Jacob Eiting

RevenueCat: Overcoming Self-Doubts as a First Time SaaS Founder – with Jacob Eiting [257]

RevenueCat: Overcoming Self-Doubts as a First Time SaaS Founder

Jacob Eiting is the founder and CEO of RevenueCat, a SaaS platform that helps mobile apps to power in-app subscriptions.

Jacob was working as a CTO for a mobile app company…

It was a real pain for him and his team to enable in-app purchases and subscriptions. He thought it would be a great idea if someone could make it easier.

But he did nothing with the idea for 2 years.

Eventually, he left his job to build a solution himself. He started with a simple SDK and posted about it on Reddit. And he was torn apart by people who thought that he was trying to become an unnecessary middleman.

But there were a few people who understood the pains and were interested in his solution. He focused on them.

He improved his product and did a beta launch. He only had 5 people signup and created an account.

It seemed like his idea was going nowhere. He wasn't generating any revenue and relying on his wife's job.

He had a few months of runway left. But he didn't want to spend a lot of time improving the product if he didn't have customers guiding him.

So he started writing content. He spent 6-12 hours a week writing and publishing a blog post. And he did this for a couple of months.

He kept doubting himself. He didn't think he had what it took to turn this idea into a real business.

Slowly, he started to see some SEO traffic trickle in. He finally got customers and was making $400 MRR. That gave me the encouragement to get more serious.

By the end of that year, he'd grown his business to $7K MRR. He started thinking that maybe we could grow it to a 6-figure a year business.

But the last couple of years have been huge. Jacob has grown his business to over $160K MRR ($2M ARR).

In this interview, you'll learn how he's gone from struggling to find customers to building a multi-million dollar SaaS that's still growing fast every month.

I hope you enjoy the interview.


Click to view transcript

Omer Khan 0:09
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 share their stories, strategies and insights to help you build, launch and grow your SaaS business. In this episode, I talk to Jacob Eiting, founder and CEO of RevenueCat, a SaaS platform that helps mobile apps to power in-app subscriptions. Jacob was working as a CTO for a mobile app company. And it was a real pain for him and his team to enable in-app purchases and subscriptions. He thought it would be a great idea if someone could make it easier. But he did nothing with the idea for two years. Eventually he left his job to build a solution himself. He started with a simple SDK and posted about it on Reddit. And he was torn apart by people who thought that he was trying to become an unnecessary middleman. But there were a few people who understood the pains and were interested in his solution. So he focused on them. He improved his product and did a beta launch. But he only had five people sign up and create an account. It seemed like his idea was going nowhere. He wasn't generating any revenue. And he was relying on his wife's income. He had a few months of runway left, but he didn't want to spend a lot of time improving the product if he didn't have customers guiding him. So he started writing content. He spent 6 to 12 hours a week writing and publishing a blog post every week. And he did this for a couple of months. He kept doubting himself. He didn't think he had what it took. To turn this idea into a real business. Slowly he started to see some SEO traffic trickle in. He finally got customers and was making $400 in monthly recurring revenue. But that gave him the encouragement to get more serious. By the end of that year, he'd grown his business to 7K MRR, he started to think that maybe he could even grow it to a six-figure a year business. But the last couple of years have been huge. Jacob has grown his business to over 160K monthly recurring revenue. That's over $2 million annual run rate. In this interview, you'll learn how he's gone from struggling to finding customers to building a multi-million dollar SaaS that's still growing very fast every month. Hope you enjoy the interview. Jacob welcome to the show.

Jacob Eiting 2:58
Hi, good to be here.

Omer Khan 3:01
So do you have a favorite quote, something you can share with us that inspires or motivates you or will will get us excited or inspired about our days?

Jacob Eiting 3:10
Yeah, no, I do. And I'll probably miss a tribute, but I think I heard it. They're one of the stripe founders. I think it's Lance Armstrong quote, but don't hold me to that it says, “It doesn't get any easier. You just go faster.” And, and like, as I think in the last couple years, as we've been scaling RevenueCat, you're always like, ready to every hill is a false Hill, every hill you cross, it's just there's another bigger hill on the other side. And once you settle into that, things kind of get easier you just realize it's just always gonna be this hard. It's just going to be different. There's a corollary along with that too, I think for another Stripe employee Actually, I heard which is the “The only reward for hard work is more hard work”. Seems to certainly have held up for at least these first few years.

Omer Khan 3:52
Okay, so for people who aren't familiar with revenue can't tell us about what does the product do, who's it for and what's the big problem you're helping to solve?

Jacob Eiting 4:00
Yeah, so we make an SDK and an API for mobile developers to add subscriptions to their apps much easier. And it allows them to build and scale their businesses by providing dashboards and integration tools. And really just all the missing infrastructure that the platforms like Google and Apple App Store don't necessarily provide out of the box. By using our system, you kind of get most of what you would maybe take a year building if you were building one of these businesses from scratch.

Omer Khan 4:29
So you guys launched in around 2017. And when I was doing research for this interview, I found a revenue number around November 2018, which was 6.9K MRR. And now we're talking July 2020. So two years on, less than two years on and that's 6.9 MRR number has gone to…

Jacob Eiting 5:03
Like 161

Omer Khan 5:04
160K, that is awesome. Okay, great. So we're going to dig into the story of how you started the business and all the things you needed to do to get that initial traction and, you know, get to around 7K MRR, and then we're going to talk about growth and and what's happened in the last two years just to drive that that sort of growth with revenue cap. So why don't we start with how did you come up with the idea for this product.

