Are you looking to make a successful exit? - **Whether you start out hoping to sell, or decide to consider** that option along the way, this guide can help make your startup more attractive to buyers. Hint: Not all recurring revenue is alike. Focus o
Are you looking to make a successful exit?
-
Whether you start out hoping to sell, or decide to consider that option along the way, this guide can help make your startup more attractive to buyers. Hint: Not all recurring revenue is alike. Focus on sustainable growth.
-
If you're launching on Product Hunt for the first (or second, or third!) time, check out these quick tips to level up your launch game.
-
Founder Tony Dinh hit $10,000+ in monthly revenue with TypingMind, an improved UI for ChatGPT. Below, he shares how he found success with TypingMind after 6 failed AI products, and how he hit a sweet spot with his pricing.
This issue is sponsored by EmailOctopus, the indie email marketing platform built to support other growing businesses. With a focus on affordability and ease of use, EmailOctopus contains all the features you need to reach and grow your audience. Start today, and contact up to 2,500 subscribers for free.
Want to share something with over 75,000 indie hackers? Reply to this email. —Channing
🤩 Making Your Startup More Attractive to Buyers
by Andrew Gazdecki
You might build a business, even a profitable one, but building is unlikely to be your big payday. Your big payday comes from selling your business.
That day might seem distant, but for the biggest return on your hard work, there are things you can do now to make your business more attractive to buyers later.
When I built my previously acquired business, Bizness Apps, a mobile app builder, I knew that I wanted to sell it from day one. That ended in a multimillion dollar acquisition 10 years later.
But you don’t need to wait as long as I did. Smaller acquisitions free you up to work on new projects, and can also fund them. Today, as the founder and CEO of Acquire.com, I help thousands of founders get acquired.
Here’s what I’ve learned about what makes a business attractive to buyers!
Automate everything
Buyers hate busywork. Admin takes buyers away from the work that earns a return on their investment, like acquiring and retaining customers. If your company more or less runs by itself, buyers can pursue growth.
For example, at Bizness Apps, we initially needed 10 people uploading apps to the App Store, since it was a 45 minute job each time.
Then, we built software that automated the delivery of these apps to the Apple Review Team, freeing our teams to focus on more fulfilling, rewarding work.
Here are some other areas you could automate:
- Calendars and scheduling: Apps like Calendly save you time.
- Customer support and ticket management: Self-service help desks with answers to common questions, chatbots, asynchronous webinars, and other tools can enable customers to help themselves.
- Product renewals and upgrades: Email automation on product renewal dates or notices of approaching higher plan tiers save time.
- Customer onboarding: Videos, demos, chatbots, and webinars are all possible automations that help customers onboard themselves, without consulting you or your support team.
- Social media management: Schedule your tweets months in advance, and get notified of social media mentions of your business without manual input.
- Employee onboarding: Create templates and a three month onboarding plan with all the guidance that new hires need, in written or multimedia form.
- Accounting: Put your payroll, income, expenses, etc. in one system or platform.
Automation shows buyers that you run a lean, agile company that values scalability and efficiency, two maxims of every acquisition strategy.
Create recurring revenue
Not all recurring revenue is alike.
First, lifetime subscriptions are great at getting customers through the door. But their lifetime value drops to zero after that first payment. The revenue only recurs if you upsell them.
Monthly revenue is typically the golden standard, but don't overlook the annual subscription:
- Reduces customer churn by up to half.
- Attracts high-quality customers who need your product.
- Gives you more upfront cash to reinvest.
We helped scale Bizness Apps by charging a yearly upfront fee, which allowed us to reinvest more cash into growing the business in a shorter timeframe.
That’s why you’ve probably noticed software vendors offering annual subscriptions cheaper than monthly ones. They can do more with the cash upfront than by spreading it over 12 months.
Buyers might review your recurring revenue as part of a quality of earnings report, especially on bigger acquisitions. Monthly subscriptions are fine, but you need to work harder to convince customers to stay. You have less time to demonstrate the full value of your product.
Persuade customers to pay annually, and you’re not in such a mad rush to retain them. You must consistently check in and listen to them, so you’re always improving, but by committing to annual subscriptions, they’re already pretty convinced that you’re the company for them.
Engaged, high-value customers are a big asset to buyers!
Focus on sustainable growth
If you’re running a profitable, growing business without any outside funding, congratulations! You’ve found the holy grail of acquisitions, the ultimate buyer fantasy.
Why? A revenue-at-all-costs approach, the kind of hyper-growth strategy that venture capitalists might encourage you to pursue, often comes with unpleasant side effects.
For example, you could stress yourself silly, end up hating the job, and easily burn out. Imagine the impact on your employees and company performance.
Also, it can encourage the wrong behaviors. With piles of investor cash in the bank, it’s tempting to spend on another ad campaign rather than determine why growth has plateaued.
I bootstrapped my first life-changing exit. Every dollar counts when bootstrapping, so we relied heavily on storytelling and press to scale Bizness Apps and find customers. We were featured multiple times in just about every publication you can think of, from TechCrunch to Forbes.
When we acquired new customers, we did everything possible to make them happy. Happy customers are your most sustainable source of revenue. Delight them, and they’ll return time and again.
Stay lean, agile, and responsive to the market, and you’ll not only profit when your VC-backed competitors are burning cash, but you’ll attract plenty of buyer interest, too.
Write the book on how to run your business
Never underestimate the power of convenience.
Amazon, for example, isn’t always the cheapest, but it’s one of the easiest shopping experiences. Apple has gone to great lengths to make buying decisions easy by designing products that just work out of the box.
Can you make your business “just work” after acquisition?
Yes, you can. Not only with automation, but also by writing the book on how to run your company. A buyer will excuse a little extra work if you’ve given them comprehensive instructions on what needs doing.
Attack this project like writing a training manual:
- Identify everything you do to run your business: Include people, technology, vendors, partners, and more. What bricks is your business built from, and what keeps it standing?
- Document every process so that it’s easily repeatable: It’s okay to assume some prior knowledge from buyers, but generally, assume you’re drafting a manual for someone new to the industry.
- List your people, customers, partners, and vendors: Keep your HR records, customer lists, partner profiles, and vendor information in one place, with contact details. That helps buyers find what they need, fast.
A benefit of this exercise is that you might spot areas to improve and increase your profit margin. After all, if you can’t explain how your company is run, or why you’ve chosen to run it that way, you stand little hope of convincing a buyer to acquire it.
Write playbooks for future growth
Think of your business as a ship, and each port is an exit event where the captain changes. You, the old captain, have arrived at port, ready to disembark for a new adventure.
The arriving captain wants a ship that’ll go the distance, a vessel that’ll carry them to the next exit event in a few years. To help the new captain succeed, you might share navigational charts, introduce them to the crew, and give them a tour of the ship.
It’s the same when selling your business. You want to equip the buyer with realistic playbooks for success.
Financial buyers, the most common type you’ll encounter, are primarily interested in your company’s performance, including:
- Profit (EBITDA or SDE).
- Revenue (MRR and ARR).
- Churn rate.
- Growth rate.
- Customer acquisition cost.
- Lifetime value of a customer.
Buyers will use these metrics to forecast performance and calculate your valuation. The more evidence you share with buyers to justify your valuation, the likelier they are to pay it. Identify growth opportunities and strategies to achieve performance targets. Research trends and macroeconomic factors that might impact the metrics above. How can buyers exploit or defend against such changes?
When listing your business, outline potential growth levers and their impact on your financials. Give buyers a chart to that buried treasure. Whether they find success or not is up to them. Just show what’s possible, and how to achieve it!
Have you considered making an exit? Let's chat below!
Discuss this story.
📰 In the News
from the Growth Trends newsletter by Darko
🔎 Instagram is testing a new transparency tool for creators.
📝 LinkedIn has shared new insights to help SaaS marketers capitalize on current trends.
💲 Reddit is following Twitter's lead in aggressively monetizing API access.
🤖 Does adding AI-generated content to webpages improve organic traffic?
📱 Here's new insight on how the Instagram algorithm works.
Check out Growth Trends for more curated news items focused on user acquisition and new product ideas.
🚀 Quick Tips for Launching on Product Hunt
by Anji Beeravalli
I'm preparing to launch our product on Product Hunt in three weeks.
The product is command bar (Cmd-K) for popular SaaS tools. This is targeted towards people who use multiple apps for their work.
What do I need to focus on before launching on Product Hunt? Can we go with a free product?
Would love to hear more on best practices from other indie hackers!
A quick list
Alex Conway has helped a ton of people launch their products successfully:
Here are some tips:
- Launch just after midnight PST.
- Pre-arrange a bunch of friends or other contacts to upvote.
- Respond to all of the comments.
- Make sure that the featured image is catchy, and accurately conveys what the product does.
Beef up your audience
Sunwoo Yang recommends focusing on your audience:
My thought is that you can't really get high in the rankings on Product Hunt unless you have an existing audience or source of traffic.
