Quitting Facebook to Bootstrap a SaaS Business

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

Hello, I'm Sarah Hum and I'm one of the founders of Canny. I was born and raised in Toronto, Canada. My professional background is in design; I studied graphic design and worked as a product designer at Facebook straight out of school. During that time I met my co-founder Andrew, who was a software engineer at Facebook.

As a Canadian from a small-time design school, Facebook was a good way to get my foot in the door. Turns out, nothing can really prepare you for being a founder. A year and a half later, I quit to work on Canny.

In March 2017 my co-founder Andrew and I launched Canny on Product Hunt. Canny helps software teams make better product decisions. As software businesses grow and they get more customers, feedback becomes messy. There's so much valuable insight but it's hard to see through the noise. That's when teams hire Canny to help keep track of customer feedback in an organized way.

Canny is completely bootstrapped and we recently hit $45K MRR. With that money we've been able to start growing our team and we're now a happy family of five.

What motivated you to get started with Canny?

Canny is a reincarnation of one of our past products called Product Pains — a community where anybody could give feedback about any product. It was largely focused on products that we used on a daily basis. Think Yelp, Uber, and the like. We started Product Pains to solve our user problem: companies were not good at listening to user feedback.

The concept was simple: you can post new feedback for a product or vote if the same feedback exists already. We thought if we could get enough people engaging, companies would notice and claim their company profile.

After growing Product Pains to thousands of users, we realized our approach was backwards. We needed to go after companies first. So we built an embeddable widget to collect feedback directly. We priced the widget at $19/mo and businesses started paying. This was when we knew we were onto something.

As product people, we understand why feedback is so important. We can also see how at scale it's so hard to organize feedback into actionable insights. Teams genuinely wanted to listen to their users; it's just a really hard problem. To tackle that problem we flipped the Product Pains community into Canny, the SaaS tool.

What went into building the initial product?

Andrew and I started working on Product Pains while I was still in school. I actually proposed it as a final project and got credit for it. Since I was in design school, most of the work went into designing the product and branding it. The functionality was minimal.

When I started working at Facebook, Andrew quit to work on Product Pains full time. It would be a year-long grind before I'd join him. During that time he built out the product and grew the community. Meanwhile, he was burning through his savings.

Soon after I quit FB to join Andrew we kicked off the transition to Canny. We were able to reuse a lot of the Product Pains code for Canny. We threw everything together in a couple months. Our customers were smoothly transitioned over to a rebranded product with better UX.

Building Canny was super fun. We're a designer and an engineer — building is our happy place. It got harder soon after that. We had a functional product but no experience in marketing. One regular day in March 2017, we decided we were going to launch the next day.

How have you attracted users and grown Canny?

We launched on Product Hunt and it went really well. Canny ended up second for the day and fifth for the week. It gave us a big spike in traffic day-of and also the day after because we made it into the Product Hunt newsletter.

We never ran an official beta with Canny but we did have Product Pains. Several teams that used Product Pains chimed in and helped boost the launch.

One thing that really helped was plugging into the open source community. Andrew's old team at Facebook, React Native, continued using Canny after Product Pains. The public nature of Canny meant that we're exposed to many developers. Some of those developers started using Canny with their teams.

We also started writing for our blog. A few of our posts made it on the front page of Hacker News which created huge spikes in traffic. Those posts definitely scored us awareness and customers. However, they're very hit or miss and unpredictable. We've made it this far with that kind of content but we need to turn our focus now to evergreen content and SEO.

We've put a little effort into answering Quora questions and paid ads. They work but we haven't explored them to their full potential.

For a small team, it's important to focus on a small number of key channels and going deep into them. Trying too many things usually means you're not doing a great job at any.

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

Canny has never been free. The nice thing about SaaS is that there's an agreed-upon concept of a monthly cost. We provide Canny as a subscription service billed at a monthly price. The hard part is getting those prices right. In our first year, we changed our pricing four times.

Our first pricing attempt included a plan for $2/mo. This was a mistake. We opted for this cheap plan instead of a free plan. The thought here was that we could weed out people who weren’t serious about using Canny. But not that many people opted for this plan. We ended up wasting time chasing people for what ended up being only $24/year.

The gaping hole here was that we didn't define our target audience. We tried to target both B2B and consumer businesses. The use cases were drastically different so pricing was completely misaligned.