Jacob Eiting 5:35
So my co-founder and I, prior to starting this company, were worked together on an engineering team at a company called Elevate, which was a brain training app on App Store. So it was games on your phone that kind of helped you with language skills and kind of keeping sharp and we were very early to the app store as far as like building subscription-based consumer products on the App Store site. We provide these games in this content and you pay us might remember what the price was a 499 a month subscription or 899, whatever it was. And we kind of had this interesting strange we launched the product we didn't have subscriptions in it product was not monetizing very well at all at the company was kind of in a in a tight spot. Then we were like, okay, let's let's just see if we can monetize with subscriptions. So we shoved in subscriptions really quickly. And then that next week, Apple calls and tells us that we're going to be App of the year, which was great. It saved our company. It was amazing, like, launched us on this like crazy trajectory. But what end up happening is we had this really rushed subscriptions infrastructure that suddenly was loaded with all this usage. And you know, okay, so dust settles from App of the Year and we're trying to like figure out okay, like, how do we build this business? It was like, Well, how many people are turning we don't know that how many people are converting from free trial to paid we don't know that who's converting for free trial to pay, etc, etc. all these things that Google and Apple's subscription platforms don't really make easy for you to extract. We were spending a ton of our engineering resources internally building back end systems to just extract this data, give it to marketers and other stakeholders who were, you know, working to scale the company, my company and I remember having a conversation in probably 2015 being like, this is really dumb. Why are we it sucks at every sprint, we have to spend more time on the system, we should build something or somebody should build something, then of course, we just waited two years before we actually did anything, but that was that was sort of the beginning of RevenueCat as a as a product, but it wasn't for a couple of years on I've actually started working on it after that.

Omer Khan 7:32
So I mean, I don't know that much about app development, but it doesn't seem like the easiest problem to solve. So it's not like you know, yeah, I'm gonna kind of go away and build this MVP over a weekend and, and, you know, people are gonna start using it. And then as you and I were talking earlier, there's a whole bunch of overhead that comes with this in terms of you know, when you're having this information to play apps, it's so dependent on you, there's got to be such a high level of trust before they start using you. So how did you get started?

Jacob Eiting 8:10
So I mean, we started just with a small I mean, we still started with an MVP. So that my first, our first anything was I was like, Okay, if I were building this for me, at Elevate like, what, what I want it to look like and we coded it, I coded up a little SDK. And Miguel, my co-founder, wrote up a little API to service that SDK. And I went on Reddit and was like, Hey, does anybody want to use this? And of course, like, I got torn apart. But we did get a few people to sign up. And it took a few months, I think it was maybe like 60 days until like, the very first app was like, they had enough utility that some app was going to use it. And the real reason for those very first customers was just that they opened up the Google Docs or the Apple docs. And we're like, Whoa, this is a lot of work. Hey, this guy on Reddit had posted this thing That said, it makes it much easier. We're just giving it a try. And it just it took us just a few months until somebody was crazy enough to do it, right. And I think that's kind of because of this infrastructure and trust problem, right? Like, if we were launching from a trusted brand, it might have been different. But in the very early days, like, you're just gonna trust some random internet person. Okay, sure. He worked at Elevator, whatever but there's still like, like, how long is this project going to be around? Like, can I rely on this etc, etc, is especially a problem early on for dev tools.

Omer Khan 9:25
So when you when you go to an upon on Reddit, did that make you at any point kind of think twice whether this was a good idea or not? Or it was just the kinds of questions or kind of criticisms that you expect it to get.

Jacob Eiting 9:38
There's like a couple categories, right? There's people that are indifferent, which those are pretty useless to you, as a product builder. There's people who get really excited. Those are the ones you should focus on, if nobody gets excited about your product, yet a lot of problems. But if there's a group, a small group of people who do get really excited, then focus on what they want, talk to them, because there's probably more people like them and there might be enough that you can just build for them. The middle, I mean different people like they will come along eventually if the product gets good enough that people who are just the haters like don't worry about it too much like the most likely they were never going to use your product anyway. And they just like being mad on the internet. I remember we wonder, Is it enough subscriptions Made Easy was like the tagline in the early days, and somebody on Reddit posts rip off middleman made easy. And it's just like the meanest thing I was like. That's so me and like, you can't help it does affect like, it shouldn't right. But here I am 3 years later, still thinking about one mean Reddit post. And like one throw, it's funny when things are due. Like when somebody posts something really nice about us. And we shared in our Slack, I always sometimes I'll dig up that post. Or when we hit a new revenue goal, post it there just to be like, just remember, like, it doesn't matter what people say, as long as you just keep working hard, right? Like you'll eventually succeed. So yeah.

Omer Khan 10:50
So what was what did the first version of that SDK actually do?

Jacob Eiting 10:54
I mean, it was super simple. It just it allowed developers to basically add subscriptions to their app without writing a back end server. Because it's kind of one of the required steps. If you read the Google and Apple docs for this, it'll say like, Oh, you have to have a back end. And actually a lot of mobile apps don't, or their back end is limited, or it's just not something they want to do. So that was kind of the very first basic functionality was literally like, make a purchase through our API will talk to Apple for you. And then we'll post it to our back end for you. And then we'll track all the updates and everything so that you can keep that user status correct. That was basically it. I don't even think we tracked prices, or we didn't really have our analytics dashboard was really rudimentary like you did very, very, very little. And that was actually kind of important. In the early when you're launching a product. And it's sort of the MVP hypothesis, like make the crappiest product you can that will somebody will have a quantum of utility, right? I think it's a Paul Graham thing. Quantum minimum thing that will be useful and if that's sticky, and you have a little bit of traction there, keep going right like then worry about like, okay, like, how do I work? on making this something I can convince people to use, but you can tell when there's that quantum of utility and people will use it despite all the problems. That's when you know, you've kind of got something.

