Snowballing One Project Into Another
When you're bootstrapping, it can he helpful to snowball one project into another until you find something that works. Today we dive into the nitty gritty of how a mobile app funded Geocodio's launch.
So Michelle, I saw that you recently published a blog post a little bit about the founding of your company. And I haven't read it, because I want to hear the story fresh from you. And I, this is something I've actually wanted to talk to you about, frequently, and you've always kind of just been like, Oh, yeah, you know, we just started it. And then it just, you know, happened. So I'm super excited to dive into this with you, especially where I'm coming from, like, where it seems so far away to have a successful SaaS. So tell us a little bit about how you guys got started?
Michele Hansen 0:31
Yeah, this is something I get questions about, all the time. And I wanted to dive into the story and the numbers a little more. Because I think that's helpful for people when they're getting started, like yourself, to see that you don't have to have success the first day, or the first month, or the first three months or four, six months, really in order to make something work. And then also that if something, you know, does okay, but not great, you can always chase that and snowball it into something else.
Colleen Schnettler 1:10
So how did you guys get started? What was your very first product?
Michele Hansen 1:15
Well, my very first product? Or our very first product?
Colleen Schnettler 1:18
I don't know what gave you the bug, like, let's go back, just let's talk about about you.
What was your first, like, What gave you the bug?
Michele Hansen 1:25
So, so this actually, this isn't in the post, but my first business, if you can call it that was basically a blog that I started with friends, my freshman year of college, we called it an online magazine. And the whole idea of it was college kids from around the country, with different perspectives on politics, all writing about politics together and collaborating together. And that was really one of the first things that introduced me to running something online, in a sort of organized way, because I had little projects before, like, you know, we also started a satire blog at one point, but like, we didn't put our names on it. And it was very much for fun. And like that project, talking about how to use Blogger, and then this other one that we launched, that was a bit more serious, and like something we ended up putting on our resumes, was on WordPress, and just how it happened was I ended up being the person doing all the WordPress admin. So managing the site, and, you know, customizing templates and stuff like that, um, you know, my introduction to coding was MySpace. So HTML, you know, for a certain generation of us was a key skill as a teenager. And that carried over, but I think those projects, my freshman year of college really gave me the bug of like, you create something, and then you get a, like, a reaction from people. And you, people tell you, they enjoyed it. And then and then, you know, just kind of keeps you going like that. And then actually, a year later growing, though, so that blog actually never made any money. We had ads on it, but then I don't know, something happened. And it didn't work out. And we didn't make money. Um, but then we actually ended up turning it into a consulting firm, like a social media consulting firm. So that was when I was 20.
Colleen Schnettler 3:39
I mean, that was 2010 ish. So that was like before, that was a big thing, right? Social media consulting wasn't the powerhouse it is now.
Michele Hansen 3:47
Yeah, it really wasn't as well. And so what are our angle was, was reaching out to PR firms that were, you know, very experienced in PR, but didn't know how to use Facebook and Twitter. And that was really where I earned some more business chops, in terms of like, actually, like operating a business and writing proposals and pitching and doing sales and things like that. You know, I'd had a little bit of experience with that, like, you know, when I was a kid, my mom had an art business, and I would spend Saturdays as a teenager helping her sell her art at art and craft shows. But really, in a kind of, you know, a context that is the closest to now, it really wasn't until college. And then we actually made money doing that, but then shut down the business about six months later, because basically, the purpose of the business was to allow us to skip several layers of terrible internships and get to the ones we wanted, faster. So there is an exit strategy from the beginning. And, and so actually, by the time that we made the, Mathias and I made the products that ended up being the one that funded Geocodio, that was actually my third business. Okay. And I think all of those little experiences, you know, really added to just having more comfort with what it takes to launch a product, even if those other efforts were not quite as organized, or structured, as at you know, as the as the projects that Mathias and I have launched together.
Colleen Schnettler 5:38
Yeah, yeah, well, even you were talking about, you know, back in your college days, like reaching out to ad agencies and things like that, like, for a lot of us who are just starting businesses, this is the first time we've had to do any kind of software sales or sales. Really, I was thinking about that today. Because this is just something that like, I don't do a lot, like, I'm comfortable with people, and I like to talk to people, but like, I'm basically cold emailing everyone who has signed up for my service, to be like, Hey, can I help you? And that's like, a little thing, but just, it's still outside my comfort zone. So you starting those lessons 10-15 years ago, you know, they just compound I'm sure to bring you guys to where you are today.
