on May 12, 2015
by Andy Jones
PennyPipe's story thus far, from our founder
Before I start, I do want to say, the main point of writing this is not for publicity [this was originally posted on reddit]. Starting and running a business is hard and we - the entrepreneurial community - can and should support one another. If I'm struggling, then surely there are others struggling as well who could use a story of hard work and limited success rather than the exciting "we made $100k in sales in 30 days omg we're blowing up". While these stories are useful, and do provide helpful pointers, I feel they are over-represented. Most businesses come and go quietly, and you are not alone.
The first iteration on this business started from the idea "hey wouldn't it be cool to connect a bunch of web APIs and move data around". This business is PipeThru.com, and is very similar to other companies doing this such as Zapier, IFTTT, and others. I realized through this work that implementing something like 200+ APIs is exceedingly difficult. While the internet has come far to standardize APIs with REST, OAuth, and JSON among other technologies, the implementation and undocumented quirks of each app's API often turn into a nightmare. That and there were lots of people who were much better funded.
About this time I hired one employee. While working together, we noticed that a good number of our users and support requests pointed to a small set of very specific use cases. Using this information, we decided to focus on the #1 use case which is simply getting credit card charges, fees, and refunds into accounting software. To be clear, I never would have guessed that automating the movement of accounting data would be desirable. Only by diving into this problem and measuring our support requests could we have seen that.
So, we pivoted to PennyPipe.com. PennyPipe automates the movement of charges, fees, and refunds from things like Square, Stripe, and PayPal into accounting software like QuickBooks Online and Xero. That's it. Since we're focusing on just this, we can accomplish this much better than by being general.
One painful lesson that we learned along the way is that people can't buy what they don't know about. I'm embarrassed this lesson was not more apparent. Our backgrounds are computer science and history and, as a result, we learned and applied a lot of marketing on the fly. We've tried: organic search, blogging, finding forums where people are asking questions about what we're doing and answering, placing ourselves in relevant app marketplaces, contacting companies themselves and asking to be placed on support pages. We recently started with AdWords and just finished our first video. We're continually trying new approaches. For each, we measure - each link, each view, each hit - and we focus on the methods that give us the best return. The best part, I found, is there is no secret. Marketing takes persistent work over time and the ability to hear "no" a lot. Measure a lot and grind it out.
Currently our user base is small. Conversions in the online world are incredibly low, even when the marketing is highly targeted. While hiring an MBA or someone who has lots of experience handling sales and marketing would accelerate our business, this is just not a possibility for us. I should point out now - we're bootstrapping.
Bootstrapping has allowed us the freedom to build the tools we want as well as create a work-life balance. We're not working 80 hour weeks to get our tools to market as fast as possible. Bootstrapping has allowed this. I won't say that we're cash flow positive, only that our meager cash flow is just enough to pay the bills. There are those who will see this as a failure. Certainly, our per hour pay is far less than what we could make as an employee for another company. However, if personal wealth is defined as the freedom to work on the things that interest you every day, then becoming wealthy is much more attainable than most people realize. The ability to pay the bills has created infinite runway by which we can continue to work.
So, we're not doing this for the money. Ultimately, we're doing this because we enjoy it and we're doing it for peanuts. Certainly dreams of money have entertained my mind, but the more I think about money, I'm not even sure what I'd do should a successful exit event occur. I'd probably turn around and start another SaaS business. And maybe buy a nicer car.
Then why? Ultimately any business that becomes successful does make money. For better or worse, money is the poor measuring stick we use for business value. The why for me is this: building something that solves a concrete problem and makes the world a bit easier while maintaining a work/life balance.
I realize that I don't get to define how others define value though. In the business world value is loosely determined by how many consumers willingly fork over cash for your product. As long as I'm building something I believe in and some group of people is paying, that definition works for me. I've always enjoyed building things and seeing people use them. In this way, SaaS is incredibly sexy. I can build things and watch them being used directly. I can measure and make changes immediately.
I feel very fortunate to be doing what I am at PennyPipe.com. We have not achieved overnight success, nor the admiration of our peers. For those of you digging away in the trenches with us, keep at it.