Omer Khan 12:10
So was your first customer or user, a friend of yours?

Jacob Eiting 12:14
So it depends on how you date it. But like the first app that that integrator SDK was definitely a friend. Like I went to all my friends, the first thing I did went to my friend said, Hey, is anybody working on a subscription app, I will do all the work for you, if you let me put this SDK in your app, right? Because I needed to test it. Like I had written it. I had like, been like, I had a test app, that was fine. But until you actually integrate it with somebody, like in the production system, there's a lot of edge cases and things. So like I that was really useful for me in the very early days to kind of like, and I learned a lot like see how it would actually plug in and made a lot of changes. And it was great. We had no customers, it was me and my friend,s app. And I was just acting as a customer building. And then I could make adjustments to the SDK and the API and like, make it better. And I did that a few times. So a few people's apps that were friends or friends of friends. I would be like, Listen, you can get a week of free dev time out of me, man, I will totally implement this entire thing in your app, you don't have to worry about it right? So I was basically giving away you know, talking about like, cost of acquisition, right? It was like whatever a week of a developer's time as which isn't isn't super cheap. That was kind of our strategy initially, but actually that first app that actually hit the store ended up being somebody I didn't know which was which was cool. So but but at that point, the party had been through some iterations.

Omer Khan 13:24
So Miguel was working still he was still full time at Elevate so this was like a evenings weekends thing for him. You were working full time on this but the product wasn't really generating revenue. So like what you kind of living on savings like how will you sort of..

Jacob Eiting 13:45
a little bit of savings a lot of bit my wife who had a job right and this is where like, you know, honestly, like privileged and just having a saved up some money and having some safety net around you kind of does make starting a business a lot easier. So for like six months or I mean, until we raise money RevenueCat really couldn't pay pay me anything over a year that I was I was just basically working on this for free. And I was able to do that because yeah, my wife had a had a nice computer job that paid well.

Omer Khan 14:14
So what was it about this idea that kind of got you to take that leap of faith and say, um, you know, I'm going to do this I'm going to basically not generate an income and this sort of you What kept you going like was it just based on how painful this experience have been in terms of building this type of solution at elevate? Was it kind of market research? He did? What was it that sort of told you this something here? And I should keep pushing forward? Yes, this

Jacob Eiting 14:52
is gonna be like, not the the fairy tale startup founder story that people like to hear like, Oh, this problem was just inside me and I had to make it real right. Not that story. So it was literally like, I love to elevate because not because I wanted to start revenue. But because I wanted to start a company I had kind of worked my way up and seen a lot of elevate and I knew like, Okay, the next phase in my career in life, I want to start something as my own and that I can show something that has an unbounded upside that I can continue to just, you know, see how far I can take it and I think a business is really good vehicle for that. But I didn't know what I wanted to do. So I did, you know, took a little time off, like messing around, like played with my hobbies, learned to design, you know, rounded out my skill set a little bit and then I got really bored after like, six months or so, and started to like, write down ideas. And I started I started with the big Elon Musk ideas right like rockets and airplanes and things like that,

Omer Khan 15:40
Of course

Jacob Eiting 15:40
Yeah. And I started do some research and like look who what other companies were in the space and who would have been tried. And firstly, I was like, okay, I am way out of my league on this stuff. Like there are people who know this stuff better and they're not doing you know, nobody's like crushing it. So Mike, am I really going to be able to do well here I was like, okay, I'm going to start a company. It's really hard and based on that, it really tells me it's really hard. So I should just stack the deck in my favor as much as I can, right like, so let's pick an idea. I know how to do. And a market that I know exists and need I know is there and with with tools that I know how to build with, which were, you know, these API's and iOS, SDK's were something I had, you know, as an engineer I had worked with extensively. So I was like, Alright, RevenueCat, this idea for this API. It's not the it's not the coolest idea in the world. I mean, it's subscription management API's. It's like not wasn't my passion, but like, I'd like I know, this is something that if this market is here, like I can build this like and and I've learned later that that's called product founder fit or company founder fit, you want to find something that you are uniquely positioned to work on, right. You don't want to go into something you don't want to build something for, not you. You know, in some ways, it gives you a lot of lets you skip over maybe a lot of customer interviews, you might have to do otherwise. Right if you are the customer initially. But yeah, I hesitate to tell that story because Yeah, sometimes it's like, you want to hear the passion project, the lifelong dream or whatever like that, but for me really, it's just a lifelong dream is to, is to build something really big, you know, since then we've kind of coalesced the story and the mission or of revenue cat around helping developers be successful, which is kind of the story of why we started the first place which Miguel and I were developers, and we wanted to, you know, make more money started company, it's not RevenueCat we're building tools to help developers do that on a very large scale. And that's a mission I'm now I kind of came into it in the reverse way. I started without like, a real clear vision and mission for the company. And now I have like a super clear vision for where we want to take it in the next decade.

Omer Khan 17:35
So you had a handful of apps sort of initially that sort of came on board to start using RevenueCat, were you charging anything at the time?