Michele Hansen 6:20
Absolutely. I mean, it's totally useful, you know, on Mathias aside to his early projects, one of which was the precursor to when the first one we launched together, you know, he was funding those because he was a magician as a child. And so he had his, like, he was running his own business, like, as of the age of seven or so eight, was when he started performing magic. And so he always had that money to fund, you know, other projects that he wanted to do, or, you know, buying the latest and greatest tools and whatnot. Yeah, it's not just the most recent business, it's a history of having that, as you said that that bug of "Hey, like, this is, this is fun, and I can do it." And also, like, making a ton of mistakes in the process, like accidentally not monetizing our blog. I mean, it was or like, I think we did, but then, you know, some of our friends, like, we had ads on it. And some of our friends knew that if they clicked on them, we would get money. And so they clicked on them. I think we got shut down for having like, suspicious clicks on them or like something else going on. Like, you know, I mean, we were like 19 and idiots. And, you know, but you know, it introduced me to things like that. And it got me you know, more comfortable using a modern web tools like WordPress.
Colleen Schnettler 7:54
Yeah. So then you guys, you and your husband decided you wanted to start something. And you just use the phrase, the thing that launched Geocodio. So can you tell us a little bit more about that? What was that?
Michele Hansen 8:06
Yeah. And you make it sound like we just had this idea one day, and we're like, oh, like we're going to launch thing something. And the reality is, is that we were pregnant. And we knew that daycare was going to be expensive. But once we figured out just how expensive it was, which for an infant in the DC area is about $20,000 a year for a very standard, no frills in-home daycare that might not even be licensed, like, really expensive. And so we were scared out of our minds by that expense. And we were like, you know what, we can kill it at work, but like realistically, in the next, you know, six months are we going to get raises and bonuses equal to $20,000 a year. Like if we want to be able to keep our standard of living, we need to be launching stuff.
So it's with that motivation as the backdrop that we finally stopped spending our weekends watching TV shows and started working on stuff.
So this came out of an app that Mathias had launched in Denmark before he moved to the US. And the app was called What's Open Nearby. And the idea of it was that if you needed milk at midnight, or a coffee at 3am, you could pull up the app and it would have a map of all of the stores that were open near you. So that you could just go to the one that was open rather than having to like remember what stores were near you and type it into Google and then go to their website and go to their store locator and find the one that was near you. And then like look at their hours. Now right now you can go to Google and type in Safeway hours, and it all pops up there. But the Google Places API was really not as robust in 2013 as it is now, and it wasn't as integrated into the Google search experience. So, you know, this would eliminate, you know, 10 clicks when you're tired in the middle of night in and out of toilet paper.
Colleen Schnettler 10:13
Michele Hansen 10:14
launched this in Denmark before he came to the US. And it was really successful. It was based on a need that he had himself. And it was regularly in the top charts in Denmark, and it got to about 500,000 downloads...
...Which is something like 10% of the Danish population. And how he monetized it was, people would pay to have their store listed in the app, got it.
But that really only worked because it was consistently top 10 in the Danish App Store and had all of these downloads and so companies wanted to be in it. By contrast, we knew that launching in the US would be much more difficult. And, you know, a much larger country not nearly as close knit, as Denmark is. So, um, so we decided to go with an ad supported route.
So we started working on the app in January of 2013. And we ended up launching it in October of 2013.
Colleen Schnettler 11:29
So that's a that's a good chunk of time that you guys were working on it. Was that predominantly development time, or was it predominantly like customer research time, like, what was happening during those months from conception to launch?
Michele Hansen 11:42
So it was a couple of different things. So one of them was, we had to localize the app to the US. We did a redesign of the app, I'm not quite sure. I don't quite remember why we did that. But I know that there was some issues with the Danish app. And I like remember, we had to design a new bug reporting flow, like if people had issues with the hours, so like, people could like take it. Like if the hours we had in our app were different, like they could take a picture of it, if they're standing at the store, for example. So we were also we also just had to pull all of the data together. So a big part of the app was automated parsers that were scraping the store hours websites. And so we are building all those parsers. But then we also wanted to make sure that we had a lot of smaller stores in there as well, because that works really well for big chains, but a smaller store, it didn't really make sense for us to build a parser for that, because we'd only get one or two locations rather than 50 or 100, or 500 from a big chain. So we spent a lot of time just building the data that goes into the app. And that was most of what consumed us.
It wasn't until August of 2013, actually seven days after our daughter was born that we incorporated formally.
Yeah. Um, and started doing the administrative side of things.
