Why I Spent Thousands on Early Customers, and How It Paid Off

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

Thanks for interviewing me — I'm excited to be on Indie Hackers!

My name is Turgay Birand, and I've been an entrepreneur my whole professional life. Though I've never held a full-time job in my life I can easily say I had multiple bosses at one point as I did work as a contractor for a while!

EditionGuard is a digital rights management platform for eBooks. It essentially makes sure eBooks sold by a company can't be copied or printed without authorization. It's currently used by university presses, governments, enterprises, and publishers across the globe to ensure their eBooks are delivered into their users' hands securely.

Used in over 40 countries so far, it's helped deliver close to a million eBooks since its inception, and the company currently brings in around $25,000 MRR on average.

What motivated you to get started with EditionGuard?

After having some failures with a bunch of local e-commerce businesses, I had to pick up some contract work as a developer around 2009, as I needed more income to pay off some bank loans and to eat every once in a while. :)

It was a difficult time! But after a while working as a contractor, I was on track to becoming more and more profitable.

But something in me was suffering day by day. I was not building and running my own product anymore, which was always what I had dreamed to do. Above all, I consider myself a maker, and I needed to make things according to my own vision. I also wanted a business that was scalable, profitable and didn't require my attention 24/7.

As luck would have it, the opportunity to build such a product came to me while I was working on a project for a big client. At the time, we were developing the e-commerce site of a pretty big bookstore chain in Europe, and they came to us with a request: "We want to sell eBooks, but we and the publishers are both concerned about piracy. Can you help us?"

In typical contractor fashion I said, "Of course!" and after doing much research and deliberation, we settled upon using Adobe's DRM solution. After successfully deploying and integrating this solution with their e-commerce website, a funny thing happened: I started getting many more requests for the same setup from both domestic and international markets.

The trouble with this solution is, while it's the industry standard nowadays, it's very pricey, difficult to deploy, and even harder to manage. We were having to quote prospects around $40k to $50k per project each time! Of course, our conversion rate there was close to 0.0%.

Then I got to thinking, there's so much demand, why isn't there a SaaS solution for this? This is how the idea for EditionGuard came to be. After buying a simple $20 landing page from ThemeForest and hacking away at it with some back-end code, I had a duct-tape product out in a couple of months.

What went into building the initial product?

Blood, tears, and suffering funded EditionGuard.

Ok, that's a bit too much — it was mostly my sweat. I developed most of the initial product, and spent what savings I had on getting help from a friend with some of the product features. The Adobe DRM stack uses Java (ick) which I had to handle and extend while the web app side was built using the Codeigniter framework on PHP. In essence, there were two back-end apps talking to each other through APIs to get things done.

All in all, I ended up spending around $10k on the initial version, including the servers, software development, and the initial acquisition of the first 10 customers. Thankfully, I've never had to take on any outside investment, all growth was done through reinvesting profits.

Of course, this was linear and slow growth. But I was not in a hurry, as I've never been much of a unicorn hunter. I'd rather chase after having a bunch of cash cows first!

Around that time, I had been reading many different books on startups and loved the idea of having a very barebones product with only essential features. It was actually pretty embarrassing in hindsight! Customers could upload eBooks, but they couldn't edit them. They would have to email me to upgrade their subscription or cancel it. Still, it made me money and I could see it had a future, which was all the initial push forward was about.

In the end, all the features that were "missing" from the initial release did find their way in and more, but they were not mission critical in the beginning. You don't need a subscription upgrade/downgrade feature in the beginning because it doesn't tell you anything.

I think that's the main methodology to use in determining scope at the very start; what does this feature tell me about my market and my prospective customers? If it tells you nothing, leave the feature out. An easy yet not-so-easy thing to accept and implement, especially for a person who identifies as a maker and idealist. But I tried it nonetheless, and I'm glad I did!

How have you attracted users and grown EditionGuard?

I didn't really have a "launch" like you see today. After I finished building EditionGuard, I emailed a few of the organizations who were interested in eBook DRM, and those were the main source of initial customers in the beginning. This was phase one for me, where I got to 10 paying customers, which told me I had a viable business model.

The nice thing about having a SaaS business is the recurring revenue. And in the beginning you don't need to worry much about churn, because your user base is very small. This let me reinvest into the business little by little each month.

I remember setting a goal of 30 paying customers at the end of phase one, and that's when I started putting some of the profits back into the business for things like SEO through on-page optimization, blogging, link building, and press releases. I think it took me another 4-5 months to get to this goal, which concluded phase two for me.

