VEED.IO has grown fast.
12 months ago we turned on our paywall and made our first ever SaaS $1.
For any entrepreneur, this is a moment that they will never forget. Tim and I could not control our excitement.
You achieved the impossible, there is light at the end of the tunnel and everything you have been dreaming about and working towards might come true!
Exactly 12 months after this first payment, we have managed to cross the seemingly impossible task of hitting $83,333 MRR / $1M ARR.
And the best part is we did it 100% self-funded, with no external funding.
In this post, I would like to share relevant financial data that might give other founders insights into how to build their own bootstrapped SaaS to $1M ARR.
I would also like to share some insights into our attitudes and believes that have got us to where we are. Such as our bullish attitude towards growth, how we build the product and how we think about the future of VEED.
The Numbers
First off, we are aware that we did this very fast and we also go lucky (I talk about this more below) From the outside, VEED might look like an overnight success, however it was 10 years in the making!
Before we look at the numbers, I would like to provide some context. When we started charging, we already had about 30,000 MAU. However, pretty much none of those users would speak to us and we were unsure that if we added the paywall any of the users would upgrade.
Growth starts slow, but having a product that is scalable and can we assessed globally from day one really means the sky is the limit. 6 months in, our projection for 1M ARR was December, then August and due to increasing demand influenced by the pandemic, we hit 1M ARR in June.
As you can see, the first $100K ARR took 171 days to reach and the following $100K took just 48 days. The reason why the 2nd was much quicker than the first is because we were learning from users and building the required product features. We were also learning more about our acquisition channels and were able to double down on them.
Although 171 days is not a very long period of time, turning up to the office and putting in 12 hours every day can be really draining. The stress of getting to profitability was really real. For bootstrapped startup, be aware that it can really take some time.
Like with anything with compounding growth your first 100K takes ages, but the next comes a lot quicker. It took 12 months for us to hit 1M ARR, however we are projected to hit 2M in just 4 months!
How to bootstrap to $1M ARR
Bootstrapping is hard work, but as you grow it gets a lot easier. The speed in which you grow makes a HUGE difference to the bootstrapping experience. You need to get the flywheel moving super fast to keep everyone motivated and to get you to ramen profitability.
6 months after our first-ever paid users, we reached $10K MRR. Although a relatively small sum, it was enough to support the founding team.
This is important as it means you can donate 100% of your time building and growing your product.
However, if it took 18 months to reach this goal, the market would have moved on, our attitudes towards the product would have changed and maybe we would have been disillusioned. Otherwise known as the "Long, Slow, SaaS Ramp of Death"
From our experience, there are three keys to successfully bootstrapping.
Your ideas at the core.
A common mistake I often see is founders building way too much!
Building any app is hard work. If you set out to build a fully-fledged product you might never finish and more importantly, you are not getting valuable feedback from your users to help shape your product.
Setting the bar too high will also delay your launch and also make responding to feedback much harder due to a bloated codebase and feature set.
After years of building VEED, we don't even think we are at version 1.0.
We believe the best thing to do is to build your MVP and get it out into the world as soon as possible. The first version of VEED had only 4 features, Trim, Crop, Draw and Text. There was no login, no accounts, just a simple web app. Looking back, I think we made way too much, we should have launched with just a really good crop tool.
After we saw that users were responding well to your app, we started building new features that they had requested. This kickstarted our build measure learn process. So you need to find the minimum set of features that represents your idea.
Validate your ideas fast.
When I first entered the startup world, I was under the impression that you needed a new and original idea. For many years I tried that approach with little to no success.
In my opinion, the best way to validate an idea is to look to see if this is a product people are already willing to pay for.
For example, I would feel comfortable that people are willing to pay for an email marketing tool. Why? Because Mailchimp has proven this for us!
This questions now is, how are you different or what subset of users do you believe they are undeserving?
For us at VEED, we knew people where the will to pay for video editing software (I know because I had an Adobe subscription myself). What we did differently is we just put it online and targeted, short-form content creators.
Why? Because we believe they were being underserved by legacy video editing platform. One of my fave tutors from art school once told me "An original idea is not something completely new, it just 10% different"
If it feels like you are pushing a boulder uphill and struggling to get traction, it might be time to move to the next idea. Seriously, the faster you can get to this realisation, the better. Don't let a "sunk cost" fallacy keep you working on the same idea.
Work out how to charge for your product early on.
Your funds will not last forever. We ran out of money before and had to go back to contract jobs. This ultimately set us back 6 months. To give your startup the best opportunity for success (I believe this both applies to Boostrapped & VC backed startups, with some exceptions*) it has to generate revenue, a clear sign that you are creating value.
And charging for your product early on does a few things.
- Proves that users are willing to pay for it.