That said, we got a lot of feedback about our pricing from initial users and were able to correct ourselves. Our messaging became a lot clearer when we were only trying to speak to one kind of customer.

Our lowest plan now starts at $50/mo. Our $200/mo plan recently superseded all others. By phasing out those earlier plans, we've been able to drastically increase our ARPU.

We do offer some special plans but don't believe in discounts as our main driver of conversions. We want Canny to be seen as a premium product, because it is. It's not a cheap, discounted version of UserVoice. For these same reasons, it's unlikely we'll ever do something like AppSumo.

When pricing your product, focus on keeping it as simple as possible. Buyers don't like to be confused. We're also big believers in using a value metric. Find one that makes sense based on your product and charge based on that. We have customers naturally expanding every month which goes along way in keeping us at net negative churn.

What are your goals for the future?

Feedback is a big problem for a whole range of teams. We've gotten Canny to a point where it works really well for smaller teams. We can do a lot better for larger teams. We'll be focusing more on making Canny a power tool. This means we need to understand the problems our bigger customers are facing. If we can build features that solve those problems, we can add more value to Canny.

We're also investing a lot more into marketing. We've done okay for ourselves so far with little-to-no marketing but we can do so much better. We brought Elen onto the team earlier this year to help us kickstart our efforts. We'll be focusing on producing more evergreen content.

We've just started growing the team so I'm really excited about our potential. It was just me and Andrew for so long and it feels like we can do so much more now.

We've bootstrapped Canny from day one. It feels great to be able to pay people with the money we make. Moving forward we'll continue to grow our team sustainably. I never want the team to worry about not getting their paychecks.

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

As first time founders, we've come across countless challenges. You can read blog post after blog post, but some things just have to be learned first-hand.

Pricing is one of those challenges. On one hand, we have customers willing to pay hundreds of dollars. On the other hand, we have competitors coming in to undercut us at $10/mo. Product founders are notorious for charging too little.

There are so many factors to consider and it's hard to strike the right balance. We're learning that pricing is not something to set and forget; it should be something that grows with your company.

Hiring has been top of mind recently as well. We're a happy team of five now but it wasn't easy to get here. Our first couple of hires didn't work out as well as we'd hoped. There's a lot to learn from being on the hiring side of the table for the first time.

I'm so grateful that we've made it this far but also terrified. We now have a team and we can't let them down. As an introvert and someone who does not like the spotlight, I'm coming to terms with being a leader.

No challenge has knocked us off our feet, although many of them got us down. I think every entrepreneur needs to have that learn-from-your-mistakes attitude. Having a co-founder is great for that emotional support. Get back up and keep hustling.

Have you found anything particularly helpful or advantageous?

I've never found books particularly helpful for picking up new skills. The best thing for me is to just try things myself. I learned how to code by building my portfolio website. I learned how to make videos by taking sprites from games and animating them in Sony Vegas. Skipping the books probably saved me a bunch of time. When I get stuck, I do a quick Google search and learn that way. I prefer getting my hands dirty and learning from my mistakes.

I’ve wasted so much time getting lost in blog posts about a topic. There's so much content out there, often with conflicting advice. In the end, I was just more confused by the information overload. When it comes to getting things done, I just go do it. I read three blog posts max, but then stop stalling. I learn a lot more by doing it myself.

I think this applies to building a startup as well. We've heard the conventional startup advice so many times. Talk to your users, do things that don't scale, etc. It's hard to understand the actual impact of those things until you do them yourself.

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

Take designing a good user experience seriously. Good design won't sell your product for you if you're not solving a problem, but bad design can prevent people from seeing the value in your product. Good design is baseline today. First impressions matter, especially if you're selling tech for tech. If a landing page isn't good, I assume the product isn't good. Countless people have reached out to tell us they appreciate our design.

Also: market from day one. People will not find you unless you put yourself out there! It doesn't matter how great your product is. You need to kick start word-of-mouth traffic. Product founders, I'm talking to you. I know it's hard, but you'll benefit so much from starting early. It takes time and effort to get marketing working for you.

Where can we go to learn more?

We're writing more this year on the Canny blog! You can find me on Twitter @sarahhum. If you're curious about our nomad journey, check us out on Instagram @carryoncode.

Feel free to comment if you have any questions. I'm happy to help where I can!