Jacob Eiting 17:46
So for my friends, no. But the first app that signed up so initial, and this is like, I think probably one of our big there's been a couple moments where like, we just we missed on something and we fixed it and it changed things like very rapidly. Initially, the way we price the product was like, Hey, give us three and a half percent of your revenue, which I had arrived at because I did like a market sizing. I was like, well, if I get, you know, how many apps do I need to get to pay my salary or whatever, and did a really poor bottoms up market analysis on it? And and I was like, Okay, I'm gonna need 3% or whatever. And turns out that that's way too much for take rate that people want to like give up to a tool. And then secondly, it's just not there's other ways to like say that without saying three and a half percent, which is kind of what we do on our website now we talked about like bundled amounts of revenue volume, which equates to a take rate, I don't think anybody's super surprised, but it kind of pitches the value better. So like, in the early days, we did charge a little bit I had like two invoices go out that that really aggressive pricing, I think we made total maybe like $300 and then this was before we got into yc and then I was like, okay, like, once we got into YC and talk some people that we realized our pricing was probably way off. This one, we decided to pivot to the price and kind of we have now. And then I just I just stopped charging those people. I didn't tell them why I just was like, I'm just gonna stop setting because in the early days, we'd have a billing system either, right? So to charge them, I had to like, go into our like invoicing software and like write an invoice and send it to their email. So I just stopped doing that nearly once we decided to change our pricing.

Omer Khan 19:21
What so that was just using it for free?

Jacob Eiting 19:23
Yeah, yeah, essentially, I mean, we created a really generous free tier. So like anybody making less than 10K a month can use our basic API for free. And that was a big change shows a big pivot moment for us as far as like, people being more willing to try it if they don't have to, like commit to paying, especially like up front. If they can just like get it going. They're gonna think less about it. And to be honest, like if you think about how products are sold into companies, if the developer doesn't need to get like budget approval for something, then there's more likelihood they're gonna use it right as opposed to they have to go to their boss and say, like, Oh, just give me $100 a month, right? It just kind of like reduces that friction or early on.

Omer Khan 20:01
How else did you find customers like, so you were sort of reaching out to friends. What are the sort of outreach were you doing to try and find potential customers?

Jacob Eiting 20:13
Yeah, so you just kind of exhaust your easiest channels first, right? So it started with friends. And then I was like, well, I'll go on Reddit. And I posted there and like maybe on Hacker News, or maybe on my Twitter or something like that, for the beta launch in December of 2017. And then quickly, I like got 30 signups and then like that, and then that was it. 30 signups altogether from all those places. Yeah, exactly. Like, which, you know, not crazy good, right. And most of those people were just like requesting a beta and then I would send them the invite, and then they would never sign up, right. So maybe I had like five people who even like created an account and said, like, Okay, well, I guess we have a lot of work to do. And so after I kind of exhausted his obvious channels, I was like, what am I gonna do I have any customers so I wasn't like ready to iterate on the product too much because I just didn't have any feedback. So I just chunked out two days a week to writing content related to the problem. And the theory was like, okay, developers are experiencing problems in this space. If I can write content that answers their questions better than the doc scan. And then it just happens to say RevenueCat at the top, I feel like that's going to, that's going to like be good for us. And I didn't push revenue cat very hard. I had like a few places on the page where it's like, hey, RevenueCat does a lot of this for you if you want to check it out. But then I would actually just dive in, like we're subject matter experts on this stuff. So like, we just I just dove into all the engineering applications, why it's difficult, the things you need to look out for the gotchas and you know, I would post them on HackerNews and Reddit or whatever, and none of them like blew up but what started to happen is I did I did that every week for like two months. And by the end of that there were just enough trickle of started SEO well, and like that trickle started become a stream right? We started to just get like, kind of like a daily little flow of traffic off of those blog posts are still persist today, and I still think that was probably one of the highest leverage activities I did in the early days was was just taking those those 10 weeks to write a bunch of content because it established my brand as a expert on this and established the company's brand as being somebody who really understands its problem probably better than you. Right? So like you should trust us. It goes back to that building trust thing.

Omer Khan 22:19
So how much time are you spending on writing the content every week? And was this something that you had been doing before or was sort of writing a new thing for you?

Jacob Eiting 22:30
No, I was kind of I did not do very well in English in high school. It may surprise you to learn more of a calculus kind of kid but no, it was a challenge. My wife helped me a ton with copyright editing like and just making sure it was like the English was proper and stuff and I paid for Grammarly and all that stuff just to get over the like technical aspects of it because I wasn't at the point now we now we just have read a copywriter right. So we just sent it to a copywriter $200 post or whatever and we can afford that but back then I was you know, trying to be cheapest. I could So, yeah, I would take, how long would it take me to write a post, like, eight hours was fast, if I could get a post done in eight hours of work, because it takes you a while to research it, then you write a draft, then you like, tough to walk away, because he can't, like, do too much writing at once. So you array you walk away, come back later that day or the next day and rewrite, and then you do that three or four times, and then you know, send it to somebody else to look at. So it was a lot of work. I mean, two days was probably fast if I could get one done in two days. But you know, you make a process out of it, you list all the different things you can write about you, you rank them on, which is going to be you think it's going to be the best and fast and like most effective, and then you just got to do it. It's a grind. I still have a hard time writing content now. Because like, it just like sucks up so much time. I can do podcasts all day long. So they're easy. Just talk. Sorry.

Omer Khan 23:50
Yeah, yeah, no, I find that too. It's like, I write stuff and and people will look at what I've written. And they say, Oh, that's really good, right. Generally it's kind of positive. feedback. But to me, it's like writing is like, pulling teeth.

Jacob Eiting 24:06
I hate it.

Omer Khan 24:07
I don't know if that's supposed to be like that, or not.

