand will keep up.
If your first track is a long-term engagement, increase your rate on every new project on the second track by at least $25/hour. You may find that people stop saying yes at a certain point, so maybe you level off there for a bit. However, if you don’t force this rate increase every time you have an opportunity, you’re really selling yourself short. Again, my lowest rate when I started in July 2012 was $95/hour. By the time I stopped taking new consulting clients, I was comfortably charging $200/hour and people were still saying yes at $300/hour.
Schedule three annual vacations right off the bat, one of them within the first few months of consulting and make sure you take it and disconnect. These are the recurring litmus test whether your business is actually optimized for happiness and whether you're really putting family first if you've got one.
Here's my favorite part: If you completely fail at this, it's no big deal. You're going to fall back into a safety net of regular full-time employment where you're still in ridiculous demand. The worse possible outcome for your business is everyone else's definition of success.
My recommendation is this: If you're currently salaried, find out how to become an independent consultant to free yourself from full-time employment. If you do this wrong, it's worse than full-time employment. If you do it right, you'll make the same amount of money working half as many hours.
From there, identify pain points that still exist across multiple clients or leverage some insight you have into an industry you've worked in to create a business-to-business software-as-a-service product that generates recurring revenue.
It may take a couple years to figure it all out, but I have no doubt you can eventually launch a product that is bringing in the £4166.67 a month you want to save £1,000,000 over 20 years while also doing 20 hours a week in consulting if you still need that to cover your ongoing expenses. (I know a serious lifehacker who has that number down to 5 hours a week with a spouse and two kids, and he doesn't have a SaaS product yet. They're currently driving around the U.S. in an R.V. on a hunt for their perfect town to live in.) That would be on the low end of success in this space. It's also quite likely, you'll make much more in monthly recurring revenue and you can get out of consulting entirely if that's what you want to do.
There are a handful of people who have done this one way or another who are super open and transparent about it, which may be really helpful for you and other people who are interested in doing the same. A couple that come to mind are Patrick McKenzie and recently Josh Pigford. However, if you connect personally with other people who are doing this in chat rooms and such, you'll find that many people are quite open and willing to share numbers, tactics, advice, etc. if they feel it will help someone drum up confidence and help guide them along the way.
I think the first step is transitioning from full-time employment to consulting, because then you can scale your time commitment to people paying you up and down as you need to in order to build your business. And you never have to kick the coffee and wine habit you enjoy... just do another hour of work every two weeks.
I read Exploding The Phone[1] last summer and I couldn't put it down. The first couple chapters are great for putting in perspective how amazing and novel this new network was to people vs. the way they communicated before. The rest of the book catalogs some great profiles of different (and some pretty famous) people who were drawn to tinkering with the system for various reasons. Some are outright criminals and some of them are like many of those in the HN crowd, just without such overwhelmingly accessible general computing, networking, and open-source software to build with.
I grew up just on the tail end of any sort of telephone hacking and exploration that was still going on and watched as BBSes were eventually made obsolete by the Internet. Reading the book was a really nostalgic experience and put me in touch with a lot of great memories while also allowing me to be thankful for the new opportunities to tinker and hack that are available to us these days, really at a much higher level.