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Bootstrapping a SaaS from Zero to $55K MRR in 2 Years – with Arvid Kahl [259]

Arvid Kahl - FeedbackPanda

Bootstrapping a SaaS from Zero to $55K MRR in 2 Years

Arvid Kahl is the founder and editor at The Bootstrapped Founder. He also co-founded FeedbackPanda, a SaaS productivity tool for online teachers.

Arvid was working as a software engineer in Germany. He had to commute to his office three days a week. The train journey was a 5-hour round trip every day.

He didn't have a great cell phone reception on the train, so he spent a lot of that time reading books and listening to podcasts including this show.

Arvid is a long time listener of The SaaS Podcast which he's been listening to since 2015.

Arvid always wanted to start his own business. He'd worked on different ideas over the years, but never had any success with any of them.

So for two years on this train journey, he soaked up as much information as he could about what it takes to build a SaaS business and how to do it successfully.

Eventually, he and his partner Danielle came up with another idea in 2017. It wasn't a super innovative or ground-breaking idea. In fact, it was pretty simple.

By 2019, Arvid and Danielle had turned that idea into a successful SaaS business and they were able to sell it for seven figures.

In this interview, you'll learn how Arvid and Danielle bootstrapped their SaaS business from zero to $55K monthly recurring revenue (MRR) in 2-years.

We dig into what Arvid did differently with this idea that made the difference between success and failure. And despite a successful exit, you'll also learn about some of the key mistakes Arvid made and the decisions he regrets that created a lot of unnecessary stress and anxiety for him.

I hope you enjoy it.

Transcript

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Omer: [00:00:00] Welcome to another episode of The SaaS Podcast. I'm your host Omer Khan. And this is the show where I interview proven founders and industry experts who shared their stories, strategies, and insights to help you build, launch and grow your SaaS business. In this episode, I talk to Arvid Kahl. founder and editor at The Bootstrapped Founder.

[00:00:31] He also co-founded Feedback Panda a SaaS productivity tool for online teachers. Arvid was working as a software engineer in Germany. He had to commute to his office three days a week and the train journey. Was a five hour round trip every day. He didn't have a great cell phone reception on the train. So he spent a lot of that time, reading books and listening to podcasts, including this show.

[00:00:57] Arvid is actually a longtime listener of The SaaS Podcast, which he's been listening to since 2015. Now Arvin always wants to start his own business. He had worked on different ideas over the years, but never had any success with any of them. So for two years on his train journey, he soaked up as much information as he could about what it takes to build a SaaS business and do it successfully.

[00:01:23] Eventually he and his partner, Danielle came up with another idea in 2017. It wasn't a super innovative or groundbreaking idea. In fact, it was pretty simple. But by 2019 Arvid, and Danielle had turn that idea into a successful SaaS business, and they were able to sell the company for seven figures. n this interview, you'll learn how Arvin and Danielle bootstrapped their SaaS business from zero to $55,000 in monthly recurring revenue.

[00:01:55] In two years, we dig into what Arvid did differently with this idea that made the difference between success and failure and despite a successful exit. You'll also learn about some of the mistakes Arvid made and the decisions he still regrets today that created a lot of unnecessary stress and anxiety for him.

[00:02:17] Now, I did have some audio issues with this interview. The good news is that it only impacts in my voice, which isn't that important.

[00:02:26] And you're still here. Arvid. I did think about re-recording this, but I want it to be respectful of its time. And I also want it to practice what I've got printed on the wall next to me here, which says done is better than perfect.

[00:02:40] So my apologies for the sound issues, and I hope you still enjoy the interview. Arvid, welcome to the show.

Arvid: [00:02:46] Thank you very much for having me. It's a, an absolute joy and pleasure to be on.

Omer: [00:02:50] Thank you. Do you, do you have a favorite quote or something that inspires and motivates you or gets you out of bed every day?

Arvid: [00:02:57] Yeah, absolutely. Recently I found that the quote by Robert Heinlein to be really, really impactful in my life. And that's, “When one teaches, two learn”. I've ever since I started writing that has been really inspirational to all I've been doing, because, and then just talking about my experiences, I learned so much more about underlying concepts and things around these kind of experiences then I thought I already knew.

[00:03:22] So yeah. When one teaches, two learn, that would be mine.

Omer: [00:03:25] That's a great quote. So, for people who don't know about Feedback, Panda, the company that you founded and sold. Into, yes. Tell us a little bit about the product. What does it do? Who is it for? And what was the main problem you were helping to solve?

Arvid: [00:03:48] Right Feedback Panda still is a software as a service application. So, it's a web-based SaaS for online English teachers who teach English as a second language online that are hired by Chinese online schools that themselves try to teach Chinese. Children. So as specific as I can get, right, it's just kind of freelancer economy right now.

[00:04:15] And there are all these people who work from home. And this has been going on for a couple of years, just people who speak English natively and they teach Chinese kids over the internet to speak English in like 25-minute lessons, couple of lessons every day, there are teachers who teach like 20 lessons every day, one for 10 hours.

[00:04:34] And these people have one big problem and that's student feedback because they need to give feedback to the parents of those kids. How did the kid do in the lesson? What can they practice for the next lesson, these kinds of things. And that's still, they still have to type it out. And I founded Feedback Panda with my partner, Danielle, like she was such a teacher at that point, and she figured out I am teaching so much. I don't have time to type. I cannot type all of these little statements about how the students did and what they should be doing next and all these things within the five minutes between lessons, I just can't fit it in. So she actually needed to do this. After teaching for 10 hours, because the problem is student feedback is mandatory to be paid for these kinds of freelance teacher.

