Making $2,000/mo in Passive Income by Talking to Customers

Tell us about yourself and what you're working on.

I'm Michael Herrmann, a bootstrapper based in Austria. I launched Terminerinnerung in 2014 and grew it to $2k MRR (~$1.7k profit/month) within a year. In 2016, I've spent an average of 12.5 hours/month to keep it at that level, so it's ideal passive income.

Terminerinnerung is a clone of Patrick McKenzie's Appointment Reminder, but for the Austrian market. Doctors pay me to send SMS reminders to their patients à la "Please don't forget, appointment with Dr. XYZ tomorrow". It reduces the number of no-shows and thus increases the doctors' bottom line.

How'd you get started with Terminerinnerung?

I spent the first month building a prototype. Then I called or walked into local service businesses (plumbers, hairdressers, doctors, lawyers, etc) and offered them an SMS reminder service. From these interactions, I learned that I should focus on the medical sector, because doctors have money and because competition in that sector was weak.

My prototype turned out to be pretty useless for what the doctors actually wanted, so it was a good thing I started talking to potential customers early. When they asked, "Can it do X?" I lied and said, "Yes of course", and then frantically spent the next days implementing X. This ensured that I was only building what they really wanted. It also made the sales process much smoother.

Two months later, I had my first two customers and was at $450 MRR. One thing that helped win those first two customers was that I had already known them personally or through a friend.

How'd you find the time and funding to do this?

I had some (mostly) passive income from a business I'd co-founded before and was living with my parents at the time. This allowed me to work on Terminerinnerung full-time.

How have you grown your business since the early days?

After winning the first two customers, I spent an entire month walking into doctor's offices in Vienna unannounced, pitching them the service. Most said no of course, but I managed to win one additional client. It was a very interesting challenge to overcome the fear of rejection every time before entering an office.

I also built a nice web site and tried to do some SEO. As it turns out, doctors don't Google for "appointment reminder SMS" or related terms, at least in Austria. You have to physically be there and talk to them.

A customer I won later organised a conference and asked me whether I wanted to be a sponsor. I paid $3.3k for the privilege, but won two new customers, which made it a financial success.

I now have eight customers (3 dentists, 1 gynaecologist, 3 surgical clinics, 1 centre of aesthetic medicine). I won...

• 2 of them because they were my own doctors
• 2 because I was introduced to them by a friend
• 2 from showing up at their office unannounced (only one of them is still my customer)
• 1 by referral from another customer
• 2 from sponsoring the conference

What's the story behind your revenue?

Each doctor pays a flat monthly fee of $200-$400 for the SMS reminders. I send out roughly 6000 SMS per month, which costs me $350. The service is hosted on a single server, which costs $50 per month. One customer hasn't been paying me for half a year. When that customer pays, MRR is $2.4k (and profit is $2k). Without that customer, it's $2k/$1.7k.

Revenue has been stable for well over a year. Doctors are reluctant to change their IT systems, and there is little innovation in the sector. I am hoping that revenue will stay at a similar level for a few years.

What are your goals for the future?

By now, you may have realised that I'm no longer growing the business. Here's why:

Unlike Patrick McKenzie's Appointment Reminder, which seems to mostly be a web calendar with SMS functionality, most of my customers already had software for managing their appointments. I would not have been able to convince them to switch to a new system. So I developed integrations that read out the appointment data from the existing system and send SMS accordingly.

One of the software vendors found out that I was doing this. He approached my customer and said "stop working with Michael Herrmann, or we'll terminate your contract". That particular customer had on the order of 20 employees who use the software every day, so shutting down the software would have killed the clinic. I thus lost the contract. The vendor introduced their own SMS feature a few months later.

The fact that I could lose customers that easily made me realise that it's not a solid business in the long run. So my goals for the future are merely to make sure I keep my existing customers as long as possible.

That's not to say that there isn't money to be made in the space. Existing solutions for clinic management (appointments, patient data, etc) are awful. All Austrian doctors hate their software. Because of the massive lock-in, software vendors have not had to innovate for 20 years. They offer completely outdated desktop apps. I believe there is a huge opportunity for a SaaS app to disrupt (at least) the German speaking market.

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

I would talk to potential customers even before building a prototype.

I'm happy the business is running as it is, but in the future I would also be more cautious about developing mere additions to existing platforms, as you are always at the mercy of their respective providers.

What do you think your biggest advantages have been?

My personal connections and manners (stupid as that may sound) have helped me win the trust of doctors who were usually 30 years my senior. In order to develop the integrations, I had to reverse-engineer the existing software. For this, and setting up the necessary IT infrastructure in general, my experience with programming really helped. Finally, I am grateful to Patrick McKenzie for sharing his experiences in blog posts, and thus inspiring me to pursue a similar project myself.

What advice would you share with aspiring indie hackers?

Never give up ;)

Pursue projects you care about. The reason I'm not starting the SaaS app described above is that I don't care enough about the medical sector. I'm devoting the next years of my life to another project I really care about: fman, a file manager for power users. You should totally check it out – especially if you are a programmer.

Where can we go learn more?

• My personal home page contains more of my bio.
• I'm @m_herrmann on Twitter.
• fman, the file manager I'm working on now.
• You can also leave a comment below, and I'll try to get back to you: