Turning a Discouraging Launch into a Profitable Growth Story

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

Hello! My name is Valentin Staykov, and along with Haneef Ghanim and Aloke Pillai I’ve been building Pastel for just over a year.

Before getting into startups, I went to the University of Toronto for commerce and worked in the corporate world for a bit. I quickly realized that it wasn’t for me and decided to give starting my own company a go. I’ve now been in the software startup space for four years and, prior to starting Pastel, I worked on a real estate marketing software startup with Haneef. We got that to $1,200 in monthly recurring revenue (MRR) before realizing we’d built too niche of a product to scale. Instead of pivoting to a different direction in an industry we were just starting to learn about (how we got into real estate in the first place is a long story), we decided to work on something completely different, which eventually became Pastel.

Pastel is a feedback and communication tool for people building websites. It allows designers, developers, and product managers to collect feedback from their clients and teams by leaving comments directly on top of the website they’re building, without having to install anything or sign up.

Pastel now has 50 paying customers and $1,400 in MRR.

What motivated you to get started with Pastel?

Pastel didn’t start off as a feedback tool for people building websites. The earliest iteration was a browser extension that allowed a developer to share a website on their local environment. My co-founder Haneef had wanted to build something like it for some time, ever since his days working on Wattpad’s platform team. After we decided to move on from our previous startup, Haneef hacked together the extension in two weeks, and we did what we could to get it out there.

We quickly learned that sharing your local host wasn’t something a lot of people were eager to pay money for. Either they already had some solution in place or were using an open source alternative. We knew there was something there, so we tried to figure out the “why” of the problem — why we wanted to be able to share a local host in the first place. Of course, it was to get feedback on what we were building. But we realized that it was specifically the feedback that mattered, not whether it was on a local environment, staging, or production server.

Once we understood that, we decided to be smarter about or product and our approach and talked to around 40-50 developers, designers, and product managers at different companies over two months before writing any more code. We found that they all had issues getting feedback, and most were using some combination of screenshots, email, Slack, and Google Drive to iterate on dynamic websites.

So we started building what would eventually become Pastel. The earliest version was developer focused; everything from the language to the design was aimed at people writing code. Soon after that, following a lot of experimentation and almost as many failures, we met Aloke. He was working on the same problem, but from a designers point of view. As a product designer with a ton of experience, he had a great understanding of the problem and insights we hadn’t thought of.

We quickly decided to pool all our knowledge together and formed Pastel. In a few months, after a complete redesign and rebuild, we had the earliest version of our current product. Pretty soon, the sign-ups and (more importantly) paid customers started coming in, and we’ve been working away on it ever since.

What went into building the initial product?

There were two main things we wanted for the first version of Pastel:

• the ability to click anywhere on the page and leave a comment like a sticky note
• the ability to do this for any website accessible over the internet without installing anything

Each took about two months to get an MVP working, so in about four months we had the first version of Pastel. The second part was tricky, as we’ve had to build a fairly complex custom proxy solution to allow us to add our commenting tools on top of any website just by pasting a link in our dashboard. In the early days, a good chunk of the websites people tried didn’t work properly. After about a year of bug fixes, we now rarely run into sites that don’t play nice with Pastel.

Because we were intentional in keeping the design clean and simple, the fact we didn’t have a lot of features at first wasn’t an issue. And there were a lot of things we skipped when launching the first version. At one point, we were offering a discount code to some people that signed up, but we didn’t have our billing system in place. Once we reached the point where people wanted to pay us, it was a mad dash to get things set up. We just added the ability to change your email or profile image through the UI a month ago, almost a year since the product went live. Before that we, handled all requests manually in our database.

As far as funding, Pastel has been entirely bootstrapped and we’ve been doing consulting and freelance work part-time to pay our bills.

How have you attracted users and grown Pastel?

Pastel went live in the middle of July in 2017, and a week or two later someone posted about us on Designer News. The reception was less than stellar. Many people voiced concern that our price ($25 per month) was too high and said that they didn’t think our product was valuable. We also had a few messaging issues around our team plan pricing, which caused some confusion. While there were some supportive voices, in general, the tone in the comments was very negative.

Though we were initially discouraged by the negative comments, we started seeing a bunch of sign-ups coming from the post on Designer News. Pretty soon, we had our first paying customer. We had four people pay us that month, and by the next month we hit our first 10 paying customers (nine of whom are still paying us today).

Since then, we’ve also launched on Product Hunt, been featured on a few landing page inspiration galleries and gotten on the front page of r/entrepreneur and r/startups on Reddit, which all drove some traffic but nothing outstanding.