And so I was actually so you know, so we talked about bootstrapping, right. And bootstrapping is, is is fundamentally a form of financing. If you're taking the null option, right, which is you don't take financing, but, you know, you self-fund it, and so towards that, and I kind of dug through our financials from that first year, to look at how much we spent, and how much we made because this self funding period is really difficult for a lot of people.
Um, so first, one thing I want to mention first, is that in the spring of 2013, we did a couple of hackathons. And like, you know, big sort of sponsored ones, they don't seem to be as popular anymore. Maybe I'm just not paying attention to it, but I remember it being kind of a big thing. And, um, we got an $1,000 AWS credit as a reward from one of the hackathons. I think that might have been from a like Facebook-Gates Foundation hackathon that Mathias did with one of his friends in California. Anyway. So it was like one of the prizes for that. So we had that sweet $1,000 credit from Amazon. Now they give these out as a way to, you know, promote people to switch to AWS, right. And $1,000 is not really a lot of money for an established business. But for a nascent businesses just coming into existence, $1,000 is huge. And that paid our server costs for the first couple of months. And I think that was really important for us because it took away a lot of the pain of self funding the product. And so we basically, you know, you could say that we took, you know, non-dilutive non-debt funding from Amazon to get started.
But we had other expenses as well. And so this is something I was sort of looking at, okay is like, how much did we really spend? So, I mentioned that we had to incorporate the business. We had, we were paying for servers for the Danish app. So even though we didn't have a regular income stream from it, we were still supporting it. And we needed SSL certificates, icons, sort of all sorts of things. So September of 2013, is the first month like, sorry, August of 2013 is the first month that we really started having expenses.
So we had $416 in expenses.
And 20 cents in ad revenue.
Colleen Schnettler 16:04
But that was your very first month, right?
Michele Hansen 16:06
Yes, that was our very first month. And and you know, as I look at this right now, you know, the server costs -- I don't know how your husband feels about this, but I feel like when you marry a developer servers are going to be part of your family budget, no matter what.
Colleen Schnettler 16:20
We have servers in our garage. It's fine. It's not weird at all.
Michele Hansen 16:24
You know, I mean, so you know, I remember going in as me like, okay, we're always like, servers are just gonna be a family budget line item. Um, but you know, so yeah, that was like, $400 is a non-insignificant amount of money, especially to us at the time.
Colleen Schnettler 16:39
Well, you had a baby. Right?
Michele Hansen 16:41
Colleen Schnettler 16:42
So, so wait, before you keep going with your numbers. So that first month, here you are, you guys are still both working full time?
Michele Hansen 16:50
Colleen Schnettler 16:50
You have a brand new baby, and you're just out 400 bucks. Do you remember how that made? You feel?
Michele Hansen 16:56
No. I don't remember much from that first month.
Colleen Schnettler 17:00
I mean, I'm just wondering if there was like panic, if there was, you know, kind of a known sense of patience. If there was a this is a terrible idea.
Michele Hansen 17:08
No, I think if anything, I remember being super motivated. And I think that's the biggest thing I got from becoming a parent was motivation. And that, you know, the idea that, you know, when you have a kid, like you have maybe an hour to yourself a day, if that, like, you no longer have, you know, the evening doesn't stretch in front of you after work, right. And in, you can't do whatever you want on the weekends, and you have no control over your time anymore. And for both of us, that was really helpful, because it was like, Okay, if I only have an hour to do what I want to do today, then I'm going to make it worth it.
And, and as a procrastinator, you know, it was really helpful to have things be time box like that. And you I remember, you know, sitting in the nursery, which was like part nursery part office, and she was sleeping, and we were both working, and it felt like really great. Like it felt it felt good. It felt like what I wanted to be doing. Um, and we knew it was going to be expensive. But I think because we had had that success from the earlier version of the app, we had a lot of confidence going into it, that it would be successful if we did the work.
Colleen Schnettler 18:28
Okay. All right. So then what happens next?
Michele Hansen 18:31
Okay, so October of 2013, we finally fully launched I think, in September of 2013. We're only you know, friends and family launched. Um, and, yeah, I'm not quite sure, actually, cuz I don't our Apple developer subscription wasn't until October of 2013. And I remember that being very painful. That was $100. Right off the bat. And that was -- that hurt a little bit. Um, so October of 2013, the month we launched, we made $6 and 66 cents.
Colleen Schnettler 19:07
That's not concerning.