At that point, I was able to completely drop all contracting work and start focusing solely on my business. I was living in a cheap (and boring) city with very low living costs, which was a great advantage. I'd highly recommend this to any bootstrapper; just move to a low cost town or city, at least for a while. You'll worry much less about bills and have a much higher chance of success, as it's always about perseverance. The longer you can keep going, the better your chances. And the biggest overhead you have is always housing, so cutting that down really gives you lots of runway.

After this phase, I set a much more ambitious goal: I wanted to get to 100 customers. This was a huge deal for me, as it would give me the financial freedom I wanted.

In order to achieve this goal, I started to really focus on onboarding and conversion optimization by adding in more educational content, an entire onboarding sequence in the app, and detailed drip email campaigns. I also built some turnkey solutions for the biggest e-commerce platforms, like WooCommerce, Shopify, and Magento. For the Indie publishers that were strapped for cash, I launched a low priced plan and very simple solutions based on PayPal.

In the end, I would say these were the biggest drivers of growth from 30 customers to the point I'm at today. These efforts proved to be more effective than I had hoped for in the long run, and I actually surpassed my 100 customer goal to land where I am about a year ago. At that point, my churn caught up with my new customer acquisitions, and I think this is the natural end of phase 3 for the business. Now I'm thinking of the next steps to keep moving forward!

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

The way EditionGuard makes money is through recurring subscription fees, as well as monthly variable usage billing.

The variable usage is based on the number of downloads the user facilitates through us, for which we charge a flat fee. The business was a paid service from the get-go, since the value proposition was quite clear.

Initially we were using PayPal, then made the switch to Stripe a couple of years later due to its excellent API and lower commissions. But mostly, I wanted to be able to use some of the awesome tools out there like Baremetrics or Firstofficer to keep track of my metrics in realtime. What can I say, I really love metrics! For the variable usage billing, we've been using Freshbooks through its API, which always works very nicely.

One thing I did to increase revenues is that I kept increasing my prices by around 20-30% every six months. I did this because I always came across the same idea on many different sources; we tend to undervalue ourselves and our services. I can tell you that this is definitely true. Because my pricing increases never had an impact on my conversions. And more importantly, it allowed me to increase revenue per user over time.

I think a very good thing to watch out for when increasing prices is to make sure you're grandfathering existing customers. Not only will you be giving them another reason to become loyal but you will have built a deeper relationship with them by doing them a favor. I still have a few customers who are on 2012 pricing and they're always a great source of feedback and inspiration when needed.

Also, pay no attention to the people who tell you your product is "too expensive". I assure you, most would keep complaining even if you charged $1, and if they ever sign up, they'll make your life miserable with zillions of support tickets to "get their money's worth".

Today, the business brings in $25k in recurring revenue. About $23k of that is from subscription fees, and $2k is from the variable usage fees. The overhead is about $4k, including all server, software, and support costs. I use lots of SaaS tools and a virtual assistant to help me with level one support inquiries.

What are your goals for the future?

This is a great question, one I'm still contemplating here at the end of another phase. I have thankfully reached and even surpassed my financial freedom goals, so the next steps are ironically a little harder to determine.

On one hand, I know EditionGuard still has lots of growth potential and probably has the cash flow to be able to pull it off. It will probably require some expertise I don't have, like direct sales, advertising, showing up at industry events, and such. While this is attractive, it also means building a team, which increases overhead and risk.

On the other hand, the business is at a very good place financially, and it takes very little time to run and manage. But more importantly, the freedom provided by the business lets me focus on some interesting side projects, one of which has been showing some promise. And I have the means and tools to build another cash cow (or maybe even a unicorn??) so maybe I'll just keep things as they are.

It's a tough decision, and one that I've been discussing with many other entrepreneurs. The nice thing is, it's not one of those decisions I have to make right away. Because I'm already doing one of them, and the other will still be an option in the short to mid term. That is why I'm taking my time.

As entrepreneurs many of us have difficulty slowing down our minds and thoughts. It feels as if we're constantly racing against time for survival; we'll be out of business if we don't act very quickly all the time.

While taking action quickly is always a good thing, especially in the beginning, doing things too quickly is also a possibility when you have a business that is at a certain stage of viability. I think it gives you the luxury and time to really think on your options and come to a decision you feel good about. After all, what good is your business if it's not claiming more time for yourself at some point?

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

The biggest challenge I faced with EditionGuard was in the beginning, when I was juggling it with contract work. Progress was slow, and it always felt like the product wasn't going to get off the ground quickly enough. It was a constant struggle to motivate myself to keep knocking things off the todo list day by day.

Based on that, you can easily say my biggest challenge then was myself. And I believe this to be true for most entrepreneurs. We're always being too hard on ourselves, expecting too much and not letting things take their course. It's very stressful living that way, but I can assure you it doesn't have to be that way.

If I were starting over with this knowledge in hand, I'd try to go with the flow more and tell myself the following.