The only thing we’ve found to drive consistent traffic is putting out regular content, and that’s been a fairly recent development. Other than that, our monthly visits have remained relatively stable, with an uptick since May of this year when we started publishing content more regularly. We knew we wanted to do content for some time and it took us a while to actually get into it. If you’re thinking about doing content but have yet to pull the trigger, start now. If you’re having a hard time thinking of what to write about, we use the strategy of turning our own knowledge acquisition and failures into blog posts. Whenever we learn something or screw up in some way, we put it down in a draft blog post, then come back to it later and expand on the topic if we think it’s good enough or table it for later consideration.

We tried a lot of different things along the way, many of which didn’t work as we’d hoped. My cofounder wrote up a blog about all of the different experiements and setbacks and what we learned. Something that made a big difference early on, and continues to help us now, is talking to our customers using a chat tool. For most of our paying customers, we had some kind of initial interaction on our chat tool (Intercom). Whether they asked a question or reported a bug, when we got back to them and resolved their problem quickly, they were much more likely to convert. That may seem obvious, but if we didn’t have a chat tool installed, some of these customers may never have reached out and eventually converted.

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

We’re a SaaS business and charge a monthly subscription. We started charging as soon as the first version of Pastel went live. We learned from earlier experiences that we need to ask for money as early as possible — that’s really the best way to validate if what you’re building is valuable. Our plans come with a 14 day free trial and we don’t have a free tier. We’ve considered the idea, and we’ll most likely add one eventually, but we’re sticking with the trial for now.

Until two months ago, we only had one plan — an individual account for $25 per month. We had a bunch of teams using Pastel though and knew we needed a team account. There was some infrastructure and additional features we needed for that so we ended up prioritized improving the core product over adding team functionality. Once we finally added teams in May, we’ve seen faster growth than in previous months. We'd need four customers on our individal plan to get the same revenue as just one team customer, so it made a lot of sense.

Our expenses are fairly low, being a pure software business. We spend about $100 per month on hosting and another $200-$300 per month on tools to help save us time, like Intercom, Mailchimp, and Polymail.

What are your goals for the future?

In the long run, we want Pastel to be used by anyone building a website to communicate with their team and stakeholders.

In the more immediate future, we’re looking to add a lot more team and collaboration features to Pastel. These would be things like tagging people in comments, better notifications, and deeper integrations with project management tools. We’re also planning to add the ability to give more visual feedback rather than just text based comments. On the business side, our goal is to reach $20,000 in MRR 12 months from now.

The biggest roadblock for us right now is not being able to work on Pastel full-time. Since we’re not yet making enough revenue to pay ourselves, we have to take on freelance work in order to fund Pastel and pay the bills. This distracts us from working on the product and growing the business, but we’re getting better at planning and managing our time to be able to do both.

What are the biggest challenges you've faced and obstacles you've overcome? If you had to start over, what would you do differently?

We have some pretty complicated proxy technology powering Pastel that allows us to make the experience as smooth as possible. That proxy tech took a long time to get to where it is today. In the early days, we would get regular reports about something not working right. We fixed those as they popped up, but some fixes took a lot longer than others. The good thing was that once we fixed it for one website, it was fixed for all other sites that used the same setup. Now, we’re at a place where it’s rare to get more than 2-3 reports of something not working right per month. And whenever we do get them, we usually fix them the same day.

There isn’t much we could have done differently about building the proxy, that just had to be done. But one thing that we could have done better is honing in on a market segment early on. Pastel can be used by anyone building a website, but that’s a pretty big pool. While building the product, we spent a lot of time trying to meet with and sell to just about anyone, from an individual freelancer trying to get their first client to some of the largest banks and telcos in Canada. Once we narrowed it down and realized Pastel is most useful for teams building websites for clients, we had a much easier time.

Have you found anything particularly helpful or advantageous?

Talking to other startup founders that are further along in the journey has been really helpful. Learning about how they did things, the mistakes they made, and what worked for them has helped us approach our problems more intelligently.

Two books that have helped us are Intercom’s book on marketing and Traction by Gabriel Weinberg and Justin Mares. Everyone on the team is a product person, and being as methodical on marketing as we are on product is something we aim to do. Both these books have gone a long way in helping us frame our thinking.

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

If you have an idea, just start working on it. But be smart.

You don’t have to quit your job and work on it full-time, there are tons of things you can do to validate an idea part-time. Talk to your target customers, put up a landing page with a waitlist, or combine a bunch of existing tools to try and deliver the value manually. This won’t work for everything, but for the vast majority of ideas there’s a way to test them with minimal resources and time.

At the same time, knowing when to jump in with both feet and fully commit to an idea is tough. I definitely didn’t do it right the first time I started a company. We decided to build a product for a market we knew very little about and made tons of mistakes. I learned a lot, but I would definitely do things differently if I could have another go.

Where can we go to learn more?

The best place to learn more about what we’re doing is at usepastel.com. You can also follow @usepastel on Twitter or email me at valentin@usepastel.com.

You can also read more about our journey and what we’ve learned on our blog over at blog.usepastel.com.

And feel free to ask questions in the comments below, I’m happy to continue the conversation :)