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Channing here. Well, 2020: You continue to outdo yourself. Many of our predictions about a crazy start to the week came true in the form an [interruptive shouting match](https://www.bbc.com/news/election-us-2020-54366618) disguised as a presidential
How to Scale a Service Biz · Trump Has COVID-19 · Passion Economy is Now $38bn
Channing here. Well, 2020: You continue to outdo yourself. Many of our predictions about a crazy start to the week came true in the form an interruptive shouting match disguised as a presidential debate.
But who among us predicted that the US president would test positive for COVID-19 only two days later?
This has implications for the business world. The markets plunged on Trump's announcement and then they stabilized slightly. And negotiations in the US congress over an economic stimulus package now face an uncertain future.
Oh, and let's not forget: the election itself is only one month away, but the election drama will continue for days, weeks, or months beyond that due to delays in counting all the mail-in ballots this year. So buckle up, everyone!
Onto the newsletter. Here's what you'll find in this issue:
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Code scales. But manual services? Not so much. Learn how a solo founder has innovated his way around the scalability problem to grow his productized service to $5,000/mo.
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In the news. The passion economy is now worth $38bn. A new creator platform is giving OnlyFans a run for its money. Retail bankruptcies are at record highs.
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No-code is blowing up. Read why even developers should consider incorporating no-code tools into their workflows.
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3 growth tips: Use your customers to find more customers. Convert more users without shortening your onboarding. Write more blog posts with less research and brainstorming.
Special thanks to Dru Riley for contributing to this newsletter. Want to contribute a piece of your own? Check out this doc for an idea of what I'm looking for. Then simply publish a piece on IH and email me about it! —Channing
📈 Solving the Scalability Problem in the Service Business
In the world of productized services, Tyler Gillespie is an authority. He runs a mentorship community for the founders of productized services, and late last year he sold his own productized service to a private equity fund.
Now he's trying to add to his résumé. In the past year he's grown another company, a video testimonial service called ApplauseLab, to $5,000 a month.
Eazy peazy, right? With his experience and past wins, you might expect him to moonwalk his way to success. But you'd be mistaken.
Growing ApplauseLab has been anything but easy. And this is largely owing to problems of scalability that are unique to service businesses.
The early days of ApplauseLab were like the early days of most indie hacker companies. The idea arose from Tyler scratching his own itch. He wanted to produce video testimonials for the landing pages of his former products, but a lack of tooling made him settle for text-based testimonials instead, despite their lower conversion rates.
And to get going with product development, he followed a playbook most that resonates with most indie hackers: he did things that don't scale.
I started very lean. There's a lot of moving parts, obviously, since it's a tech-enabled service. So we have the capture element and then we have our real editors on the other side. When I was first proving the idea, before we leveraged any technology, I was just doing the interviews myself via Zoom… a lot of this was manual and obviously building out the team, product development, finding really high quality video editors and project managers for the team. I started putting these pieces in place early on and kept adding manually until everything was working how I wanted it to.
This is where the trouble started. With typical SaaS companies, "do things that don't scale" is a temporary directive. Once you get your footing, you write software that does a lot of that work for you and allows you to increase your distribution without increasing your costs.
But with productized services, where humans rather than lines of code are so critical to the production process, this transition to greater scale isn't so straightforward.
At scale I knew it wasn't going to be in alignment with the ideal business that I wanted, or else we were just going to have to have someone doing interviews full time. In the beginning, there were times where it might take two to three weeks just to get on the phone with someone to do the interview. And I realized that was just a lot of friction. Plus it's an hour of my time, it's an hour of their time, and then there's three weeks of waiting.
Tyler was stuck. When you run a business, time is money. And all the extra hours he was spending to ship his product spelled doom for his ability to profitably grow ApplauseLab beyond a relatively small size.
But Tyler's not an authority on productized services for no reason. His situation called for creativity in the process department, and that's what he brought to the table:
We really tried seeking different solutions, and eventually we came across this idea of asynchronous video capture. Essentially, it allows you to pre-record a question, and then send that question to X person. Then they can respond and record their answer. We started putting together sets of ten very powerful interview questions that we'd pre-record and then send that link to the customer to let them answer async. They could answer one at a time, and then our software would automatically take them to the next question, and so on. It's seamless, like you're getting interviewed by someone. It's just not live. Once we had that figured out, and got a couple editors to check it at the end, we had our product.
In other words, he introduced just enough software into the process to significantly cut down on production time.
The result? More money in his pocket. Out of the $5,000 ApplauseLab generates in monthly revenue, here's what Tyler tells me his margins look like:
Our gross profit margin is around 75%, and then we typically are putting away 10% of that into a profit account based on the profit-first framework.
Of course, solving a product problem is just one of many fundamental challenges of running a business. Next you have to find product-market fit.
And that's been no walk in the park either:
It took me a bit, to be honest, to go from seeing this pain point to figuring out where we could fit in the marketplace. We wanted to price competitively but also help businesses solve these problems.
Check out the full interview to learn how Tyler's found traction and set himself on the path to success in under a year. —Channing
📰 In the News
🏡 The passion economy is now worth over $38 billion. More people than ever are monetizing their skills and hobbies to earn income.
🐦 OnlyTweets just launched in an apparent hat tip to the decidely more risque OnlyFans. The difference? Fans pay for private tweets instead of private parts.
⌚️ Google wants to buy Fitbit. The EU said no. But now after renewed negotiations it's looking more like a "maybe?"
🏚 Retail bankruptcies will soon outpace those of the 2008 financial crisis. Meanwhile, e-commerce continues to boom.
🌎 The US and China are fighting for dominance in Big Tech. But in the face of globalization, is it even possible to stop the flow of tech from country to country?
🔨 Trend Alert: No-Code
No-code tools help you solve well-understood problems. Blogs, online stores, games, marketplaces, mobile apps and more can be built without writing code.
No-code is a competitive advantage. Saving time, money, and energy. Allowing you to build (and change) faster and cheaper than competitors.
Leverage amplifies judgment, and no-code tools democratize leverage. When anyone can build, authenticity outweighs access. No-code is commoditizing code, capital, manufacturing, (paid) acquisition and ideas.
More here. Including opportunities for indie hackers. —Dru Riley
🚀 3 Growth Tips
We've got a mailing list that sends out 5 growth tips a week. You can sign up on our site. Here are 3 from last week:
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Launch a referral program to get customers spreading the word about your product in exchange for small rewards. And structure these rewards in tiers to keep your new referral partners incentivized. Read more…
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If you can't find a way to avoid a long onboarding process, you can save a few conversions by adding a commitment checkbox. Read more…
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Coming up with new blog posts and writing them from scratch is hard. If you've got old articles that are languishing, put them back to work by revamping and relaunching them. Read more…
🏁 Enjoy This Newsletter?
Tell me how I can make it better! Or help me out by contributing to it directly.
P.S. If you're an indie woman looking to meet others like yourself, our community manager Rosie Sherry's hosting an icebreaker meetup next Thursday (October 8th). Join up! —Channing
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