Jacob Eiting 24:10
You know, but but but it's effective, right? It's like, a lot of times if something's hard, you know, there's value in it. So if you can, if you can push through that pain and learn to, like, make a process out of it, I think that's a real advantage, especially if you're a decent writer, or you can find people who are decent writers who can give voice to your, you know, whatever you're doing, I think really does pay off.

Omer Khan 24:29
So did you do like any keyword research or, you know, kind of come up with sort of like a content plan? Or was it really just, here's a list of stuff that, you know, brainstorm a list of stuff that I could write about that I think is interesting that I know something about? What was the criteria?

Jacob Eiting 24:44
Yeah, mostly that it was just like, okay, I now, you know, having worked with content marketers and stuff like now I go, Okay, that's content plan, right? This is like keyword research, right? There's like, names for this stuff. But back then I was just like, Oh, no, I'm just gonna write about stuff. I think people will Google And it turned out to work really well I socially like looked for I think about writing about technical topics. If you write about like a particular call or a particular API, if you put that in there, Google will pick those up really easily. And so that worked out really well. We were throwing error messages and things like that. And when people would have an error message, they jumped to Google the search it, Apple might be the first hit, but then like, our blog might be three or four and people are just going to click on it, you know, nothing else out of curiosity.

Omer Khan 25:26
Okay, so I was looking at a graph of MRR back in 2018. And it was kind of like, almost nothing happening in May and June, then sort of July and August sort of look like yeah, maybe there's like three $400 in MRR and then suddenly, from August to November, like three months, it goes from you know, $400 MRR to almost $7,000. What happened?

Jacob Eiting 25:59
I guess it was the early indications of product-market fit? Well, okay, so so we did launch one concrete thing, which was integrations like prior to that we were just kind of collecting your data showing you in a graph, it was all like in our product, we realized a lot of people were asking us, like, Hey, we want to send this to this marketing platform, or this attribution platform or this analytics thing. So we're like, okay, let's build, like integration. So we can just can do these connections for developers. And we built that. And that's how we found our first like, big customer that I didn't know or didn't come through YC. There's like first, like, 300 $400. And in December, that was during YC. And we were just kind of like begging other YC companies to like, trust us. And that's a little bit you know, you talk about bootstrapping, trust. YV is a good way to do that. Right? Like, you get into yc. And they're like, Alright, at least I know, these guys went through the same program that I did. But then after that, like in September, yeah, that's when the first customer came to us that we didn't know. That was like, Hey, we have this problem and we'll pay you handsomely for it. And we're like, sure. Like, the funny thing was when we launched integration. Actually, we didn't actually do them, we didn't actually write them, we just made the landing page. So we picked like 15 tools or whatever it was that we thought would be make good integrations. And we just like wrote like an indexable, landing pages for all that stuff. And then there was like a contact button. And then as soon as somebody asked for it, like Miguel would turn around and write the integration in two days. And it's funny, like, end up being really smart, because like, we did get a couple customers without having it written initially. And then, honestly, we just finally finished up the last one like a month ago, like finally. And I mean, that's like, advice you hear, like, try to try to not do as much work as possible, right? Like be as lazy as possible as far as like, putting things off because a lot of times you won't even need to do them, right. And so like we were able to, like take out a loan, essentially, and sell like we had all those things, because we knew we could quickly build them if they were needed, right. And that's kind of just like a general hack when your team is small.

Omer Khan 27:54
So when you finished YC, which was what sometime in 2018

Jacob Eiting 28:00

Omer Khan 28:01
You were making about $400 a month, you raise some money there as well. Right?

Jacob Eiting 28:09
Yeah. Yeah. So we raised a small, like a million and a half seed right after YC when you do YC it's kind of one of the things that maybe I wish I had. I don't regret anything, but that's one of the things we, you know, I applied to YC probably a bit naively thinking like, Oh, it's YC it's like a credential or whatever. It's like a, you know, the I was enamored with the brand, which it lives up to it, to be honest, like, it's a great program. But it really the real thing is it's it always starts you down this like fundraising path. And really to get the most usefulness out of it. You want to leverage the end of your demo day into a fundraise. And so that's what we did at the demo day, we raised a small seed round a million and a half dollars to kind of let us hire a basic team and start to start to scale things up a little bit.

Omer Khan 28:53
And one of the things that we were talking about this before we started recording was that you had said that, you know, I kind of didn't really take this business seriously until after I joined YC like there was still doubts in your mind that is this the real thing, right? So what was going on in your mind up to the point that you went into YC and what was it that changed your mindset going through the YC program?

Jacob Eiting 29:25
Yeah. So So this was and this is priced into an individual founder psychology I'm sure not all people are like this, but I think you know, I had done my homework and I had done the business plan I had thought about it but still in the back of my mind I had never had something do really well before right. I had worked at companies I always had jobs I could pass an interview fine, but I'd never built something that truly was like going to gotta grab the ring or whatever. And so even RevenueCat I you know, surfing a lot. I was like, maybe not taking it as seriously as I should, right? Because I just didn't know like, I think subconsciously I was kind of waiting on somebody's permission, you know. And when I got into YC, my mindset totally changed. Maybe subconsciously. And I like was like, okay, like, here we go, like, let's buckle in let's let's really like try to try to leverage this mountain issue mindset. Like, let's, let's see how far we can take this thing. It's real now, right? And looking back, I'm like, you know, I didn't need their permission to take it seriously, right? Like, I could have just done that on day one. And so I tell founders that now as like, as soon as I help a lot of people who are interviewing for YC and stuff, and I always say like, hey, like, do you want to get into YC? take it seriously now, right? Pretend you're in YC. Now, pretend demo days in three months, right? Just like treat your company like seriously and good things will happen. And I don't know. I think also I just maybe had a chip on my shoulder. You know, I didn't go to Stanford. I didn't go to Columbia, right. So like when I got into yc, and there were all these like, really smart people and like, all these like, Titans, for lack of a better word of Silicon Valley running around, you're like, Okay, there's no further level, right? Like, I don't need any more credential or permission from anybody like I can now it's all up to me. And that was really useful. But I do think it was just like, totally psychological. There's, there's not as much magic there, you know? So take it seriously, it's my advice.

