Getting MRR before you build — Daniel Abebe on how he hit $530 MRR with nothing (not even a landing page)

Daniel Abebe (@realDanielAbebe) of HuggyStudio recently hit $530 MRR on a new product without building a thing — not even a landing page.

I was intrigued, so I caught up with him to find out more. Here's how he did it. 👇

Getting paid before building the product

Daniel: In 2013, I launched my first startup without validating the idea first. I left my job and took a loan to build an expensive MVP because I assumed that customers would come if I just built the product. The project turned into a failure and I ended up with big financial problems. That was a painful lesson.

Over the years, I learned how to validate startup ideas and my personal belief became quite extreme. I promised myself I wouldn't build anything new without having paying customers first.

So we don't have a name, logo, or landing page yet, but our first customer paid us up front for a 6-month subscription at $530/mo. The $530/mo comes from 55 employees at $12 each, minus a pilot-period discount.

We have two months now to build the product before their subscription technically begins.

On how he did it (and who can do it)

So he learned his lesson in a big way. And I like the idea, but how would one go about it, and is it even possible for other indie hackers? The short answer is that it probably only applies to B2B companies, but yes, most B2B ideas could get started this way.

Here's how he did it.

Daniel: We reached out to 80 companies asking for a meeting to better understand how we could help them reinforce company culture. 20 people agreed to meet, and from our calls, we identified 6 warm leads who were really interested in getting some help.

But here comes the trick: At this stage, we didn't sell them a solution. We sold them the idea of building one together. In that regard, not having an existing product or landing page actually helped us. It showed how flexible we were to focus on their specific goals

This is what we pitched: "Let's build a solution together that will work for your specific needs. We will invest as much time as necessary. In exchange, you commit to pay and give us feedback for at least 6 months once we go live."

Of the 6 warm leads, one client accepted our offer. Our belief is that if we build something that ONE company really loves, chances are high that other companies will love it too.

Here are the outreach templates he used.

On their agreement

It wasn't just about the initial influx of money. The feedback/direction from a real client is really where it's at for Daniel.

Daniel: We closed that customer by Week 3. They agreed on building the platform together for 2 months and using it for at least 6 months once we go live. That was the deal.

They'll be investing 8 hours in giving us feedback for the next 2 months (the equivalent of 1 hour per week). Once we go live, they committed to onboarding all their employees and giving us continuous feedback so that we can improve the platform to better match their needs. We retain the right to evaluate each feedback/suggestion before implementation.

Nothing like time and 55 onboarded employees to get a customer invested in the product. I'm guessing it would take a lot for this customer to churn.

On how they'll allocate the funds

So they made over $3k right off the bat, along with really great direction, and a highly motivated customer. What will they do with that sweet, sweet cash?

Daniel: The first 6 months were paid all at once. We'll use that money to test some marketing campaigns and see if we can get to free trials with performance marketing. We'll probably start with Linkedin to make use of their powerful job filter. It's still unclear how the distribution of our product will go once we launch. If performance marketing doesn't work, we will keep on investing in direct sales as it is working quite well already.

As for how they'll keep the lights on while they build the product, they've set up a pretty sweet engine.

Daniel: I co-founded HuggyStudio with the vision of becoming a bootstrapped company builder, and after 2 years of providing agency services, we've set up the company in a way that we can start building new startups without investors. Five people work on client projects, bringing in over $1 million per year, and the remaining four focus on building new startups.

On that 25% response rate

But let's go back to that outreach. If you didn't notice, they had a 25% response rate, which is pretty stellar. Here's how they did that. Hint: Warm outreach, and heavily vetting cold prospects.

Daniel: I started with my own network and this helped get our first interviews. When we started going outside of my network, the reply rate dropped drastically.

With some creativity, we managed to get our stats for cold outreach messages to the following: 47 cold messages, 10 replies, 6 meetings arranged. What did we do? We invested a lot of time vetting each lead before reaching out and launched a podcast to offer value in meeting us.

That podcast offer made me do a double-take. Never heard that one before. They created a podcast specifically for this and a few of the potential customers actually wanted to be interviewed.

Daniel: That was a bet we took to talk to more people and build up a brand within the space over time. As we realized that our target audience is made of remote/hybrid companies, we decided to launch "The Remote-Culture Podcast". I recorded 4 interviews so far, we have 3-5 more in the pipeline. We haven't turned any podcast guest into a paying customer yet, but we benefited greatly from in-depth discussion that helped us better understand our target audience. Down the line, we also hope that listeners will be possible customers for our SaaS.

On whether it's really the right way to go

Well, I'm convinced. Sounds like he is too.

Daniel: I hope I never go back to building something before winning paying customers first. This feels like cheating the world.

Entrepreneurship becomes easier when your product already has customers before going live. Also, you are held accountable to make progress because people are expecting you to launch now.

And collaborating with customers is an exciting process for both parties. We are not pushing our product down their throat, we are truly fighting together on helping them achieve a goal. If they win, we win.

The only downside is that you need to start with sales and this can be a painful process that kills the excitement of "building a startup". Still, this could save you a lot of time building a product nobody wants.

Now all he's gotta do is build it... Within two months. 😅

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