[00:05:18] So you need to write it, but you don't have time to do it while you work. So you have to kind of add two hours every single day to that. So what we figured out is that you can automate a lot of this. You can template a lot of this, and we build a system that uses templates and browser integration, a browser extension to integrate into these classrooms and make feedback, a thing that lasted two hours.

[00:05:40] And turn that into something that lasts five minutes every single day. So, we save people effectively for two hours and we priced it at like ended up at 15 bucks a month. So, it was a very clear tool for people to buy. And that's what Feedback Panda was so that the audience was teachers online teachers, but working part-time remotely from home.

Omer: [00:06:00] So you picked online teachers who teach English as a second language that teach Chinese kids how to speak English.

Arvid: [00:06:11] That's all right. Yeah. It's a, you could say it's a niche. It's definitely the most precise niche of an audience I've ever targeted with a product I've been doing other startups before this and they pretty much either went nowhere or imploded on impact or, you know, the kind of 10 years of startup history that every successful founder has that they don't talk about too much. But with this niche in particular, we knew that it was a good one because first off Danielle was part of it. So, we had an expert from the niche already on the team when we thought about like what product you would build, what kind of businesses would be here? She knew exactly what problems of her audience our audience would be because she experienced these problems. It was absolutely clear to her that student feedback was an issue. And since this was a Chinese online school, everything was pretty much.

[00:07:07] Predetermined right. The kind of lessons and you would teach to kind of PowerPoint slides. You wouldn't have the kind of things you would work on. It was all done in advance. This was all pre-formatted for the teacher to just use and go through the slides. So, every teacher out of. at first, a couple thousand on nine teachers and over the years, like 10, 20, 50, 70,000, that's at least where audience size, when we sold the business was at every single one of these teachers would have to do the exact same thing.

[00:07:37] So obviously a productized service like Feedback Panda, that would template things for people that use them over and over again was a good idea, or at least a good potential solution to a very clear, critical problem.

Omer: [00:07:51] Let's do a mini-market segmentation exercise here because I think one mistake that founders make when they're trying to start a new business is going too broad.

[00:08:06] Right. So maybe saying I'm going to do this for all teachers. You can, maybe you go down that next level and say, well, I'm going to focus on online teachers, but you and Danielle went so specific. Did you ever at any point think that maybe this is too small? Maybe there isn't enough. Here for us to build something that enough people will want.

Arvid: [00:08:31] Well, you would think we would have thought of that. I put we didn't. And the reason for that is we were in the that's called an emerging market. Like I said, when we started out, when Danielle was really still teaching and we toyed with the idea of building something, you know, how all of these ideas out, just like a.

[00:08:48] A glimmer of an idea in the back of your mind at some point and then they take shape before it took shape. We were looking at an audience of 5,000 teachers, the school that she was teaching for, they had numbers that they put into the public because they were also like funded by a couple of big names in the VC world.

[00:09:06] So they kind of were trying to show that they were growing this kind of school. So, they were saying we have 5,000 teachers and then a month later they said, well, we have 7,000 teachers. And if you see growth, and that kind of speed you think, okay this seems to be like a market that is really expanding at this point.

[00:09:24] And it was expanding the whole time. There were 5,000 people when we started, there was 10,000 when we were a couple of months in, there was 20,000, 25,000 when we were a year in and then like 50, 60, 2 years ended up being around 75. And that was just the official number of one school in China of which there were hundreds.

[00:09:45] At that point. So, we never thought that there wouldn't be enough market for us to pivot into or something because we saw it wasn't explosive like a terraforming kind of movement in China with online education at that point. And one of the things about Chinese industries is like once an idea takes hold.

[00:10:07] A lot of stuff gets moving like this first, one of the first schools, the school that we support at first was one of the first schools to do this. And then people cloned copied, improve, build other schools, not just for English, but for other languages all over the place in China. So, the concept was proven and then it just exploded into this wave.

[00:10:27] And that was, we saw this, right. It was very apparent to us that numbers went up every single day, more and more people were talking about it. And in North America, because it was a really good option to make some money on the side early in the morning when it's like late in China. And you're not at work yet. If you're a teacher or doing whatever, right, you still have a couple of hours to squeeze in my just as well, teach a couple of kids for 20 bucks, in the morning. And that really as a alternative income stream before COVID-19 right. This was something that has been working for the last couple of years.

[00:10:59] They've made it very interesting to stay at home parents and people who had a job in some brick and mortar place, an office or a store, but had time that they wanted to make like a second job happened in all of this became very interesting and their marketing was intense. I think the school that we first supported, half of their staff.

[00:11:20] Which numbered thousands of people was marketing just in China, both marketing towards the Chinese and towards the teachers that they were going to recruit from North America. There was a lot going on and we just read it, hooked into this wave and we just went with it. So we never really looked into, or we never asked if we were in too small of a niche, but we did always look into adjacent schools because the teachers we're teaching for the one school that we initially supported, also taught for other schools in China, because you can sign up for as many as you want. As long as you get bookings, as long as you find Chinese parents who want you to teach their kids, you can make money, right. You just have to kind of deal with the scheduling there. So other schools popped up that most of our customers also we're working for.

[00:12:06] So we just, we looked into our own audience and saw, okay, maybe 20% of our existing audience is interested in this other school might just as well build an integration for that too. And then we did that and that's how we kind of organically expanded into multiple integrations into multiple schools. But we started with the first and biggest one that we could find to China because that's also the one that Danielle was teaching for at that time.

Omer: [00:12:28] Now you didn't just wake up one day and say, Oh, I've got this idea and I'm going to build this SaaS business. This was something that the story goes back a few years before that when you were spending a lot of time, commuting back and forth on a train to your day job.