Omer Khan 31:12
Yeah, I guess the hard thing is, when you're starting out, you don't really know if the idea has any legs, if it's gonna get anywhere, whether you're gonna get traction, or you'll find product-market fit. And I think it's like, it's almost like an especially, I guess that was different for you because you were doing this full time. But if you sort of doing it, like, you know, can still have a job. And I'm sort of dipping my toes in the water and, and it feels really nice. And I get that reassurance and like you said, the permission then I'm gonna kind of go in but I'm just yeah, I'm just waiting, man.

Jacob Eiting 31:49
I see that all the time with like, especially people who are trying to like bootstrap out and kind of Yeah, kinda like have that safety net. And I think there are definitely cases where that works out. But no matter where you decide to take the leap, it's always gonna feel scary. I'll tell you I'm still after YC like we weren't sure I was gonna say when we raised our seed round I was like, we had $400 a month and MRR. And I was going out raising a million dollars because I had this like, I was like, Marcus is big if we can get this percent we're gonna make a lot of money. But like, did I believe it? I mean, I believe it could happen. Yes, I believe it would happen the different questions right. So like there was still a lot of suspension of disbelief even even after YC and mostly now that's kind of probably the biggest shift in mindset in two years since then, is that now I've watched it compound for two years every month I'm waiting for the other shoe to drop every month I'm waiting for the down month so the terrible thing to happen that just like you know, exposes me as the fraud I am but it just keeps on happening and now I'm now I'm starting to like really honestly believe hopefully that that hubris doesn't get me in the end, but it took it took a long time for me to really be like, okay, like this thing is going now and like we just need to go faster. That's kind of the stage we're at now.

Omer Khan 33:02
You know, I heard something from a very successful entrepreneur completely outside of, you know, tech, in terms of like about mindset. And he said, like, if you're into the idea, you think there's something there. You see, there's the opportunity. A lot of the times, it's not that you're doubting that there's an opportunity and something can happen. You're sort of doubting whether you're the person who can make that happen, right. And, you know, it's not it doesn't apply to everybody. But I think just I think I've seen a number of people go through this. And he said, one thing that really sort of stuck with me, which was look, you sort of think about this, and you say to yourself, look, somebody is going to do this. Why can't it be me? Right? And I think if you just kind of keep asking yourself that question, sometimes it can be kind of helpful just to keep going, pushing forward.

Jacob Eiting 33:56
Yeah, I mean, it goes ties back to that that founder product fit right? It's much easier to say emphatically yes to that question. If you pick something that's really you're really strong at, right? If I was trying to work on my electric airplane startup right now, I probably wouldn't be here. Right. Like, I would have scrapped it and I would have gotten back and gotten a job and, you know, just done that thing. Right. But I think because we chose something that was really in our wheelhouse, it gave us the confidence to be like, yeah, I'm sure other people could build it, but like, I think we were the best ones for the job. And and if you believe that, then then look out like you're, you're powerful at that stage.

Omer Khan 34:32
Okay, so you raised the seed round. So you got about a million and a half and some change. What was that like, like for you in going out and fundraising? It was it a process that was easy to pick up doing it as opposed to time?

Jacob Eiting 34:55
It kind of depends on your personality and just kind of what you're good at if you're good at sales. Which I found I discovered, I was an engineer. But during starting RevenueCat, I realized I kind of fell into some sales situations, right, where I'm trying to sell stuff. And I was having a lot of success and kind of realized I liked it was like, Oh, I'm actually pretty good at sales. And so fundraising is just another, it's another sales thing. You're going out there, you're pitching this vision, you're trying to tell these investor like, wow, their life is going to be improved after they make this investment. Right. So is what you're trying to paint the picture of this like post close world where where things are better. I know that now but intuitively, that's how I you know, you just kind of how you go about it. But we were also hesitant to give too much like a picture of like, what our fundraising experience was like, because I think we just had a lot of trends in our favor. Going back to stacking your deck like I had done the market research, there was nobody else doing this. It was a little bit of a weird idea and like something new, which maybe hurt us or might have helped us. So like I ended up being able just to kind of talk to a few people had come to us directly and and he was able to close around really fast. So Once you get like a Jason Lemkin came into our round, he was like the first one to jump on board of SaaStr fame. Once that happens, like the dominoes just kind of fall into place, once you get one like good investor on board, because people people tend to feel better about the decision.

Omer Khan 36:14
I guess it was the same with RevenueCat and getting on customers. Like I guess once they're seeing, oh, this app and that app are using it. There's a lot of social proof and it kind of builds it.

Jacob Eiting 36:26
Yeah, it's huge investing as well. Yeah, social proof is.

Omer Khan 36:30
So what what's happened in the last couple of years, like how did you go from 7K MRR to what was that? We said 160K yeah, and and you're still growing month over month. So what's been driving that growth in the last couple of years?

