Identifying a Gap in the Market and Reaching #1 on the App Store

Hello! What's your background, and what are you working on?

Hello! I'm Trevor McKendrick. I founded and later sold Salem Software, the #1 Spanish-language Bible app for the iPhone.

I didn't start my career in tech though. I actually went to school to get a Bachelor's and Master's degree in accounting. After school I worked as an auditor for KPMG in Silicon Valley. My main client was Adobe, so when you read their annual reports, I was one of the people behind the scenes dotting every "i" and crossing every "t" to make sure every single number was right.

(If that sounds like a miserable job then hey, you figured out in one paragraph what it took me more than five years to figure out! 😄)

So I quit that and started Salem Software. Its users tended to be Spanish-speakers in the US. People used our Bible app because everything we did — marketing, the entire app, customer support, etc. — was 100% in Spanish.

When I sold the company to Salem Media (NASDAQ: SALM, and just a funny coincidence that our names are similar) in 2015, our apps were doing around $8k a month in revenue (after Apple's 30% cut), but that fluctuated significantly from month to month.

What motivated you to get started with Salem Software?

I quit my accounting job the week I got married at the end of 2011. My wife was still in school in Utah, so I moved back to Salt Lake City once we got married. I had a little under $10k saved up in the bank, and thankfully only a little school debt.

Arriving in Utah, I had a few small job leads but nothing substantial. I ended up in a weird part-time job that paid like $15/hour and only gave me 10 hours of work a week. Looking back, it sounds crazy, but at the time I knew it was the only option going forward. A career in accounting just wasn't an option, and any extra days down that hole were steps in a direction I knew I didn't want to go.

The goal with the Bible app was just to make enough to pay our rent: $600 at the time. And truth be told, the Bible app was just one of a few ideas I was working on at the time. I had no idea what I was doing and was just trying stuff out.

How'd you come up with the idea?

I discovered the idea in a pretty straightforward way.

I looked through the Top Grossing apps in each category of the App Store, and specifically looked for apps that ranked well (i.e. they were making money!) but that sucked: they looked poorly built, or had bad reviews, or some combination thereof.

It helps that I speak Spanish because I lived in Mexico for 2 years when I was 20, but that was just a lucky coincidence. I do think the language barrier helped limit the competition, and it's probably one of the reasons there were no decent Spanish Bible apps even though the App Store had already been around for 4 years at that point.

I didn't do any validation other than scrolling through the App Store. There's obviously a market for Bibles, and I had a hunch there was a market for this on the App Store.

I think a lot of entrepreneurs focus too much on making something new, which then has to be "validated," instead of looking around and noticing industries that already exist and are doing well. The Bible market's been around for hundreds of years, and Christianity's been around for thousands… it's not like I had to go and gauge the demand for a book that's been around for thousands of years. The demand is there.

The only real question was whether people would find me on the App Store, and there was so little competition I thought I had a shot.

What went into building the app?

I'm not a professional developer myself, so I had to hire a contractor to build the app. The first version took about a month and cost a little over $500, which I paid out of pocket. The first version was pretty terrible, but it was good enough to see whether I could get some traction.

I hired a guy from Elance (now Upwork) named Bob. He was from Romania. We Skyped once and then the rest of our interactions were through Elance. He got most of the job done, but then at the very end said he had personal issues and wouldn't be able to finish the project.

We'd built in payment milestones so it wasn't like he was ripping me off… I'd only paid him for the work he'd done. The app was 90% done but had a few features that weren't finished, e.g. sharing a passage on social media.

I didn't want to pay someone else to finish it, and I could code a little myself, so instead of trying to finish the incomplete features I just went in and figured out how to remove them. This ended up being a great decision, as the features didn't end up mattering and it allowed me to ship the app much faster.

I still remember the night where I felt the app was "good enough" to publish. It was already around midnight and I thought, "Okay, I'll just upload this to the App Store now," like it was this easy thing to do.

The upload process is anything but simple, but at a certain point I just told myself I wasn't going to bed until I figured out how to submit the app. It ended up taking 4-5 hours to jump through all the hoops, but I finally got it done and went to bed. That was an awesome feeling.

The bigger lesson is that the app could have been better and I could have taken more time, but that would have been an enormous mistake. You can always take more time. You can always add new features.

But at some point you just have to say, "It's done," and put it out there.

How have you attracted users and grown Salem Software?

I didn't have a launch or tell anyone about the app other than my wife.

The app got 99% of its downloads from people searching in the App Store. We ended up going back and forth between ranking #1 and #2 for "la biblia" and "la biblia reina valera" in the App Store.

Some people ask, "You literally built it and they just came?" and that's true to a point. The broader lesson though is to find something where there's a mismatch between demand and the market. This applies to startups and regular businesses too: solving an existing problem that's unaddressed is the best form of marketing.

