Entrepreneur-ing In Public: Journey Log #8
Vacation time! (For everyone else...)
I teach entrepreneurship at Duke and I’m publicly growing a company — Autopest — from $0 to $100k/year in revenue in order to help entrepreneurs better understanding the process of building startups. Learn more about my journey here.
I went to my office inside Duke’s Fuqua School of Business last Friday. The entire building was a ghost town. I think I might have even seen a tumbleweed or two. Why? Because the following Monday was Memorial Day — a federal holiday in the United States — and everyone had already decided to start their vacations early.
Personally, I didn’t do anything exciting for the long weekend. However, if the big drop in my Autopest stats are to be believed, I might have been the only person in the country who was still working.
To be fair, that’s not unusual. I often “work” because it’s how I entertain myself regardless of whether it’s a holiday.
However, as someone who’s inclined to always be working, an important lesson I had to learn about holidays is that not everyone is as devoted to their jobs as entrepreneurs. In fact, almost nobody is. This matters because you need to learn to account for holidays in your projections or risk getting yourself into big trouble by expecting revenue that isn’t going to come.
In my case, since I tend to build B2B, SaaS tech companies, federal holidays equal major drops in revenue. And not just on the day of the holiday itself. Revenues are depressed the entire week around federal holidays because people tend to go on vacations.
But not every business is a B2B tech company. Some businesses boom during holidays. Still, that doesn’t change the warning. Whether a holiday causes your business to boom or bust, you still need to factor holidays into your projections.
I didn’t do that with my first funded tech company. Instead, I made some key hiring decisions around the November/December holidays using revenue projection data that didn’t consider the time of year. This forced some painful spending cuts early in Q1 as well as some less-than-thrilled investors at my post-holiday board meeting. And, honestly, I got off easy. It could have been much worse.
To be fair, Autopest isn’t at the point where a holiday week is going to have any significant impact on its (minimal) growth trajectory. Instead, I’m mentioning the issue so Autopest’s less-than-impressive numbers this week (and, presumably, in next week’s issue, too) provide a good reminder that holidays will impact your bottom line. Ignore them at your own risk.
-Aaron
Core Metrics
WEEKLY ACQUISITION METRICS:
Site Visitors: 466 uniques (-16%)
New Free Users: 35 (-24%)
Website Conversion Rate: 7.5%
New Paid Users: 0
AGGREGATE ACQUISITION METRICS:
Total Free Users: 421
Total Paid Users: 3
Total Revenue: $328
Total Costs: $30.90
Net Revenue: $297.10
WEEKLY USAGE METRICS:
Extension Installs: 12 (-14%)
Unique Senders: 5 (-44%)
Funnel Analysis
As I mention in the intro, holiday weeks are weird — especially for a B2B SaaS product — so I try not to spend too much time obsessing over funnel numbers. If I even bother studying them, the only thing I’m going to learn is that people weren’t particularly interested in working ahead of a long weekend, and I already know that.
Instead, I want to share an update on something I identified a couple of weeks ago. You might recall that I was doing a deep dive into my signups and noticing that people who register for Autopest with professional domains (i.e. not @gmail.com domains) are much more likely to actually use (and, eventually, pay for) Autopest. Clearly, those are the people I need to focus on converting. Specifically, I need to improve the onboarding experience for them so they’re more likely to start using Autopest.
In theory, the way to improve usage of a self-serve product like Autopest is by optimizing the user interface and user experience. In other words, I need better design, better tutorials, better email welcome funnels, and so on and so forth.
Unfortunately, these kinds of onboarding optimization are time consuming to build and difficult to test without lots of users. After all, how can I possibly know if a new signup email funnel or new video tutorial is actually improving usage rates if I don’t have hundreds of new signups a day?
This is a catch-22 lots of entrepreneurs experience when they’re first launching their startups. They know they need to optimize their customer onboarding process, but they also don’t have lots of inbound signups, which means they also need to spend time on marketing.
Which do you prioritize? If you spend all your time marketing, your leaky onboarding funnel is going to minimize the value of your marketing efforts. Conversely, if you focus on funnel optimization, you’re not going to have enough data to make any reliable decisions.
The solution is to implement a manual hack. Rather than optimizing your onboarding funnel with any product-based improvements, find a way to personally help onboard and train new users.
For example, during the past couple of weeks, whenever someone registers for Autopest with a professional email account, I’ve begun sending a personal video welcoming them to the platform and offering to help with any questions/issues/etc. To be fair, I’m still working with a small dataset (only a handful or professional emails register each week, and I’ve only been doing it for two weeks), but, so far, the people I’ve been personally emailing are using Autopest more, and it’s clearly a direct result of my willingness to reach out.
Yes, I realize this isn’t scaleable. I’ve already had to jump on a half dozen 1-on-1 Zoom calls for 30 minutes each, and that’s a lot of personal hand holding for a product that ultimately only costs $144 a year. But that’s OK for a new startup. Sometimes you have to do things that don’t scale in order to get to the point where you can aggressively scale.
The same is true for you. Don’t waste time trying to build a perfect solution when an imperfect, manual, clunky solution gets you 90% of the way there in a fraction of the time. It won’t be a longterm solution, but, in the earliest days of company building, you don’t need longterm solutions. You need to survive.