Building a Company to Meet My Own Needs and Selling It in 2017

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

Hello there! My name is Dave Rogenmoser, and I created Payfunnels — the quickest and easiest way to collect payments from individual clients using Stripe. Below I'll discuss my journey of starting, growing, and handing the business over to another indie hacker to support my other venture.

Today over 500 consultants, coaches, and service providers use Payfunnels to seamlessly accept payments with no friction. The company is currently making about $10,000 MRR and growing steadily.

What motivated you to get started with Payfunnels?

My partner and I originally built Payfunnels out of a need. We were doing digital marketing consulting and realized quickly that after landing a new client, taking payment was a point of huge friction for the client. Everything hinged on that transaction going smoothly.

We didn't have much money to use a service like Freshbooks to do our invoicing, and frankly that was too complicated anyway. So one weekend we built Payfunnels to send simple invoices to clients through Stripe.

Payfunnels quickly became the tool that we used to land all of our clients, but we had no plans to ever offer the software as a service. That came about once we launched a consulting course called 6K Success. This was a training program in which we taught people how to start and grow a profitable consulting business.

As the course grew, people started landing clients and asking me, "Dave, how should I take payment?" I would tell them that I use Payfunnels, but it wasn't available to anyone else.

That's when the lightbulb went off and I realized everyone in this course would pay monthly for Payfunnels if we offered it to them. So we spent some time rebuilding the product and offering it as a service, and that's how we got our very first customers.

What went into building the initial product?

The initial product was very lean. Like… we built it in one weekend, which I think is a great idea. If there's one thing my team does really well, it's that we really understand MVP, or Minimum Viable Product. At the beginning I wanted to do 2 things: 1) Accept payment using Stripe, because I had heard Stripe was great and didn't trust Paypal 2) I wanted it to take less than 30 seconds to create an invoice and fewer than 30 seconds for my client to pay the invoice.

I didn't want analytics, user accounts, fancy branding, or anything like that. I just wanted it to solve my pain so I could get back and sell more clients. So naturally Payfunnels was pretty simple.

My partner JP was a programmer, so it was nice having him build it for us. It didn't cost anything but time. As far as the tech stack, Payfunnels is built using Nodejs and AngularJS.

In terms of funding, Payfunnels has always been a bootstrapped company. We funded it solely through selling digital marketing services to clients and by selling courses. Personally, I think selling courses or digital products is an incredible way to grow a software business and also fund development.

How have you attracted users and grown Payfunnels?

Growing Payfunnels was very different than selling a course or landing clients. We tested quite a few different strategies, and found three that really moved the needle and drove new user sign ups.

1. Selling our 6K Success course along with Payfunnels. 450+ people bought 6K Success for $997, and we created a training inside of it on "How to collect payment from clients". Naturally, nearly everyone who went through that training signed up for a trial of Payfunnels.

2. Creating an affiliate relationship with a fast-growing course creator. I reached out to Sam Ovens, who also had a course to train up consultants on how to land clients. We worked out a deal where he would recommend all his customers use Payfunnels and in return I gave his customers a steep discount (60% off). Because I lowered the price for his customers, I didn't give him any referral fee, but if I hadn't lowered the price, a 30-40% ongoing commission is what I would have been willing to pay. This is a standard commission rate. Sam sends us lots of customers every month.

1. Viral growth hack. I'm a big fan of adding built-in virality to products to speed up growth. With Payfunnels, we realized that each time an invoice was sent, it was an opportunity to get a new customer. So we added the Payfunnels logo to each invoice, and after the invoice was paid, there would be another link that allowed people to click back to our site. As long as we created an impressive payment process, we would get customers that way… and it worked.

What's your business model, and how have you grown your revenue?

Payfunnels generates revenue through a single-option pricing plan of $29/mo for unlimited payments.

Honestly, this was just the price point we picked initially, and I believe that adding multiple price points is a quick way to add extra revenue. This is something we are working on — having the price point scale based on volume of transaction or additional features.

What are your goals for the future?

Payfunnels as a product is evolving organically. We listen to our customers for new features and we deliver these to them.

Our most ambitious goal is to 3x our customer base in next 6 to 12 months. We're looking for a growth hacker to work with or bring on board for this. Another way is to reach out to influencers and affiliates.

What are the biggest challenges you've faced and obstacles you've overcome?

The biggest obstacle we've had to overcome is making the tool sexy to use. Payfunnels solves a relatively "boring" problem, so it isn't something people tend to rave about to friends. "You won't believe how easy it was for me to create an invoice!" It's just not happening. It is so easy to setup recurring subscriptions or payment plans that our customers reach out to us just to confirm they don't need to do anything else.

So for us the challenge has been in creating marketing materials that describe a simple solution that just works. To do this we've relied on creating training programs around the product to sort of sell it secondhand.

If I could go back and start over, I'd create a flashier feature early on that got people excited. If people could screenshot it and share it on Facebook that would be even better. An example might be some really cool analytics people want to look at on a daily basis. If I could give them a few critical numbers pulled from their Stripe account that are hard to track, it could make the product easier to talk about or share with friends.

You sold Payfunnels while it was still growing. How'd you go about this, and why?

We never intended to build and grow Payfunnels to sell. Along our journey in digital marketing consulting, we came up with a new software idea that would help businesses increase conversion rate — Proof. At that point we were forced to make a decision either juggle two SaaS businesses or focus on one. We decided to focus on one and fund our new idea, which we wanted to pour gasoline on and grow extremely quickly.

Finding the caregiver?

Payfunnels is our baby and we wanted to make sure the next person who would takeover would have the technical skills to build new features and continue supporting the customers, as we had. That itself was another challenge. We decided we would hire a software broker to guide us through the process of finding a qualified new owner.

After interviewing and talking to several people, we felt comfortable with a developer from Houston, Texas. As we spoke, we realized that he had the talent and skill to make Payfunnels the product our customers deserved.

From his perspective, getting a business off the ground is hard. At first you don't know if the idea will work. And even if it does, you are not sure if people will pay for it. Also, finding those initial paying customers is hard. So when he found an opportunity to take over a SaaS product that had already been validated, gained paying customers, and was cashflow positive, it was a no-brainer. And on top of all that, he was experienced with the technology we used.

So on April 1st, 2017, we handed over the operation of Payfunnels to him. Since then, I have still been working with him to improve the product, add exciting new features, and grow the business. It has been a win-win.

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

• Focus on growing your MRR 10% weekly. This is what the best startups do. In the beginning there are a lot of things to do, but make decisions by asking yourself the question, "What can I do to grow MRR 10% this week?"
• Read The Lean Startup and DotCom Secrets
• Build something people want. This sounds basic, but it's true. A lot of software solves problems that just don't exist. Solve a problem that businesses or consumers truly have and are willing to pay to get solved.
• You don't have to build things from scratch. You can take over existing side projects or products which are validated and making money, but which the developers no longer have the bandwidth to focus on.

Where can we go to learn more?

• Our Blog On How To Start a Business
• My Personal Facebook page
• Payfunnels.com
• My email

Feel free to ask any questions in the comments below. I love talking software and sharing what I can.