My product failed.
Update - August 21st, 2013
For those of you that haven't read any of my more recent posts, here's a quick update: First of all, there was quite a bit of hubbub about calling my product "failed" when it had only been 4 months old. Those people are right, 4 months is nothing compared to many or most other SaaS startups. Instead, I had called it failed because I had lost interest in what it did and who it was for, and I had zero intention of ever working on it again.
After writing the below blog post, I floundered and pivoted for a few months, trying to revive and sell the product just to prove I could. Eventually I realized that I was only wasting my time on something I didn't care about.
Recently I announced that I'd be building Iron Conversions (renamed to Bantam in October 2013), a product that I do care about, a product built for eCommerce businesses. It's been a business idea I've had for months, and I hinted at it in the post below.
You can learn more about Bantam at www.getbantam.com.
My product failed.
That's the first time I've written that, or even acknowledged it.
Four months ago (sometime in January, 2013) I started building my first real SaaS business. Rakasheets was a realtime, cloud based inventory management app that had a ton of great benefits. Or so I thought.
At the time I was starry eyed, dreaming of a future of fat bank accounts. Rakasheets was my ticket to success! The tool that would make my dreams come true.
I thought I did everything right. I scoured the depths of the internet, looking for a problem to solve. But not just any old problem. The problem had to be something people would pay for, and in a demographic where people had no qualms paying for it.
Eventually I landed on what I thought was a great problem: Inventory Management. So many people were complaining about this or that inventory software. It was too old, clunky, bloated, etc.
I felt especially validated about my idea because I had already been building custom inventory systems for local businesses who loved it.
So I chose Inventory Management for my problem-to-solve, leveraging my past experience with building inventory systems.
Importantly, small business owners were my target demographic.
(Aside: Although pricing was never my biggest problem with Rakasheets, I should have heeded the most common complaint about inventory management: "Why is it so expensive? Where can I get inventory management for free?")
Fast forward four months to today, May 28th, 2013. I spent countless hours building, marketing and advertising Rakasheets. I have a grand total of one customer on the grandfather plan at $29 per month.
Let me make it clear: this post may sound depressing or like I've given up. The opposite is true, I'm glad Rakasheets failed. I'll explain why in a bit.
First, let's talk about the problems that caused me to finally give up on my precious creation.
I built the entire thing before ever announcing it
Before I ever got another pair of eyes on the product, I had built every single feature. It took nearly a month to get it all together and ready for users.
I figured if they can't even use it, why should I launch it? Wouldn't people be upset that it wasn't ready?
In my mind they would have been saying "Why are you wasting my time with something that's not ready? I'm never going to buy your product now because I'm no longer interested!"
I had convinced myself there was no point ever telling anybody about the product until it was ready. I realize now that that was pretty silly.
I should have been building up a mailing list of customers who wanted the product, who could help me shape it with things it actually needed instead of things I thought it needed.
Perhaps if I had asked people for their opinions before I ever started working on it I may have realized that this product would take far more work than I ever wanted to put into it.
Looking back now, I remember thinking "If I build it, they will come". They never did.
I built a huge feature for my only customer
After the product was ready I started hanging around the forums where I got this idea. I spent most of my time on the SmallBusiness forum on Reddit.
Every time I saw somebody asking about inventory or inventory management I'd pop in to the thread and offer some advice and tell them I built a solution for their problems.
One person seemed very interested in particular, but he needed a big feature before he would use Rakasheets.
The feature (a special way of scanning barcodes and generating reports) was one that I planned on adding much later. But as soon as I read that he would pay after this feature was in I quickly scrambled to build it.
I confirmed that the feature was coming soon, and he started a trial. Over the next week I built the feature, just for him. He was very grateful for all the work I put in for him. And at the end of his trial, he paid!
Laura (my girlfriend) and I were super excited. This was the validation I was waiting for, people were finally paying me! Everything was looking up.
Now that I had my first customer, the second wouldn't be far behind. And then the third would come, and so on. That never happened.
I wasted too much money on AdWords and Fiverr
A couple weeks after that customer paid, I started to realize that those next customers were not coming.
Reviewing my traffic, I was getting barely 5 visits a day from my forum posts. None of those visitors even bothered to start a free trial. After researching ways to get more traffic I decided on two methods:
Method 1) AdWords. I'd start advertising on Google and that would bring in some great traffic. As of now I've put about 300 dollars into AdWords and it has all been completely wasted.
I'm from a very small town (less than 4000 people) in Northwest Iowa, so there aren't very many job opportunities for an engineer like myself. That said, I'm happy to say that I'm employed full-time as a web engineer at a great company here in town.
However, I'm probably one of the lowest paid engineers in America and as such I can't afford a huge AdWords budget while also paying the bills and groceries for myself and Laura.
I spend about 2 dollars a day on AdWords, and after some refining I managed to get my Cost Per Click down to anywhere between 15-35 cents. On a good day that would get me 20-30 clicks a day.
None of those people have ever converted. I came up with a bunch of great strategies for getting them on a mailing list where I could pitch the product to them over time.