Arvid: [00:12:48] That's right? Yeah. I'm a software engineer by trade, right? I guess I'm a self-taught software engineer, but I am a software engineer and it's hard for me even to now call myself an entrepreneur or a writer because it's been so ingrained that I'm a software engineer and that's all I did for. I think that's sorry.

[00:13:04] That was in 2000, then like three or four with my first job in the industry. And ever since then, I've been working as a programmer or a coder or engineer or whatever you want to call it. So in 2015, I was working in Hamburg in Germany, which is a town in the North. And it was living in Berlin, which is more towards the East.

[00:13:24] And there's a distance of, I dunno, like 250 something kilometers between those two towns. And since I don't have a car,  I commuted by train, which is a high-speed train that goes between the two cities and I have a job worth three days out of any given week, I would have to be a Hamburg and two days I could work from home.

[00:13:42] So for three days I would commute two and a half hours there, two and a half hours back. So that's 15 hours. In a week then I would sit in this metal tube, just shooting Jude through Germany with barely any cell phone reception, because Germany has great cellphone reception in cities, but it does have zero cell phone reception along train tracks, because it's way too vast and too expensive to put up towers there.

[00:14:05] Or at least that's how it is right now. Germany is always a bit lagging behind on the rural development, I guess. So I had nothing to do, couldn't play games or watching a YouTube I could do was read books and download. I mean, prior, I guess, download podcasts and listen to them on this commute. And your show was one of those shows that I try to listen to every single day or at least on the days when you would release new episodes.

[00:14:32] And it was such an incredible learning experience to be able to just sit in this train and siphon oldest knowledge of these incredible stellar guests that you had on the show and just learn from them while I was on my way to my paid job in another city. So at that time it was just really a blessing that podcasts exist, a blessing that books exist, and I try to develop all of them because even though I knew that I was a.

[00:15:01] Well-paid engineer at a German software company. And we did interesting things in the IOT field with like long range sensors and all these kinds of things. I still wanted to build my own business. I still felt I really, in the end, this needs to be something that produces value for me instead of me producing value for somebody else.

[00:15:20] So that's where it all started for me in particular, this kind of avalanche of knowledge. I mean, I'd been dabbling in startups or like trying to find companies with friends and people that I knew colleagues before, but those really didn't go anywhere, at least not compared to what Feedback Panda finally ended up, like a very successful acquisition.

[00:15:42] Right? The other things still exist or don't, but the other projects were just projects where I didn't know what I was doing because I wasn't really. Tuned into how bootstrapping worked and how building a business work. But that time that I had on this commute really gave me the opportunity to just digest as much as I could and let it brewed in the back of my mind so that when the time came, when we had this idea, when we had this understanding of a critical problem for well-defined audience, and we had the idea that there was a solution somewhere that we could turn it into a product that would fit their workflow. Then I could actually execute it within y'all and built this business.

Omer: [00:16:19] That's a great story. And it was probably a blessing that you didn't have a very good cell phone reception on that train journey.

Arvid: [00:16:26] So, yeah. Oh, absolutely. I probably would have watched videos of work, done. Other things worked on the actual job that I was going to be paid for a couple hours later.

[00:16:36] Could have happened, but didn't so thank you, Germany for not having great cell phone reception, but honestly, yeah, there's a, I think there's a lot of contingency and these kinds of things, right. Things you do in life, they end up making sense. Wait. Yeah. After the fact, the fact that I. I studied computer science and dropped out of that because I had a job in a, in a, like a web agency we built websites.

[00:17:00] So it was interesting, much more interesting than the actual studies, which I found way too theoretic. And I guess we were learning Java in 2001, five, six. We really wasn't too interesting with all these new web languages coming up at the time. And our professors just didn't know that didn't care about that really was too academic.

[00:17:18] So dropped out of that. Then I went to a different town. And studied political science and philosophy because I wanted something completely different, which now in retrospect actually helped me understand complex human behaviors and the kind of institutionalized systems that operate on a, on a national level that you can also implement if you're smart about it on a business level.

[00:17:40] So all of these things at the time seemed like failures, right? Drop out of computer science. Then I dropped out of philosophy and political science. Then I had a little thing where I worked for a Silicon Valley company for a year and a half, which was very interesting. First job I really. Ever had made me any meaningful money, learns a lot there startups here, other businesses that I tried, other jobs said, it all seems very random, but in retrospect, all of these things taught me one thing or another that culminated in building a business.

Omer: [00:18:11] Okay. So you've identified a very clear market and a very specific market. You've identified a problem and you've identified your ideal customer profile, which is Danielle somebody, a real person who has this problem and need some help. And you see that opportunity there. So what did you do next to sort of figure out is this the right. Is it worth solving and then how do we get started?

Arvid: [00:18:45] Right? Yeah, validation. That's. That was a very important part because if there's one thing that I had learned and all these failed attempts before not validating, my assumptions would always lead to ruin, in some way or not validating them enough, right? There's always these little remnants of guessing of guesswork that you have to have as an entrepreneur, but a lot of things you can actually validate.

[00:19:08] So we definitely looked into this from multiple angles. First off we thought like, is this something that people would pay money for? There's that's always one of the, no matter what solution you built, if people are unwilling to pay any money for anything at all, because they're all hobbyists and they hate to spend money on professional tools, but some, some industries are like this or some, some niches, some, some audiences then whatever you built, it won't work.

[00:19:33] So we looked into this and we saw, well, here's another thing that these teachers seem to be paying for. They were buying a software called Many Cam, which allowed them to integrate their webcam. With the customizable background videos or little things that they could put on screen to just give the kids something nice to see, just change their video ever so slightly to make it more interesting.