Grzegorz Graczyk agrees:
We launched three weeks ago, and you're right. Even though we had an audience (over 6K users total, with ~2K daily active users), and were doing all kind of things to get them to write a review, we couldn't compete with apps that were launching for the third or fourth time with tens of thousands of users.
Lean into your existing audience, and get them excited about your upcoming launch.
Take the pressure off
Eddie Hsu shares some tips from his past launches:
- Video and images help a lot.
- It's very important to make it easy to try your product.
- Don't feel too much pressure! Product Hunt isn't the only source of users for your product, and launching on Product Hunt should be one part of a larger acquisition strategy.
One of my products got 8K users in first day from Product Hunt, but ended up not being successful. Some products may only get a few upvotes on Product Hunt, but see success in the market, and vice versa. Try to enjoy the experience, and remember that you can always launch again!
Have you launched on Product Hunt? Share your experience below!
Discuss this story.
🌐 Best Around the Web: Posts Submitted to Indie Hackers This Week
🛠 Building and launching an AI SaaS in 10 days. Posted by Fernando Pessagno.
💻 What's the best framework for building B2B SaaS apps? Posted by David.
🥊 Waging war on lifetime deals. Posted by Danny Chu.
👀 Do you always look at the price of a SaaS before trying it? Posted by Akash Hamirwasia.
🗃 Handling your backlog as a solo founder. Posted by Glen Chiacchieri.
🤔 How important is Twitter? Posted by Asad.
Want a shout-out in next week's Best of Indie Hackers? Submit an article or link post on Indie Hackers whenever you come across something you think other indie hackers will enjoy.
💬 Tony Dinh Hit $10K MRR With TypingMind
from the Growth & Founder Opportunities newsletter by Darko
This week, we caught up with Tony Dinh, founder of TypingMind, a better UI for ChatGPT. He already has over 4K paying users, and hit number one Product of the Day on Product Hunt.
Without further ado, let's get started!
What inspired you to create TypingMind?
I found that ChatGPT's default chat experience was very limited. For example, I couldn’t search for my past conversations within the app.
When OpenAI released its ChatGPT API, I tried to see if I could build a better UI on top of the API, and provide a better chat experience.
I quit my job two years ago to begin building apps as a solo indie hacker. Before TypingMind, I built several apps, including Xnapper, BlackMagic.so, and DevUtils. I also built a ton of failed products.
Seeing the sales coming in from TypingMind motivated me to continue putting more time into the product.
How did you validate?
I use ChatGPT almost every day, so I realized I wanted a better UI, and a more enjoyable chat experience.
I chose to create the first version of the app in a weekend, just for my own use. I wasn't sure (or thinking about!) whether others had the same issue as me.
I suppose that means I didn't really validate anything. I just made what I needed, and added a price to it.
Many of my past weekend projects started this way. TypingMind has been
successful because, this time, many others faced the same problem as me.
When did you start seeing traction?
At first, I posted the app on Twitter, and quickly got lots of good feedback. I set a selling price of $9, and soon, sales began!
I improved the app and added more features, then increased the price with each new update. The price increased from $9, to $19, to $29, and so on. Sales kept going strong, even as the price rose.
Once I reached $10K in earnings from the app, way above what I expected, I knew that it could turn into something huge.
At the moment, the price is $79 for the premium license.
How did you spread the word for TypingMind?
Mostly via Twitter. I have a decent audience size on Twitter, so that helped a lot.
Was TypingMind your first successful AI project?
I built at least five or six AI projects before TypingMind. Only three of my AI projects made it to the “finished” state, where I registered a domain, put a price tag on it, and actively tweeted about it:
Of the three, only TypingMind has made any significant revenue. The other two failed, but I still keep them up for fun.
TypingMind now has 4K+ paying users! I’m working on onboarding more business customers with a new branch of the product, Custom Deployment. This branch of Typing Mind is now at $3.5K MRR, and growing!
Discuss this story, or subscribe to Growth & Founder Opportunities for more.
🐦 The Tweetmaster's Pick
by Tweetmaster Flex
I post the tweets indie hackers share the most. Here's today's pick:
🏁 Enjoy This Newsletter?
Forward it to a friend, and let them know they can subscribe here.
Also, you can submit a section for us to include in a future newsletter.
Special thanks to Jay Avery for editing this issue, to Gabriella Federico for the illustrations, and to Andrew Gazdecki, Darko, and Anji Beeravalli for contributing posts. —Channing