Jacob Eiting 36:50
I mean, like what how we've done that one month at a time, essentially, but I mean, aren't we have some some useful dynamics and this is why pricing is really important. And founders should think about pricing at least in structurally at the early days, you're not going to get the numbers, right. They're like dollar values, right? But you can at least get the like price structure. Correct. And one big change the early days, we shifted from charging people by number of users to number of like, basically revenue. And that has kind of been wire our growth has been so good is that these subscription apps tend to grow like these, we're basically aligning ourselves with all these little businesses, right? Some are bigger than others. Some are big businesses that are trying to grow themselves right and and we stand to benefit from their growth, right? So we're at the point now where we have enough apps in our portfolio growing customers growing that even if we have a slow month on new business, like the the the revenue just grows, and that's wasn't a mistake, right? Like we knew that would happen. That was a dynamic that we knew would happen once we had enough customers. It was it was very theoretical. In the early days. I was like, I think this will happen once we get enough customers we will just kind of expand over time. But once it starts happening, you know, 4 or 5%, monthly revenue growth like base just from expansion really starts to add up. Like when you especially as you get bigger and bigger, it's like exponential stuff. Everybody in the era of COVID now knows about exponential growth, but it's really slow for a long time. And then it's really fast, right? And so that that's been kind of the tipping point. And then it's just been kind of a slow, you know, increase in every month just trying to talk about our brand a little bit better make the product a little bit better talk to our customers, you know, customers, if you have a good product, especially something in this kind of space, developers talk to each other. So if you do a good job and make people happy, the word of mouth is non-trivial. And that's also a compounding process, right? So the bigger your customer base gets that growth from word of mouth grows with your growth, right? So it's also an exponential kind of process. So those two things kind of combined. That's my theory for why why things have gone a lot faster. It's interesting on the, besides, we had a goal to hit a million in revenue last year, and it by the middle of the year, if you just like drew the straight line, we were like, not gonna make it. And I was like, well, we tried, right, we're not gonna make it and then you forget. And startups, you have to draw curve line, right? We did it by making it right. And so yeah, that was probably one of the biggest lessons I learned is like, is like compounding effect, like try to build as many compounding effects into your business as possible, because like, those are the things that you can rely on year over year.

Omer Khan 39:26
So what was a few? I mean, content was obviously a big part of that. And you continue,

Jacob Eiting 39:30
Yeah, I mean, that's something that you It takes a linear amount of work to create, but then that piece can potentially if it's evergreen, produce every month forever, right? So that that just like increases your rate. I think hiring is another compounding advantage, like making sure you're hiring the right people, making sure that they're happy, right culture building, making sure that people at a place where they can work efficiently, because you're gonna keep scaling by adding headcount. But if organization doesn't get less effective as you add more people, right if you don't have as every company has some diminishing returns, but if you can limit that, you know, I always think like, creators or engineers or whoever, people who build stuff, building doing little improvements, like every day for a very long time that's a big compounding effect, right? Because you're gonna look back and suddenly your product is way better than it was a year ago. Right? So building a culture around shipping and around moving things very quickly, I think has a compounding effect. So all of those things feed back into the revenue right so like, that's all ultimately what you're trying to what you're trying to build is your reach and, and revenues kind of a measure of like how well you're fulfilling your mission. So So yeah, that's, that's that's sort of a learning I've kind of stumbled into not so much on purpose, but we I've kind of now seen all these effects coming in, you know, a year or two since our, our fundraise and like eventually the ball just starts rolling without you pushing it right. And now you're just trying to keep up.

Omer Khan 40:49
So it can we sort of look at the story. It sounds great. You know, you had this idea. You started working on it for a while. It got into YC raise money, did the hockey stick growth curve to 2 million ARR we talked a little bit about sort of the regrets and things you'd done differently or do differently, like, you know, taking the whole thing more, more seriously without, you know, not seeking permission getting into YC. And just doing that on your own and having that mindset. What else do you look back? And sort of, either wish you had done differently or feel was, you know, a particular challenge that, you know, you learned something from.

Jacob Eiting 41:38
Yeah, I mean, I think everything we do I add best I get something 80% right. So there's always a little bit I can learn in every step. I mean, we had, I will say like, we've been fortunate that we this is like the last thing you say before something terrible happens, right? But like, so far we haven't I haven't. I don't have like a huge mistake. I mean, there's certainly been like interaction with customers that I've screwed up, like just through lack of focus, or there's definitely been like projects I've liked a long, long and things like that. But that's that's kind of those are fixable problems, right. Those are things you can iterate on. And so like, I think, some problems we had early on, and I won't call them problems, because, you know, we did resolve it, but when you hire people early, and you feel like the bar shifts, right, or that you that you didn't interview them properly, or like there's just not the right place for them at the right time. You have to act really quickly in the early days, right. So we ended up having to, we ended up in our first year of like scaling, hiring five people and and letting two of them go. And it doesn't sound like a ton, but for a company of our size, like that's kind of a lot of disruption. Right? And those were mistakes on our part. We learned a lot about like what we're actually looking for, right? We learned we kind of improved our interview process and I won't, I won't call them huge mistakes. I think it could have been huge mistakes. If we had just muddled on, right? If we had just been like, well, this is the new normal, and we're just not going to be as effective as we were before, right? Or we're not going to get everything we want. And so those were kind of learnings. And there's always like little mistakes about fundraising, like learning. There's so many like little unspoken courtesies and things that I don't know because I'm just like an engineer trying to like build a business. Like, I'll be like, Oh, wait, I was supposed to ask you if you wanted to put in more money. Oh, I didn't know that. Or like, Oh, it's like a composition, what's rounded composition like those users invest in that they get stock, right? What's the problem? Right so there's a lot of like little stuff like that, but like to be honest, you know, you'll make mistakes. You just don't want to make the mistakes that'll kill your company, right? Like most mistakes you can you can correct so like, the biggest regrets I have, and I apologize for not having like so many, like concrete examples are the ones where I know there's a problem and I don't do anything about it for too long. Those are the those are the things I really try to minimize

Omer Khan 43:56

Jacob Eiting 43:57
And trying to get better about it as time goes on.