[00:19:54] And they were paying money for that. So interesting people already understood their teaching to be an actual business, right? We were not just selling to teachers who were employed by schools and got a salary we were selling to, are we going to be selling to teachers who were freelancing as English, online teachers?

[00:20:13] So they were business decision makers, all of them, every single one of them. And we understood that they have a budget for this, even though they may not understand really that their businesses in themselves, they do have a budget for these kinds of tools because they see that there's something that can be done better.

[00:20:30] So that was the first validation that we did. The second one was, well, is it a critical problem? And the criticality, I kind of explained it already, but these teachers had to send their student feedback within 12 hours of the actual lesson, but it wouldn't get paid for teaching. Like they could have taught a stellar lesson and not send any feedback and they would not be paid because the text, the feedback text was the thing that Chinese parents really valued. So if they didn't have that, yeah, I would have to, I don't know, watch the whole 25 minutes and nobody has time for that. So you had to do it as a teacher was unavoidable you couldn't delegate it,  you couldn't like push it off for next quarter or something. You had to do it right there. Right now. So the criticality of the problem was very clear. It was also a painful problem because typing what often amounted to three or four paragraphs of texts. Like we were learning about apples and the color red and orange today.

[00:21:25] We used this kind of word to describe that. And then we went through these kinds of verbs and you know, all these kinds of paragraphs, typing them over and over is like mind-numbing. That's not fun. That's not enjoyable. So it's a painful process and facilitating something that would cut that process out was also a very clear sign that the solution would be valued on some level that it would actually generate value for the customers.

[00:21:50] And finally, people already had what April Dunford, often calls competitive alternatives in place. So a second competitor actually had some sort of software that solved this problem, but people were using alternative products that compete with the functionality, or at least the problem-solving component of the tool that we wanted to build.

[00:22:11] So people had already built their own templating systems. People had worked documents and Excel sheets, full of little sentence fragments, where they would just copy them, paste them, change the name, copy the next fragment. Pasted changed your name, or maybe change the pronoun because the initial fragment was written for a boy, but they told a girl.

[00:22:28] These kinds of things. People not only have these kinds of templating systems in place. They also, had started sharing them amongst each other, which was such a clear indicator that this is a common problem amongst all of these people. They had a Google sheet that were kind of shared sheets, where lots of hundreds of people would share their little templates and copy and paste it from that one singular sheet.

[00:22:53] So we knew that there was something in there where people already were kind of grasping for straws, trying to find a solution to this very clear problem, but it hadn't been built in a custom way that really understood the problems. And I guess unique circumstances that these teachers have in their day to day workflow. And that's what we built finally.

Omer: [00:23:14] So tell me what the first version of the product look like. And then how long did it take for you to build it and ship it?

Arvid: [00:23:20] So the first version was something that completely replaced Danielle's homebrew word and Excel file collection. It was a, a SaaS that she could log into.

[00:23:34] I built that within, I think. Must've been three or four weeks that it took me to build this because I was still on a day job. So it was essentially moonlighting building this project, using the same technology that it was using on my day job, which is, it looks here in Phoenix. A rather niche programming language was really, really useful for a platform like the one we were building. And yeah, it took me a month and it had all the components that it needed to have to actually be usable for any teacher. So it wasn't, it wasn't even a prototype.

[00:24:04] We built this thing with a Stripe integration from day one because I've been building web platforms and applications for quite a while and I thought if I built this just for her, and then you have to integrate the logging mechanism or a payments provider, or, you know, these kinds of adjacent, but super relevant things to turn it into an actual SaaS might as well do this from day one. So I did, she was essentially the first customer of the product, and then she tested it out for a couple of weeks and we saw a couple of things, a couple of problems here or there, this screen didn't make sense, the generation didn't work as well as we thought so we had to fix it. But yeah, she was the first customer, the test customer. And once she was happy with the product and her day to day workflow, knowing that everybody else had the exact same workflow, we really just release it to our customers because it was a niche such as well-defined and specific niche that there was barely any deviation between the actual experience that our customers had.

Omer: [00:25:01] How did you release it? How did you get the word out and were you charging for the product?

Arvid: [00:25:06] So let me answer this in reverse. We offered a 30-day trial from the beginning because having read Nir Eyal's book, Hooked, I understand that if you want to build a product, that habit-forming product, you will need to give people the time to actually form a habit and see the value in the product.

[00:25:23] So we thought. 28 days usually is how long it takes to build a habit that might as well give them 30 days. But after that we charged straight up, we started with a $5 a month, limited tier, you know, you could have like a hundred students or something. And then we had 10 bucks a month unlimited tier. That was our biggest plan, knowing that our audience was very price sensitive.

[00:25:46] These were people who had to work second or third jobs to make ends meet. So we couldn't charge them like a hundred bucks a month, just wouldn't work out. So we started with fairly low pricing. We removed the $5 tier at some point because it was just not worth it, but we kept the 10 bucks a month. So that was our initial price.

[00:26:04] So when we released a product, we didn't really push it anywhere. We had a very clear understanding of the community that we were going to serve our audience, which was very tribal. Like the teacher, community is a tribe. We meant lots of people know each other. They exchange a lot of information.

[00:26:21] And if you go by Seth Godin's tribe approach, and you have put yourself into this community and you mark it from within then you don't want to push stuff. You want to suggest things for people to try it, but you don't want to push it onto them. So what we did, and that was maybe our really only active first marketing effort was common under a question on Facebook where somebody asked, how do you deal with your, with your feedback?

