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Channing here! Well, this is a very good week to be a former guest on the Indie Hackers podcast. [Peter Reinhardt and Calvin French-Owen's](https://www.indiehackers.com/podcast/032-peter-and-calvin-of-segment) company Segment [got acquired by Twilio]
Surviving a Year Without Revenue · "The Next Google" · How to Raise Prices
Channing here! Well, this is a very good week to be a former guest on the Indie Hackers podcast. Peter Reinhardt and Calvin French-Owen's company Segment got acquired by Twilio for $3.2 billion a couple days ago. And just a few hours ago, Shola Akinlade's company PayStack got acquired by Stripe for $200 million!
Who's next? 🤔
On to the newsletter (browser version here). Here's what you'll find in this issue:
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How long can a bootstrapper survive without earning revenue? Read what it took for this solo founder to make his first $1.
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In the news: Paul Graham's huge prediction on Stripe's potential. A new IPO breaks records in China. "Dark stores": the future of retail?
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Some marketing channels get talked about to death. Here's a deep dive on one that gets far too little attention.**
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Everyone tells you to raise your prices. But marketing expert Harry Dry shows you how to make it work.
Special thanks to Darko Gjorgjievski and Harry Dry 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
☔️ How to Survive a Year-Long Revenue Drought
Ten months.
That's how long Phil Strazzulla, founder of SelectSoftware Reviews ($12,000/mo), weathered the storm of early business challenges before seeing the first payment come through.
It took me ten months to earn my first advertising dollar. But now my business is providing me a six-figure income.
Phil's struggles to get his business off the ground weren't for a lack of experience. He's a serial entrepreneur with many projects under his belt, including a SaaS company he grew to the point where he could hire a general manager to replace him.
But Murphy's Law might apply better to entrepreneurship than to anything else: Things will go wrong. Even when you seemingly do everything right. And for Phil, these two things were growth and monetization.
With growth, Phil took a veteran's approach. His company is a product-review site for helping recruiters find good software. So rather than casting too wide a net with a huge launch or a short-sighted growth hack, he focused on SEO, where he could target his audience more precisely:
I knew from the get-go that SEO was the only way I would really be able to drive high-intent software buyers that would eventually be monetizable. So from day one I was super focused on acquiring links and building great content.
Of course, the right road is rarely the easy road. Driving SEO traffic to a new site with no domain authority is an uphill battle.
A good way to climb over that hill? Get a site with high domain authority to link to one of your posts. Which is exactly what Phil managed to pull off:
It was a random post about SaaS valuations that I'd written on our blog and then posted to Hacker News that got us our first deluge of links. It stayed on the front page for a while and people started linking to it. It has almost nothing to do with HR software, and the audience that came to our site was super irrelevant, but it kind of got Google to start noticing our site a bit and starting to rank our other pages… In the first week of January 2019, we had zero organic site visitors. By October 2019 we had over 1,000 per week.
Just like that, he'd turned on the faucet of Google search traffic. And then, the very next month… the drains got clogged.
There turned out to be an oversight in his approach to growth. By relying so heavily on SEO, he'd put most of his eggs in a single basket. And the basket fell:
In November of that year there was some sort of Google update that didn't like our site, and overnight our traffic dropped 30%! Then, the seasonality of software buying kicked in and our December was a REALLY down month. That was tough to see and has made me ever paranoid about how dependent our business is on SEO.
A 30% drop in traffic! It's hard to imagine a more demoralizing setback. Phil spent a few stressed-out days refreshing his dashboards and hoping for the numbers to return to normal, but they didn't.
And then he took a road trip.
A week after the dip happened, I had a cross country trip to Seattle to visit a few friends, and so I had some time to really think about how to solve this issue versus just stress about it. On that trip, I noticed something Google was doing with their algorithm where they'd scrape HTML that was structured in a given way and put it at the top of their search results into rich snippets. So, I restructured my site and most of my traffic came back. However, this was clearly just a hack, and I wanted to have a way to diversify my traffic away from a reliance on Google's algorithm. So, I've doubled down on my newsletter, and also tried hard to build a brand in the HR community instead of being one faceless stop on the software-buying journey.