Once we had a user base I still had to figure out how to grow it and expand revenue.

One of the most important changes I made was to make the app free and monetize by selling content. This increased downloads overnight (no surprise there) and helped us rank even higher in search results.

I tried co-marketing with Christian publishers, but that didn't do much. Their offline channels can't compare to the huge user base already waiting on iOS.

By the time the company was sold, we had over 1.3 million downloads.

What are the details behind how you changed your business model and increased your revenue?

I initially charged 99 cents for the app, and the first month it did ~$1,500 in revenue.

Later I created a second identical app, but that also included an audiobook of the Bible. We charged $5 for that app. Our revenue grew substantially when that came out, so it was obvious the audiobook was a big hit.

Audiobook

One of the best decisions I made was to outsource the creation of that audiobook. I found an audio studio in Peru to record the entire Bible. We could do this because there's plenty of old translations that are in the public domain. They initially quoted me $30,000 to do the project, which was totally outside my budget.

I went back and asked if they'd go for $7,000, and to my complete surprise they accepted! They said it would take longer and they'd sometimes have to prioritize other projects, but if I was okay with that they could make it work. It ended up taking them 4 months, which was totally fine by me.

The best part of this was that I would then own the audiobook outright, so I didn't have to pay any royalties. It also meant that I could sell the audiobook anywhere else I wanted.

I put up a Gumroad page on our site to sell directly to customers (instead of through the app where Apple gets a cut). I also reached out to audiobook distributors (there are a lot!) and signed a few deals there. I put the audio on Audible. All of these probably added up to a thousand dollars a month at the most, but it was free money once they were set up.

Other Content

Eventually the most successful App Store business model changed from paid apps to free apps with in-app payments. The audiobook was our big revenue driver, so I decided to rebuild the app from scratch and make it free, with a content library inside the app where users could buy audiobooks and ebooks.

To license the content to sell, I went to Christian publishing conferences. I didn't know a single thing about the industry and just showed up on the floor and started talking to people.

Eventually I learned that each publisher has a whole department in charge of licensing their old content, and a licensing manager in charge of the whole thing.

I convinced these people to license their ebooks to me and we did a 50/50 revenue split. Users would buy and read their ebooks in our apps, and then I'd pay out 50% of the revenue (again, after Apple's cut) to the publishers.

This increased revenue, but only marginally improved profits. The revenue split was a big deal: Paying 50% after Apple's cut meant that if we sold a book for $10, Apple got $3, the publisher got $3.50, and we got $3.50. Okay, but I'd much rather sell content we owned (i.e. the Bible audiobook) through our own channels (i.e. our own website).

I did collect email addresses and sent emails with deals to boost revenue. The very first time a user launched the app they were asked to opt in to a newsletter. By the time I sold we had over 120,000 emails, so that did fairly well.

I also did a push notification most Sundays (our best revenue day of the week, probably no surprise) with a discount on some content.

If you had to start over, what would you do differently?

If I had a do over I would have tried paid acquisition. I always assumed I couldn't compete with games on getting new users via Facebook ads, but I don't actually know that for sure.

I also would have tried putting in ads in the app. This was one of the first things the acquirer did once they bought the company.

What were your biggest advantages? Was anything particularly helpful?

Obviously knowing Spanish was an advantage, though I think this could have been done without knowing the language. It just made the challenge appear more daunting.

Honestly, a huge advantage that applies to almost anyone reading this is that you're small. You don't need to land a huge customer or do a million bucks in revenue this month in order to grow.

Because size didn't matter to me, I was totally fine trying out a crazy idea like a Spanish Bible app. And when my monthly goal of $600 turned into almost $1,500 in real dollars, I was ecstatic! Those first entrepreneur dollars feel amazing.

Being small also lets you do things manually. You can talk to people on the phone all day long, or send manual emails. It's okay because you only need a few people to say "yes" to move the needle.

Being small is totally an advantage that's not talked about enough.

What's your advice for indie hackers who are just starting out?

Stop reading this and just go make something. Go sell something.

Success is just a long to-do list. It's straightforward and simple; it just isn't easy.

Be suspicious of epiphanies. Growth and success come from a little every day for a long time, not the opposite.

I'm as guilty as anyone of overplanning, so I always try to remind myself to just get going and figure out the details later. Most projects never take off anyway, so all those "mistakes" you're worried about making don't ever get seen anyway.

Shipping a pretty junky iPhone app ended up being the best entrepreneurial decision of my life, but I had no idea at the time. You can't see that far ahead, so just get something done today.

Where can we go to learn more?

• My blog: trevormckendrick.com
• Twitter: twitter.com/trevmckendrick

I buy small SaaS companies/products. If you have a SaaS product that you might be interested in selling, feel free to contact me: trevor@capitalacademy.org

Please feel free to ask questions in the comments, I'll be there answering as many as I can.