[00:26:49] That's just so overwhelming. And then all at some point it's just really replied, well, I use Feedback Panda, just that, not even a link. And then people ask, well, what is Feedback Panda? Well, it's this SaaS product and then she put the link and then people clicked on it. And then that was our first day. There was a large, I think we had a hundred something signups on our first day and that's, I guess, dwindled over the next couple days and weeks to a very solid 30 signups.

[00:27:18] Every single day that kept around 30 sometimes it's going up to 50 or something for the next two years. It was almost like a weirdly statics sign up a number that we had, but that's just kind of explains to you how the industry itself grew. We didn't need to do any further marketing, at least not actively marketing didn't ever have to pull ads or something.

[00:27:39] Do these kinds of things. We really were building. almost exclusively word of mouth approach. And it started with this one comment under a Facebook post for somebody asking how other teachers would deal with feedback. So are you organic? And it's immediately, she kicked up the community because they looked at it.

[00:27:57] Many people started using it and then they just started recommending it to other people asking the same thing question, which always happened like every single day. A new teacher that had been recruited by this Chinese company, because they were trying to grow their numbers would come into this community, either find the link or ask, how do you deal with feedback?

[00:28:14] So we had this consistent loop of marketing that happened for us by our customers in this Facebook community and other communities that they were part of.

Omer: [00:28:25] You mentioned that you knew that your target market was price sensitive. So, I know you priced it very low, but did you still get any kind of pushback people complaining that it was paid, or it was too much?

Arvid: [00:28:40] Yes. But in a, in a non-obtrusive way, there's, there will always be people who don't understand how you could charge for something that is apparently simple. And Feedback Panda was a very simple tool in the sense of that. It solved one problem really well and nothing else. Right. You have a list of students, you have a list of templates, you have a list of lessons you taught, and then you click on one thing or you click on the browser extension. It pulls it up, you save it. And then it's done. It's a very simple kind of operation that the system provides. And it's, deceivingly simple because there's a lot, obviously going on in the background, we had machine learning systems doing automated pronoun translations on templates for us, all these little complexities, but people wouldn't see that.

[00:29:23] So even for 10 bucks a month, which to many people is a Netflix subscription, they would say, wow, this is way too expensive for something that I only use for five minutes, not understanding that without using the tool. They would work for two hours, every day. It's just the awareness some people to pay for tools, particularly in a, I would say low income or high price, sensitivity audience, you can expect everybody to be aware, but the thing is. Even though we had these people complaining about it with 10 bucks a month plan or even five, the community was so taken with our product that we had people literally saying publicly, I would pay $25 for this every month. Gladly, which is from the time that it saves us, we never raised the prices to 25.

[00:30:11] We only raised it to 15 one year in, and even that was completely agreeable with most of the community. So, we raised prices and obviously we have people cancel because for some it's already on the verge of what they want to afford or can't afford, but most people have zero problem paying a higher price after that.

[00:30:30] And we grandfathered in all the old customers, or we allowed them at least to extend. the existing subscription for a couple of years. So, it wasn't really an issue and people still sign up and people still converted. So, I guess we could have priced at higher, but the thing is we really didn't want to.

[00:30:48] We were still at the end when, when we sold the business two years, almost two years after starting it, we were at $55,000 MRR. So, at the business that was just Danielle and me, we had zero employees, everything was automated. I mean, why would you need to push this even further? Right. That's just greedy. At some point, we, we were happy with serving the audience we wanted to serve serving the most critical problem.

[00:31:12] People were extremely loyal. We had sub 3% churn rates and all these kinds of things; stuff was awesome. Like there was no need for us to push this higher. And that's why we didn't experience much pushback either. We never really tried.

Omer: [00:31:26] So aside from the post. Daniel's post in Facebook telling people that she uses Feedback Panda, what else do you do to find customers?

Arvid: [00:31:40] Well, the thing is we really didn't do anything to find customers. Like we knew that there was word of mouth going on. So, what we did was we just really amplified the existing messages that people had. So, on Twitter, we would retweet on Facebook. We would like, or comment and shoutout people. We had a lot of growth strategies in our business that were kind of really amplifications off existing channels. Like we didn't try to invent anything new. We didn't try to have a big marketing campaign or anything. We did one video with, an ex-colleague of Danielle's back from Canada. Danielle is the trade opera singer. So, she comes from a completely different field. And in Canada, she a university, she had met a lot of people and one of these women there.

[00:32:28] Also was a teacher for this platform because people want to make money online. So, she did a wonderful video for us. And that one is still on our homepage to this very day. And I think that's the only like a media-based marketing expense. We really had, we had a newsletter where we would highlight our customers, random customers or customers who stood out because they were super interesting, had interesting stories or they were super generous with the community, we would highlight them every single week.

[00:32:59] And in the feature we call it the VA Panda and Feedback Panda Stories, you know, would just give people this kind of sense of community. And then we would bring it into their communities who would post about it on Facebook. We would share it through the newsletter. We would go into other communities where teachers would hang out and celebrate them right there in plain sight of all their colleagues and all of their tribe members as well. And that's, kind of building a community around the brand, around the business with Danielle being a teacher, being an advocate for teachers and how their work should improve and what things should be taken care of and yours as being like a person in this community that really helped.

[00:33:41] We didn't really need to look for people because they found us. And then either we convinced them through with a, having a good software as a service solution or other people from the community, convinced them to try it out. So that was mostly, like I said, almost exclusively word of mouth because it was such a tight knit tribal community that was without a doubt, the best growth strategy, like sustainable growth strategy for us.

[00:34:08] We fostered a lot of discussion in the community. If people ask something, we would talk to them. We had a really, really good connection with people through Intercom, through our customer service chat tool that we both man like Danielle and I, we responded to every single customer for the whole time of the business.