Michele Hansen 19:10
No, right? So, but we were hustling pretty hard. Like, you know, I was spending all of my free time -- that free time I didn't have -- emailing and tweeting at reporters in the DC area trying to get them to pick up on the app. And in November of 2013, we actually ended up getting picked up by DCist and by the Washington Post's Express. So Express is like the free newspaper that they hand out at the metro and in 2013, and quite frankly, probably still today. Service is terrible in the metro tunnels. So a lot of people actually read the free newspaper, and they had this like beginning section of the paper where it was like Quote snippets from people. And we had posted the app on Reddit. And then people had commented on it on Reddit. And so they had posted one of those Reddit comments in the, in the newspaper. And that was huge for us. And that month, so November, we had $155 in revenue. And then December we had $515.
So we went from 20 cents to $515 dollars.
Colleen Schnettler 20:31
Yay. That's great. That must have felt so amazing.
Michele Hansen 20:33
Yeah, we were so excited. And I mean, I remember we spent Thanksgiving week basically the whole time, like, updating all the parsers and making sure we had Thanksgiving hours in and I emailed like 100 local business owners trying to get their Thanksgiving and Christmas hours. And we spent so much time on this, but really felt like it was paying off.
Colleen Schnettler 20:57
Yeah, that must have felt amazing.
Michele Hansen 21:00
Yeah, it was, it was really exciting. And I think though, the exciting thing about doing a consumer app too, is that your friends are using it.
And so I was getting messages from people I know being like, Hey, this is so cool. Like, thank you for making this. This is awesome. And you're like, yeah, this is awesome. Like I'm making something that helps my friends, this feels good. Versus in B2B, you doesn't really happen quite as much. Um, yeah, it felt so good.
But we started to have some problems.
So I mentioned how the app, you open it up, and it had a map to show you all of the stores that were near you. So we could get 2500 locations for free from from Google. But then, if we added more stores, beyond 2500, we could only cache them, this was sort of the problem, we couldn't store the coordinates in a database, we can only cache them.
So we had, so we needed more than 2500 coordinates, we didn't have any options.
Because it was either 2500 for free. Or you could have an enterprise plan that was like $20,000 a year, 100,000 a day. And we're like, we have 5000 stores in the app, like we don't need 100,000 a day. And we're certainly, you know, we're feeling pretty good about our $500 in ad revenue here. But that's not remotely justify paying for an enterprise contract. Like that's insane. So what we did was, we built a very, very rudimentary geocoder out of this, just to support the app. And as we talked about this with other friends of ours, who are developers, they said to us, "well have you guys considered, you know, slapping a paywall in front of this and, you know, letting other people use it. And, you know, maybe you can get enough people to use it that the servers will, for it will be effectively free for you?" And we're like, oh, like, that'd be really interesting. Like, if you know, we can just get enough people to pay for it, that we basically don't have to pay for it ourselves. Like, like, that would be cool. And then we can keep our apps going, because these apps are making money and they're working. And so we did a month or two of testing with other people. There's actually a really awesome picture of Mathias with our daughter at three months old at 1776, which is a co-working space in DC with with tons of startups, they're like meeting with our friends here and test it out. I feel like it's very emblematic of our family and our marriage. And so then we launched Geocodio in January of 2014, with our definition of a wild success, being that more people paid for it than it costs us to provide it.
I remember making a spreadsheet of this. I can't find that spreadsheet, but that was a wild success was.
Colleen Schnettler 24:10
Sure. So what happened?
Michele Hansen 24:12
Well, so then we so we launched Geocodio.
Colleen Schnettler 24:14
Right, okay. And right. Okay, so, wait, yes, that point, though, were you you guys had both products? Or did you sunset that? I mean, that one product was making you 500 bucks, which felt like a million probably. Were you? Yeah, both products at the time?
Michele Hansen 24:27
Yes. So we're absolutely maintaining both our focus was very much on the app. And in January of 2014, we made $514 from the app, so it was still like that was the same as the previous month, but we still felt pretty good about that. Um, and we're pretty focused on both though the success of the Geocodio launch really took us by surprise. Like we ended up being on the front page of Hacker News all day, which was a huge surprise to us. It was, it was pretty surreal. Um, and so we ended up having $31 in total revenue for that month or about $27 after fees.
And Geocodio was running on two tiny little DigitalOcean droplets, one web server one database server. And so we were was gross margin perspective we netted $7, which was absolutely amazing. Like we were surprised, like we hadn't even written the, the code that would trigger the billing code to charge people because we had not expected that people would want to pay us.
But so so but then that next month, like the the ad revenue continued to drop off. And we kind of learned the hard way that with consumer businesses like marketing has to be constant, like you have to constantly be in front of people, otherwise, the attention is going to drop off. It's not like a business where if you sign them up, and then they have a recurring need, they're going to keep having that need. So I posted all of the revenue charts on the blog posts, and you can kind of see that the last month where the app and Geocodio made the same amount of money was April of 2014. And then from there on Geocodio do just takes off like a rocket, and our ad revenue goes down quite significantly.