- Provides you with better feedback (users care more if they are paying)
- Lowers your burn rate and gets your closer to profitability.
If you can't avoid writing a lot of code before you get your basic product live, you can follow the real estate showroom strategy!
When a property developer is building a new block of flats, the first thing they do is build a showroom and start selling! Then once someone is interested and buys, you can ask them what colour they want the walls and ask them what taps they would like in the bathroom.
Our attitudes to growth and perfection.
Overall we have been laser-focused over the last 12 months. We have not gone to any conferences, pitched investors, built pointless pitch decks, entertained any partnerships. We have just been 100% focused on building VEED, learning from our users and growing the company.
Product
Our product development strategies are user-centric. Every user who signs up for VEED can book an on-boarding call with us. This process is time-consuming but provided incredible insight into who our users are, what they don't understand and what they need from VEED.
We have built new features fast and scrapped useless features even quicker. Overall we have put a lot of time into UX, but I must admit consistency with the design is sometimes lacking. But that is the cost we are willing to pay to move fast.
New paid users are also prompted to let us know why they chose VEED. We have collected over 500 of these responses and use them to inform our copy and also our focus.
Marketing
For the first 8 months, Tim has spent all of his time building the product and I (Sabba) have spent all of my time working on marketing. Admittedly, we were shameless and scrappy and had varying levels of success.
When starting VEED we knew nothing about marketing, so we made it our full-time job to learn and execute on our findings.
For first time founders, growth and marketing are often overlooked. The majority of the time, this is because it can appear confusing and complex. Another big reason why technical founder shies away from marketing is that they feel a lot more comfortable coding a new feature because that is what they know.
You need to understand what acquisition channels are the most relevant for your startup and go deep on understanding them. The book "Traction" by Gabriel Weinberg, founder of DuckDuckGo is a great starting point.
If you would like to lean more about the exact tactics we used to grow VEED, please check an older post on how we grew to 50,000 MAU
Luck has played a bigger part in our success, more than you might think.
As entrepreneurs, we like to believe there as a playbook and a recipe to build a successful business.
The truth is there kinda is, but one of the largest factors of a successful business is luck. A topic topic that many founders like to admit.
Yes, we worked hard, we made educated decisions, learnt as much as we could and applied our knowledge the best as we could. But looking back on how we got here, I just can't kick the feeling that we got lucky.
This is my imposter syndrome kicking in again
The good news is that luck is not 100% out of control and there are things we can do to make ourselves luckier. Two important things happened during our journey that we were smart enough to capitalise on and make ourselves more lucky.
Example 1
We got lucky: Finding our first two engineers, Mate and Veljko. Without these two we would not be here today. Period.
We made our luck: Posting the job posts everywhere, interviewing as many candidates as possible, not settling for ok. We wouldn't stop until we found the right people, the 100% yes's.
Example 2
We got lucky: Tim and I are lucky we even met each other. We met during an online hackathon 7 years ago. We decided to meet up at a Starbucks in Islington a week later.
We made our luck: Actively seeking out events where you might find others with similar goals than you. Going to meet a random person online and having a coffee with them. That's what both of us did before we met.
The question is, are you putting your self in a position to get lucky?
Real talk
Building VEED has been hard but extremely rewarding. A growing company is hungry for capital to be reinvested into its growth. For as long as I can remember, Tim and I paid £1,500 a month, about 3 months ago we put it up to £2,000. Living in a city like London is not cheap! I believe it will take many years before we can take money off the table, however increasing our salary to a market rate will be possible in the next 6 months.
One of the hardest things to get used to is change, as founders, our jobs change every few months. 12 Months ago, I was designing, growth and coding. A few months later, I spent most of my time doing customer service, and growth. A few months after that, I was just focusing on hiring, Now I spend most of my time hiring and reviewing work. And I know my co-founder Tim has also had a similar experience.
Actively going from being the person who creates things to managing things, it's a lot to get used to. For a long time, I felt like I was not pulling my weight, that I could do more and I was letting the team down. I now accept that I will no longer spend my time in an IDE or creative design tool :(
What does the future look like?
Financially, right now I see a clear path that will take VEED from $1M ARR to $10M ARR. There will be some big challenges along the way, but as long as we double down on what is already working. I don't see any problems hitting 10M ARR in the next 1.5 - 2.5ish years.
I also believe we can do this with our core product as long as we keep being user-centric with our approach to product. However, we'll still keep an eye out for our video editing API and SDK that will be launching in the next few weeks!
Recommended links and resources that helped us?
Startup = Growth
Jobs to be done
ARR milestones
Indie Hackers
Ramen Club
Marketing Examples
7 Powers: The Foundations of Business Strategy
Traction: How Any Startup Can Achieve Explosive Customer Growth
Finally, thank you!!