[00:34:27] Whenever they had a problem, we would be there for them, which led to a lot of sleepless nights. And a lot of automation built by me to deal with the stuff that customers were talking about. So, I didn't have to get up and respond to it. We built relationships with people through this channel. I still recall lots of names and faces just from talking to them about their little bugs and problems that they found this whenever we had a person, I would say slightly enraged about some problem with the software.

[00:34:55] I would take my time, sit down with them, talk to them, food chat, go through how they could solve that. Tell him that I'm on it. Maybe even built a solution within 30 minutes, then deploy it and surprise them with the working software, like 30 minutes later. And then I would ask them how they're doing, what they're doing.

[00:35:12] What is their future looking like? Who are they teaching for? How are the students doing? I would try to build an actual relationship with each customer as far as they could, which was harder at scale. At the end, we had like 5,000 something customers. But it was still something that we aspire to every single day.

[00:35:28] And that brand, that kind of being there for every single of your customers, should they have a problem with just want to chat? We had a lot of people who just really wanted to chat because they were sitting alone at home at four in the morning, the kiss was still asleep. The husband was already off to work cause something, and they just wanted to vent about something. We would listen, we would reply, and we would check with them for 10 minutes. And that's just the kind of Brent that we build. And I think that is what led to all this word of mouth growth in the end.

Omer: [00:35:56] So you made your customer the hero, not your product, absolutely focused on promoting and celebrating your customers' successes and indirectly that led to other people discovering and trying Feedback Panda.

Arvid: [00:36:15] Yes. I think particularly with teachers, that market is extremely underserved and it's underappreciated as a profession. And we all know how little teachers make all over the world. It doesn't really matter where you look and particularly teachers who are paid so little at their actual teaching job, that they still have to wake up at two or three in the morning and teach two more hours before they go to work.

[00:36:40] Teaching kids, like these people that don't get much recognition. So it was obvious to us that not only do we want to help them, we wanted to empower them. We wanted to elevate them. We want it to make them feel seen and feel heard and recognized. And honestly, as somebody who now is a teacher of sorts at least, I think I am writing a lot and sharing my learnings with people at this point.

[00:37:07] I know that too. Just need to be appreciated. Not because I want to appreciate be appreciated now, but I have a lot of teachers on my way to where I am, and I really appreciate them. So, every single teacher can, should be appreciated. And that's what we did with. All our marketing with all our customer outreach customers, success, every single piece of communication, every newsletter we send was celebrating teachers.

[00:37:30] The product, like I said was pretty, it's a scalpel kind of product. It's a very precise tool for one very precise problem to solve. So, the product itself is not. The most inventive product. So, it doesn't really make sense to highlight that, but the people using it, every single one of them is very special and does an amazing job every single day.

Omer: [00:37:52] Yeah. I love that. That's, that's a great way to think about it. And I think it also emphasizes the point that if you find the right market, you find the right problem and you find a solution. And it doesn't have to be clever, never done before. The innovative thing just do a good job solving their problem. And a lot of the pieces will fall into place.

Arvid: [00:38:20] Yeah, absolutely. Recognizing what people's problems truly are and the criticality of them like that. We always want to solve the person's most critical problem, because that is the thing that stands in their way. The most, most often it's most annoying it was painful, right?

[00:38:36] That's at least as a Bootstrapped Founder. I think that's what you should go for, because if you can solve that, then first off, all the other problems are not as big anymore. I mean, the, the it's just, you solve the biggest thing. So you, you give them the most value you can produce. And also, it gives you this opportunity. While figuring out what their biggest problem is to really understand your customer. There's a lot being written and said about customer exploration and customer validation, like finding the right niche, finding the right audience, figuring out if it's a good market or not, but nothing beats actually talking to people, being part of the group.

[00:39:16] That they are either by like Danielle being one of these people that we wanted to sell to, or like me at a later point, just really diving into this community, understanding the problems, the things that they worry about. They're the threats to the livelihoods to kind of potential pitfalls in their jobs and the politics.

[00:39:37] Like, you know, all these little things you said when you think about, Oh, I'm going to build an email client. Well, you don't think really about the office politics of the people using the email clients, but it might be an interesting thing, right? If you dive into this audience, you figure out, Oh, maybe the Cc all is a big problem for you.

[00:39:56] Like you should really prevent people from miss clicking that Cc all button. And it turns from. Being a funny little feature into a really important part of understanding the problems of your customer. This may have been a bad example. I just pulled that one out of the head right now, but the idea is the better, you understand your audience, the better you become part of the world that they inhabit, the more you will really get why they have this problem.

[00:40:24] And then you can dive into how you can solve this problem, but then why is much more important. Because what to some people is a gigantic problem, like reporting to other people is not, some people don't have to do as much reporting. So obviously it's not a problem to them, but there are industries if you don't do reporting.

[00:40:43] Well, I think funny enough student feedback is some form of reporting. Then, if you don't do it at all, you suffer. So, it really depends on who you're talking to. If you ask is reporting a problem and then you really need to understand the customer and even not just the problem, but also the workflow in which the problem occurs.

[00:41:04] Many people built an interesting software product. Or built an interesting software product to solve an interesting problem, but completely neglect that this problem occurs between an input and an output, right? Something comes ahead of it and something comes after it. And if you build a software tool that doesn't take this into account.

[00:41:25] Then you build a tool that is thought off in isolation and supposed to be used in isolation, but it's not people won't use it if they can use it within their workflow. And I say this because Feedback Panda has browser extension., we integrated into the web portals that our customers would teach them. So, we could have just said, well, go to feedbackpanda.com and select the students and then select the class and select the template.  And you've got your feedback. That would have been the manual steps, but we thought, no, we really need to understand that the input for this is I have just finished teaching this lesson. And the output is I want to have a piece of text in my clipboard that I can paste into the field in wherever I need to paste it so I can send it and get my money.