Colleen Schnettler 26:32
That's amazing. I love that story. Like I love that Geocodio was born out of something, you guys needed yourself. And you didn't even think it was going to be that successful. And now it sustains your entire family.
Michele Hansen 26:45
Yeah, and any other app we had came out of our own needs as well. And I think there's some similarities to what you are doing as well there. You know, we should always validate our ideas against what other people are trying to do. But especially for a first project, it can be so helpful to do something that just scratches your own itch does, it makes you feel good. And yes, you, you get that motivation going. And as much as you can, you know, snowballing the revenue from one project to another, snowballing the motivation that you're getting and a positive reinforcement you're getting from one project is so helpful for the other one, because like a geocoder is not a very exciting project on the face of it like and few people would sort of jump into that right away. We only arrived at that is because it's something that we needed ourselves.
But that in turn ended up being such a great way for us to start a business because we were developer first from the very beginning. And we were out to solve the things that frustrated us about all of the other services out there. Like the whole thing about only being able to cache the results rather than store them in the database very early on, we decided you should be able to store them, like we don't want to stand over customer shoulders, telling them what they can and can't do. Like we just don't believe in that, we're not going to do it. That is a formed a lot of decision that we make, or we're going to have a free tier and we're going to have a pay as you go model to make sure that it's affordable and accessible for people, regardless of how big their project is like. Those are things that are really important to us. And you know, something that we ask ourselves, every time we're making a tough decision is okay, if we were the customers, what would we want to happen here? And how would we want to be treated? And sometimes the answers to those things are not the immediate profit maximizing decision that a larger company might make. But one of the reasons why we do this is to solve our own problems. And we don't want to create a product that creates problems for people, people already have enough problems. They don't need a product to create new problems for them, like being only able to cache things or all sorts of usage restrictions or whatnot. We just don't believe in that.
And so as a and that really wasn't a perspective that I had on business until we encountered this product like you know, I don't I don't think I believed anything negative about treating customers but I didn't really have I hadn't really felt that pain myself of "Wow, like this really, really sucks but you want to use a product to get something done and then the product creates problems and hassles for you, like why is this happening? It's already hard enough to create something." And so that that idea that we are ourselves the customers really drives what we do and I always find it so fun when I you know, create new little side projects here and there that happened to run on Geocodio. Because we always end up coming across new ideas or like, oh, like, yeah, we should, you know, we could do this or, or we could do that, like, I think you remember the the app we made in the spring to help people find grocery store pickup slots. So that had geocode do in the backgrounds. Yeah. You know, locating unit, you know, the nearest Wegmans, or Harris Teeter to help you find a pickup slot.
So yeah, it's, it's, it's, it's been fun. But it certainly required a lot. A lot of initial initial investment from us, like, you know, I think back to that, like $416 on 20 cents in, in revenue, that's a lot of money. I remember at the time like, that was basically our car payment. So that was a non-insignificant amount of money, we had a child, so we didn't have a lot of time. But also, we were fortunate enough that we had full time professional jobs, and we didn't have to have second jobs as just a part of our normal life, you know, this is a choice that we made, and we had the luxury of being able to spend our free time on this. And as children, we had, you know, the opportunities to learn about business or play around with coding. We didn't have to be working, you know, have to be working as children. And so we had that time to explore. And so that's something I always think about that. Yeah, we had several years of not a lot of sleep, and not a lot of free time. But there are so many advantages that we had going into that. And I think that's also something that inspires me too, you know, not only to feel like I'm making the most of those advantages, but also to try to inspire other people to do this as well, recognizing that, you know, maybe other people didn't have parents' businesses to observe as children like both of us did. And, you know, things like incorporating a business or doing sales are much more intimidating for other people. And so to try to demystify those things and make it easier.
Colleen Schnettler 32:08
Well, Michele, thank you so much for sharing your origin story of how you and your husband started started Geocodio. I've really enjoyed hearing it, and I'm sure our listeners did as well.
Michele Hansen 32:21
Yeah, if anyone else has follow up questions, you know, always feel free to tweet at me. I'm certainly happy to talk to you about it and see if I can help with what you're trying to do.
Colleen Schnettler 32:34
So that's going to wrap up this week's episode of the Software Social podcast. Feel free to tweet us your questions and comments at @softwaresocpod. Thanks for listening.
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