However, the people on my mailing list seem very disinclined to open these emails, let alone click links or reply when I ask them for an opinion.
(Sidenote: Judging by my AdWords clicks, Inventory Management is very popular in India)
Method 2) I started paying for Fiverr articles to drive organic search traffic. "Content is King" as they say, so I thought that getting a ton of cheap 5 dollar articles about inventory management would drive some traffic to my website.
Obviously that never happened. The quality of the articles was pretty bad, and they were short to boot. Clearly I shouldn't have expected much in exchange for an Abe Lincoln.
After 10 or so articles ordered from Fiverr I quickly realized it was only wasting my money, and I haven't purchased one since.
In the four months that I've been running Rakasheets I've had a bit under 700 total article views. Which isn't bad considering I've only had 1000 total unique visitors. But again, the problem is that nobody actually paid for Rakasheets.
"If it had @thisAmazingFeature, then I would buy it"
I failed to realize that inventory management is only a small part of the suite of tools that small businesses use.
They also need customer management, order tracking, accounting, lead tracking, etc. All of the people that I could get to seriously look at Rakasheets all said the same thing.
"Oh that looks really nice.. but I really need inventory AND this or that".
"This or that" was always a huge undertaking. Even one more feature that they wanted would take just as much time as building the inventory system took.
I have been adamant about not adding these extra features to Rakasheets. I didn't want to convolute the system from inventory to inventory + @someFeature. More importantly, I didn't want to pour even more development time into this product when I had yet to see any return on investment.
This is where my competition had their advantage. Their products have been on the market for years and years. They already have all of these extra features.
No matter how terrible their interface and user experience is, my potential customers go to the competition because the competition already has everything they want.
Most importantly, I can't relate to my target demographic at all
I'm not a small business owner. I don't have any employees, I don't have any physical inventory.
I think this was my biggest downfall. I had to pay for content because I didn't know what business owners with a physical inventory wanted to read about inventory management.
I had to practically beg for traffic because I didn't know what these small business owners were looking for.
If I were able to relate to these people and think like they do, I would have realized that Rakasheets as it was simply was not enough.
Nathan Barry had the right of it when he said "Don't throw away your competitive advantage". Oddly enough, he said that right around the time I started working on Rakasheets. I should have listened.
My advantage is engineering. I love what I do, I love talking about it, I love writing code, building features and even marketing it.
A plan of action
I have given up on what Rakasheets was: an inventory management solution for small businesses. I simply have no advantage and no desire for what Rakasheets does.
But I'm not done with it yet. I believe you can sell anything as long as it solves a legitimate problem.
I've got a plan of action now, 18 steps to making this dead SaaS app more profitable than it ever was. I know exactly what I'm going to do with Rakasheets.
Step 1 is the biggest. Step 1 is Iron Conversions.
One of my weakest points has been my trial onboarding and retention. Rakasheets has always had a decent number of trial signups, but those trials would rarely use the product or even log in a second time.
Iron Conversions is being built to deal with that problem. I'll have more details in a week or two, make sure you sign up for the mailing list to hear about it.
I'll be documenting every step, every minor detail here on this blog. I hope you'll follow along, and I hope you'll learn something by doing so.
And if I fail again, my documentation will be a great guide on what not to do.
If you've been in the same position, or you want to know more about how my product failed and how you can prevent that, I encourage you to sign up for the mailing list below. I'll be talking about all of that and more.
I don't have any info-packed ebooks or videos to offer yet, but I hope you'll find what I write to be as useful as I intend it to be.
A special thanks to Patrick McKenzie
I'd like to take a brief moment to say thank you to Patrick McKenzie.
For a long time, I've been reading Patrick's excellent advice on running a SaaS business. His two podcasts with Ramit Sethi encouraged me to move from amateur web designer to a full blown engineer building complex systems.
But that's not why I'm thanking him today.
Patrick keeps an open inbox where he encourages people to email him. A week ago I took him up on that offer and sent a very short explanation of the problems I went over here. I closed off by asking what he would do in my position.
I was looking for advice because I wasn't yet sure what I was going to do. I had a few ideas for some other products but nothing concrete.
By the time I got done writing my email to Patrick I knew what I was going to do.
Without his open invitation to talk to him, I'd still be playing WoW and wondering what the heck I was going to do.
Thanks for reading folks. Sign up for the mailing list if you're at all interested in what I've talked about here, how my product failed (and how you can avoid it), and what I plan to do to breathe life into my dead SaaS app.
In the next week or two I'll be validating Iron Conversions, the first step in my plan to bring Rakasheets back from SaaS death.
I'll be explaining every step I take on the mailing list and on the blog. Be sure to sign up.
I want to end this post by saying that, yes, Rakasheets did fail and I did a lot of things wrong. But there were a ton of things that were huge successes and couldn't have gone better.
I've learned a lot these past four months, and I can't wait to tell you about it.
Be seeing you,
(p.s. Patrick hasn't replied to the email I sent yet. He's an understandably busy person.)
(p.p.s. This post isn't an elaborate way of asking him if he's read my email, honest.)
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