[00:42:12] So we built the, the integration to really put a little panel button into their classrooms. So, once they were done, they could immediately click the little button. And since Danielle had figured out from the beginning that the classroom URL had these unique identifiers in there, these numbers that didn't really make sense, but we let her figure it out where the student ID, course ID, classroom ID, we could automate all of the following steps. Didn't it just select the student if you have an ID already on hand, didn't need to select the course if you have a course ID and you didn't need to select the template, if you have a template somewhere, we could turn this select three things on a different website.

[00:42:50] And so just click the little Panda where you already are, and it would automatically pull up everything and generate your feedback with one click. So, that is important to me to say here, because I see so many software products that forget integrations and extensibility and how important it says for the fitting into the workflow sector, product workflow fit.

[00:43:10] Right. Do you have a lot of product-market fit discussion? So, will these people be able to use it? Well? Yeah, maybe. But do you think they're going to massage the data so it will fit into your tool? If you don't provide an easy access pattern for the data to flow into it from the beginning. So, products, workflow fit is a thing that I figured out it's particularly with Feedback Panda is essential to the success of a SaaS.

Omer: [00:43:33] So it sounds like a great story going from an idea to a seven-figure exit last year in about two years. What's one thing that you look back and, and you wish you'd done differently.

Arvid: [00:43:53] Well, I said earlier, we never hired and judging by my anxiety levels that I had two years into the business. And the fact that I'm still kind of recuperating from this and now a year after selling it, we hired way too late because we never did. Right. We only really hired our replacements when we sold the business. So up until the end, it was Danielle and I. And 5,000 customers that had their little issues here and there.

[00:44:23] And that was not only was there's a lot of customer service to do. I mean, we still kept the over this from the beginning we followed the idea of automating and documenting as much as we could, so we could just, yeah, really have. Time to work on the business and not just work in the business. So, there was a lot of automation going on.

[00:44:45] We had a knowledge base with lots of articles that people had problems and Intercom has this nice feature where they automatically suggest the most fitting article. They later added features where you can have. Certain automatic replies to certain particular questions for people. I don't know. We had this thing when people would log in with Facebook sometimes, and with Google, they would get into two different accounts, even though they just forgot which tool they use to log in.

[00:45:08] So instead of, of me having to tell them, having been at the computer. We, whenever we found a logging problem or can't login with Facebook, we sent them an automated message saying, well, have you tried logging in with Google? Often people use different numbers. It, you know, they just kind of automated a customer service thing, but still every day there would be 10 20 messages that would come through and would require my immediate assistance.

[00:45:32] Either I would need to deal with the data somewhere. We store some something in the database or somebody's account was closed because they didn't pay another paid and it wasn't reactivated these little things. So, it drove a lot of interruptions into my life as the technical founder, but also Danielle's life.

[00:45:50] Because she couldn't really work on the design and the product because there were always interruptions. So, that was one problem. The other big problem is if you have a business with 55K MRR and you are one technical founder and one non-technical founder, any downtime off the product immediately impacts your business.

[00:46:09] That right there. And I need to get up, like, if there's any issue with the database or the servers, or even a tiny glitch somewhere. I would leave bed. I would be called automatically by our monitoring solution and I would need to bring it back up and restore the system and fix whatever the problem was.

[00:46:27] And that even though it didn't happen often, it happened often enough for me to develop severe anxiety from my phone ringing. I still, to this day, whenever I hear either the Intercom noise or I see my phone ringing, I just get like a heightened. Pulse. It's just, this is still anxiety physical response to this kind of traumatic experience because at some point it just really forces you to drop everything you're doing and deal with the kind of, and that happens every couple of weeks.

[00:46:55] And I really was not looking forward to that. So that level of dependency on me being the person solving every single problem and the consistent interruption. We should have hired for, should have hired a customer service person to deal with the interactions and only get the things that they wouldn't be able to solve to me or to Danielle.

[00:47:14] And we should have right, hired some sort of software engineer/dev-ops hybrids to deal with building the software, keeping the integration updated, which was a hassle like a browser extension that integrates into a classroom where you never know if it's going to change. If it breaks, you need to immediately build a better version of the integration at again.

[00:47:34] Any given time of day, it doesn't matter if it breaks. There’re 5,000 customers who do rely on it. So should have, or somebody to really filter this particular anxiety, inducing jobs into more manageable chunks. And we didn't. And yeah, should have done.

Omer: [00:47:52] Why didn't you hire somebody?

Arvid: [00:47:53] I thought I could deal with it. Honestly. I thought I could deal with it. I thought, well, this is not an, and that was like in retrospect, one of my more stupid thoughts, but I'm still glad to share it. I thought if it isn't worth a 40 hour a week position, we're not going to hire, to this day I do not understand why this was on my mind.

[00:48:12] If it's not a full-time position, we're not going to hire anybody. If it's not full time, I can still do it. Like the fact that a part time position or person on a retainer would have perfect sense, obviously retrospect, but back then I thought, nope, this is you still deal with it. And I made many mistakes, just misjudging my own ability like that.

[00:48:33] Right? Not hiring or being a bit too ambitious. Like when we founded the company, I also like to rush the founding of the actual business itself. And I turned it into like a sole proprietor limited version of in Germany, you have two different kinds of limited. And I was the only shareholder and then Danielle was not even on it and we needed to get her on, on to the shareholder on the cafe table, I guess.