Growth: check. But Phil wasn't out of the water yet. He still had a second problem — monetization — to deal with.
Six months after starting the site, I tried to start monetizing it via ads. At first, I started making bespoke videos for advertisers at $500 per video and then linking back to their landing pages… But I found it to be a bit too unscalable for my liking. I tried a few other models: sponsored events, sponsored webinars, sponsored content... None of these really suited my interests, nor my desire to create a scalable business.
You can have all the traffic in the world, but if you don't have a good way to convert it into revenue, you're screwed. So Phil had to go back to the drawing board while keeping himself afloat with consulting revenue.
Check out the full interview to learn how he got users paying and scaled his company to $12,000 in monthly revenue. —Channing
📰 In the News
🚀 Paul Graham: "I'm going to risk calling it. The feeling of deja vu is too strong. Stripe is the next Google." (For context, Google's market cap is $1T…)
☁ Dark stores (locations dedicated exclusively to processing online orders) are taking over the retail world.
🏡 Dropbox is now allowing employees to work from home forever. It's turning its offices into WeWork-like "collaborative spaces."
💵 The largest IPO in the history of the Shenzhen Stock Exchange just went down.
🏆 The Nobel prize winner in Economics couldn't be reached by phone. So his neighbor woke him in up in the middle of the night.
"Powered By" Marketing: An Acquisition Channel Nobody is Talking About
I was reading through all 484 founder interviews on Indie Hackers and was trying to discover what acquisition channels do consistently work for founders (as part of my upcoming research report).
After getting to the 100th interview, I noticed a particular acquisition channel that was being mentioned as often as SEO, press outreach, and affiliate marketing. The thing is, everyone knows about affiliate marketing and SEO. There are even experts and agencies that solely focus on mastering these channels.
Yet almost no one talked about this one… despite it being consistently (over 43 times) mentioned by founders as a viable growth channel that worked for them.
What is this mysterious growth channel? After giving it some thought, I've decided to name it "powered by" marketing, and the best way to explain it is with an example:
My Competitor is "Powered By" This Tool. I'll Use It Too.
Widgetic ($3.3k/mo) is an embeddable widget provider which gives newspaper articles more interactivity by enabling them to add things like quizzes, live voting and so on. Here's what they noticed after they got a few customers:
What we noticed is that as soon as we enter a market, other newspapers start using our app. This is because journalists read their competitors! :-) So usually we had to reach out to 2-3 major newsrooms in a country, and once we get published the majority of the other publications find out about us and sign up by themselves.
How did competitors find out their local competitor used Widgetic?
Notice that small "powered by" link at the bottom-right corner? Well, it's clickable. (You can find a live demo here.)
Here's a simple fact: Competitors copy each other. If Business A is using a certain tool, and B is their competitor, B will notice that and take a look. If Competitor B determines that the tool gives A a certain competitive "edge," they'll most likely start using it for themselves as well.
"Powered By" Does Not Have to Be a Link
Even if you don't have a "powered by" link, some businesses take an extra step to find out what their competitor is really using. Epic Plugins and Themes ($5k/mo) provides premium Wordpress plugins. Consider the story of how they launched their second theme:
The Reddit for WordPress theme was actually used as the theme for growthhackers.com back in 2013, but it was heavily customised on the front end with Bootstrap. They kept the same underlying functionality and scripts that I had written.
This got picked up by someone who had found out which theme Growth Hackers was using and asked me how they could customise the theme to "be like Growth Hackers."
This wasn't a straightforward modification, so I agreed to build it for them at a discounted freelance rate and keep the resell rights. This then became my second theme.
My guess is that this person found about Epic Themes by inspecting the source of GrowthHackers.com. They probably left an HTML comment there, mentioning the name of their company, or some clear trace which showed who they are.
But that's just the tip of the iceberg! Go here for my full deep-dive on the powered-by marketing channel. —Darko Gjorgjievski
🧠 Harry's Growth Tip
How Basecamp makes $99/month feel cheap:
- Sets expectations
- Creates comparison
- Anchors customers to higher price
Go here for more short, sweet, practical marketing tips. —Harry Dry
🏁 Enjoy This Newsletter?
Leave some comments on the site! Or help me out by contributing to it directly. —Channing
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