Omer Khan 43:59
So So, also looking back at like the process you went through to, to pick this idea because it wasn't like you said, Oh, you know, the clouds opened and I had this inspiration. And it was like, this is the thing. It was like, No, I wanted to go out.

Jacob Eiting 44:13
The Monty Python Holy Grail.

Omer Khan 44:16
Yeah. So, but it was more like a process you went through, I want to build this business, I want to do my own thing. I got a whole bunch of ideas and eventually picking one that you thought had some legs. What's your advice to somebody who's maybe in that position right now?

Jacob Eiting 44:30
Stack your deck, and put as many cards as you can in your favor. So that's like finding the best co-founder, you you know, or the person that's like, Miguel was like, when I made my list of people I could work with on this. Like, it wasn't very long and Miguel was at the top right. So he was like, I gotta get Miguel to build this with me. And I got to pick this thing that I know really well, right, like, technically, and I can build right do something that you can build. I think sometimes founders. Sometimes I see especially solo founders struggle with like, oh, I actually on your podcast, Paul Joyce talking about how he he relied on contractors a lot early on. And that just like slows down the feedback cycle and makes it very expensive. So like, if there's something you can build, if it's with Zapier or Airtable or whatever, like bigger product that you can iterate on to kind of get that first initial product-market fit before you have to or or have a co-founder you really trust that knows how to build it. Because having somebody on that on that team, I think is very important. So just like stacking as many advantages as you can, before you even kind of get into the market right before you even kind of like build a company and you're out there battling with all the stuff that companies have to deal with scaling, customer support, funding, like all that stuff, just like try to build try to set up as many advantages for yourself as you can, when you're kind of thinking about what to what to do.

Omer Khan 45:47
Alright, let's wrap up here. We're gonna go into the lightning round. Can I ask you seven quick-fire questions? So are you ready?

Jacob Eiting 45:54
I am. Ready. I got my answers written down. I mean, look at them real fast. So I can sound super smart. All right, let's do it.

Omer Khan 46:03
All right, what's the best piece of business advice you've ever received?

Jacob Eiting 46:06
Talk to customers every day.

Omer Khan 46:08
What book would you recommend to our audience in white?

Jacob Eiting 46:11
American Prometheus. It's the biography of Oppenheimer and the Manhattan Project.

Omer Khan 46:16
What's one attribute or characteristic in your mind of a successful founder?

Jacob Eiting 46:20
And I recognize the irony of this but humility.

Omer Khan 46:24
What's your favorite personal productivity tool or habit? Gmail, keyboard shortcuts? What new old crazy business idea would you love to pursue if you had the extra time?

Jacob Eiting 46:35
I would love I think there's so many problems in remote work right now. I'm building a remote company, legal infrastructure, real estate. There's so many problems that are solved by I would love to work on something in that space.

Omer Khan 46:46
What's an interesting old fun fact about you that most people don't know?

Jacob Eiting 46:50
That I got most of my leadership experience starting rock bands in high school and trying to get four teenagers to do something together.

Omer Khan 46:57
Nice. And finally, what's one of your most important passions outside of your work?,

Jacob Eiting 47:02
Become a real real this is such a such a cliche SEO thing, but I've been a real sucker for cars and airplanes, shiny machines, they're beautiful products to think about how they were made, and they're just fun to play with. So that's..

Omer Khan 47:17
Awesome. Cool, Jacob, thanks for joining me, man. It's been a pleasure. I it's, it's been a really interesting to kind of unravel this story and kind of go through this sort of process with you to understand how you went from, basically, you know, an inkling of an idea that you had no idea where there was gonna go anywhere to where you are right now. And at the rate that you guys are growing if you keep that up.

Jacob Eiting 47:47
Let's hope I'm gonna say I'm super glad. I'll be happy to come back on the show in two years after we go public so I can give you, all right.

Omer Khan 47:55
There we go. Yeah. And then remember, you have to shave your beard as well.

Jacob Eiting 47:59
Yeah. There we go. My go public beard. I like it.

Omer Khan 48:03
All right. If people want to find out more about RevenueCat or try it out, just go to revenuecat.com. And if folks want to get in touch with you, what's the best way for them to do that?

Jacob Eiting 48:13
Twitter? I tweet a lot. And it's they're not all good tweets, so I apologize in advance, but it's JEITING on Twitter.

Omer Khan 48:22
Awesome. I will include a link to that in the show notes as well. Thanks, man. I wish you all the best. And thanks for joining me today.

Jacob Eiting 48:30
It was a pleasure. I look forward to coming back in 2025.

Omer Khan 48:35
There you go. Cheers.

Omer Khan 48:36
Thanks for listening. Hope you enjoyed the interview. You can get to the show notes as usual by going to theSaaSpodcast.com, where you'll find a summary of this episode and a link to all the resources we discussed. If you enjoyed this episode, then please subscribe to the podcast. And if you're in a good mood, consider leaving a rating and review to show your support for the show. Thanks for listening. Until next time, take care.

Book Recommendation

The Show Notes