[00:48:58] Later, and that was a lot of additional things. I just thought I knew what I was doing. Which was a big mistake. I thought I knew better than anybody else, what I was doing. I thought I could do it by myself. And I think that is something that I really regret in retrospect. And that is also why we didn't hire.

[00:49:14] Danielle suggested it. I thought, man, I could deal with it. It's just my selfishness in thinking I'm great. Which I'm not just a normal person. I think I'd like to call myself a 0.8 X engineer. You know, I'm, I'm kind of lazy. I try to be as, as lazy, as possible, automate as much as I can, so I don't need to do the work, but I thought I could deal with it.

[00:49:37] I thought I could juggle all these things and be this great solo or not sort of a duo founder and deal with all these things and be amazing. But I shouldn't have. And I know that now, so the next thing we're going to do, or that I'm going to do, like hiring is going to be maybe not a day, one thing, but I noticed that once I, I feel like even a tiny bit of anxiety. I know what I'm going to do.

Omer: [00:49:58] There's so much more to this story that we can't cover here, but you have written a book which goes into more detail and, and guides people through the process. It's called, Zero to Sold: How to Start, Run and Sell a Bootstrapped Business. And you can buy it on Amazon. And we'll also include a link in the show notes to that. And I would definitely recommend if you've enjoyed listening to all of it. Check out the book and you can get deeper into the story and basically continue picking his brain. Let's wrap up and move on to the lightning round.

[00:50:35] So I'm going to ask you seven quick five questions. You know, the drill. You've probably heard these enough times. Are you ready to go?

Arvid: [00:50:43] Sure. Let's go.

Omer: [00:50:45] What's the best piece of business advice you've ever received?

Arvid: [00:50:48] I think it's build to sell and you don't have to sell the business, but building a sellable company.  As a company that's, well-structured organized hands-off and generates maximum value. So that is the best advice I've ever had.

Omer: [00:50:59] What book would you recommend to our audience and why?

Arvid: [00:51:02] Well, you just recommended an interesting one, but I would actually recommend John Warrillow's book “Built to Sell”, which fits in pretty well. Cause that explains how a sellable company works and how you can turn a, your own business or existing, or even aspirational business into a sellable business.

Omer: [00:51:17] Yeah, I second that great book by John what's one attribute or characteristic in your mind of a successful founder.

Arvid: [00:51:25] I think kindness with a willingness to empower others around you. You want to be, or I think at least facilitate the tide that lifts all boats.

Omer: [00:51:34] You're probably the first person who said kindness. And I couldn't agree with you, or I think that's often a very rare quality. What's your favorite personal productivity tool or habit?

Arvid: [00:51:49] So I've been very active on Twitter recently, and I found a tool called Hype Theory. I'm using that for the last few months. And if we need to turn this experience of Twitter from a nightmare into quite wonderful experience, it's a scheduler.

[00:52:00] So I schedule all my stuff days ahead of time and block some time for thoughtful tweets and the tool just does the work and that really freed up my time to write. So that's super helpful.

Omer: [00:52:10] What's a new, or crazy business idea. You'd love to pursue if you had the extra time?

Arvid: [00:52:15] Well, I'm a fan of virtual reality. I got VR goggles and all that stuff, but I really love to work on the idea of the Holodeck as portrayed in Star Trek, like holographic projections and stuff that would revolutionize remote work and human connection just in general across the planet. And I'd be super interested, but I guess that's still a bit too crazy to actually have any meaningful work done on it. But that, that would be idea. Holodecks.

Omer: [00:52:38] Isn't it an amazing what they were covering in this. Oh man.

Arvid: [00:52:43] Yeah. I mean, sorry you have an iPad. So it's just from star Trek. You have to communicate. I w we have those phones in our hands every single day. Like these shows these Utopian and positive utopian shows have been so good for technology. It's not even, not even funny. It's crazy.

Omer: [00:52:59] What's an interesting or fun fact about you that most people don't know?

Arvid: [00:53:03] Well recently I've been stocking up on literature and how to raise ducks because once we make a move here from Berlin, where we live right now to Canada, and to a much more rural place, I want to start dabbling in duck farming.

[00:53:17] I think that would be fairly interesting. I mean, I'm a German. I play the accordion, but that's not shocking. I guess duck my aspirations to become a duck farmer is probably much more interesting.

Omer: [00:53:27] And finally, what's one of your most important passions outside of your work?

Arvid: [00:53:31] I think I've learned that teaching, what I know has been the most passion for me ever since we sold the business, teaching, lifting up others, celebrating the journeys. I think that that has really culminated in my life right now is one of the biggest thing I can do that the most impact I can have with just like helping other people be on their own journey.

Omer: [00:53:51] Awesome. If people want to go and check out Feedback Panda, you can go to feedbackpanda.com. If you want to connect with Arvid, he hangs out the bootstrappedfounder.com. And if people want to get in touch with you, what's the best way for them to do that.

Arvid: [00:54:05] I think Twitter was the best way to do that. That would be @arvidkahl, K-A-H-L , you can find me there.

Omer: [00:54:14] Arvin. Thank you. Thank you for joining me. It's taken a while for us to -set this up, but I'm glad we finally made it happen. And congratulations with, with everything that you've done. Thank you for putting up with my voice and listening to so many episodes. I hope that wasn't part of the anxiety and I wish you all the best is what you do next.

Arvid: [00:54:33] Thank you very much. It's been an absolute pleasure. Thanks so much.

Omer: [00:55:31] Cheers.

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The Show Notes

Omer Khan

Hi, I'm Omer, the founder of SaaS Club and host of The SaaS Podcast. I help early-stage founders and entrepreneurs to build, launch and grow successful SaaS businesses. Join me on this journey.