Relax and enjoy the ride. You're learning every single day you do something, whether it works or doesn't. Just keep doing your best every day, don't kill yourself. Stay true to your course, remember your goals, but don't obsess about progress towards them daily. And definitely remove as many stressing elements in your life as you can, especially those of financial nature that'll make you constantly think about your revenues. Rent too expensive? Move somewhere cheaper for a while. Cook your own food. Go for walks in the park instead of the movies. And try to drop any excess workload if possible. Remember the 80/20 rule!

I'd read through these daily and try to stay in line with them. I find that when I'm able to do this, I really enjoy both my work and my life.

Have you found anything particularly helpful or advantageous?

I think with every business, success depends mostly on the founders but also on some external conditions out of our control. Some may call this luck, and while I don't dismiss that entirely, I think any business can create and increase their luck by doing lots of things.

Yes, if you launch something right before a market crash, you may have lots of difficulty in the beginning and the business might even go bankrupt due to it. But I still believe that'd be better than if you hadn't launched, because you will have learned how to create more luck in your life. It's easier said than done obviously, but it's founded in the belief that all adversity comes with growth. You might even quote Nietzsche: "What does not kill you makes you stronger." And while that's a bit extreme, the fundamental idea is the same. I find this very encouraging going into any endeavor.

I think my business growth has benefited greatly from the eBook industry growth overall. I launched and grew it in a period where global eBook sales have rapidly increased. This also helped many great eBooks on entrepreneurship find their way to my Kindle, to which I owe a great deal of my success so far. I was living in Eastern Europe at the time, and getting such books would be almost impossible without eBooks.

Speaking of books, the one book that really focused my thinking about the type of business I wanted and how to get it was The Millionaire Fastlane written by MJ Demarco. The name, cover, and intro of the book make it feel like a "get rich quick" scheme, but I assure you, that couldn't be farther from the truth.

By far, it's the most honest, information packed, engaging and influential books I've ever read on entrepreneurship. And MJ is a guy who has been there and done that. You will definitely learn valuable and actionable information from it. In fact, whenever I need to evaluate any business endeavor, I still use the "NECST" criteria: Need, Entry, Control, Scale, and Time.

Of course, I can't really say I would've gotten to where I am without my software development skills. I picked that up while in college, when I was doing some affiliate marketing and wanted to automate some stuff like directory submissions. (There weren't captchas back then!) I really encourage everyone, and especially entrepreneurs, to learn a bit of software development.

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

My first piece of advice ties into my last answer. I see a lot of non-technical founders with potentially good ideas wasting months and months looking for the perfect software developer. Then once they think they find one, they offer those guys 1% equity to build the entire product, because they have no idea what's involved. Needless to say, they continue spending more and more months looking.

Instead, I'd encourage every founder to take some courses on software development before embarking on their journey. There are amazing courses on places like udemy.com where you can get up to speed relatively quickly. And even if you decide not to build the product yourself, at the very least you'll have a much better grasp on the concepts and be able hire or partner up with others on much better terms for you and for them.

Another thing I'll reiterate: cut down on your financial and emotional overhead. Lessen your workload whenever you can. There's no medal for working yourself 80 hours a week into exhaustion. But there are great rewards for putting in even a few hours a week towards a goal with purpose and perseverance. Read The 4-Hour Work Week by Tim Ferriss and Built to Sell by John Warrillow — they'll give you some great ideas on how to achieve this state of mind.

Remember, both entrepreneurship and life are marathons, not sprints. Don't forget to enjoy your work and your life, because these days will not come back. Try to stay in the flow, no matter how hard it gets. I know I have to remind myself every day about this.

Create deliberate routines and rituals that bring your energy back up and remind you of things that really matter. Starting a business should be about your and others' happiness first, not money. Money is just another tool you will leverage to get to where you want to be. Ask yourself where that is and everything will be clearer!

Finally, make time for gratitude. Because we all already have so much!

Where can we go to learn more?

You can see EditionGuard at www.editionguard.com and we have a sizable blog on self-publishing which would definitely be valuable if you're ever interested in writing and publishing your own eBook.

As an entrepreneur, I also really like focusing on productivity, and one side project I have in this space is an app that marries the concepts of task management and time tracking. It's called Zask, and I recently released it as a public beta. You can try it for free without even signing up at www.zask.io. I've been loving building it and it's been seeing a lot of interest. I'm happy to hear any feedback on it!

While I'm not super active on there, I do use Twitter under the handle @tbirand. Feel free to hit me up there and give me an excuse to use it!

And of course, I've been a lurker here on Indie Hackers for a while, but that'll have to change now! Let me know if you have any questions in the comments below, and I'd love to elaborate.