How I Built a Scalable Product that Fuels My Business (and Vice Versa)

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

My name's Colin Gray, and I’m based in Dundee, Scotland. My background is a little eclectic. I started out as an Astrophysics graduate but decided that there were way too many sums in figuring out how space works, so I jumped into web and media design and worked as a web developer for a few years. I ended up working in learning technology in Edinburgh - basically teaching lecturers how to use technology to enhance their teaching - and one of the technologies we discussed, of course, was podcasting! So I learned podcasting as part of my lecturing role and that, combined with my web dev experience, led me to start up ThePodcastHost.com in 2011.

In the years that followed, I grew that site as a part-time gig, building affiliate income and client work, and ended up making enough (Amazon affiliate and client income had grown to about £4000/month) to employ someone and go full-time in 2015. The income wasn’t enough to pay us both, but it was enough to take the risk. At that point, my aim was to cover both salaries within three months, and to build some products for ourselves in order to diversify away from the 75% affiliate income that we relied on.

First of those was our coaching membership product. That included a collection of in-depth courses on podcasting (the learning technology background came in handy there!), some resources, podcasting tools, a music library, a forum community, and live coaching every two weeks.

But, in late 2016, I was getting a bit fed up competing with all the other teaching resources out there, and had the inkling that I'd like to build a software product. I wanted to give our platform something much more unique, and much harder to compete with. The biggest question that always came up from our audience was around editing. So many people hated working with tools like Audacity and Audition. All they wanted to do was get their recording out into the world, sounding good.

So, that's what Alitu was designed to do: act as a personal producer for the average podcaster. It bypasses editing software and automates a lot of the repetitive tasks, like adding music, converting audio, leveling, clip transitions, exporting, and publishing. It also helps you to edit clips, and put together a range of recordings, including ads, if you need it.

Throughout that time, though, we've continued to grow ThePodcastHost.com as a free content resource with affiliate revenue, as well as the academy as a paid membership product. That's what's allowed us to bootstrap Alitu for over one and a half years, so that now Alitu has been live for five months, and is starting to pay for itself.

Right now, ThePodcastHost.com is still our main revenue generator, with approx $14,000-$16,000 per month split between affiliate and membership revenue. Alitu now has 130 paying users, is growing approximately 25% per month, and passed $3,000 MRR in November.

What motivated you to get started with Alitu?

I mentioned above how the idea came about, but validation is an interesting question when it comes to motivation. This really came down to talking to a LOT of our existing audience. Our main site, ThePodcastHost.com, receives around 5k to 6k users per day, and we canvassed them via email lists, surveys, and chat tools on the site. We asked as many people as possible - what are you struggling with? And, like I said, many mentioned editing and production as the biggest barrier. Either they can't learn the technology or they don't have the time.

Based on this information, we put together a short description of Alitu - just a verbal prototype or pitch really - and started talking about it with users. Many said they would use it and pay for it as long as it saved them stress and time, so we knew we were onto something.

If we'd had fewer users to canvass, I think I'd have wanted to create something more concrete and test it with users before really diving in. Or, I'd have considered a pre-sale campaign to get stronger validation. But, the volume of people we managed to speak to convinced me enough to invest in this. Add to that the fact that I've been in podcasting for over 10 years now, and worked with so many people in the field, sometimes a gut feeling is enough.

What went into building the initial product?

I put together the first plans for Alitu in September 2016. That included a full outline of all the features and a set of user stories. I originally considered working with an agency and put it out to three or four different web development companies. The proposals and the costs that came back were so wildly different that I realized outsourcing would be too unpredictable and put too much of the control in someone else’s hands. Through those conversations, I also came to think that working with an agency would be way too restrictive. They'd set a spec, and, to a large degree, we'd be stuck to that spec throughout, or the whole proposal/cost estimate and project plan would have to be changed.

So, I started looking at developers. I took on a local dev through a referral from a friend and started work with him. He was a DevOps engineer by role, and a back-end dev by nature - node.js and AWS as the tools of his trade - and the first task we set was to build the server infrastructure and make sure we could build a tool that did all we wanted it to with the media files (i.e. processing, cutting, joining, exporting).

Initially, the plan was for Alitu to work with audio and video. I still plan to do that at some point, but it became pretty clear early on that building in that sort of functionality was going to require two very different interfaces. And video is a magnitude of difference in terms of file size. So within the first three months, we decided to build an audio-only tool, and then build video in at a later date. However, we created an infrastructure from the start that was capable of handling video, so it would be easy to include later.

Within three months we had a server up and running, as well as a very basic UI so I could test all the “processors,” as we called them. It worked! We could do everything we needed to with audio, so it was time to build the front-end. That's where it got tricky. I started looking for a front-end dev in January 2017 and didn't manage to find anyone until May. During that time, I realized how important it is to get out there and search like crazy - at that point, my full-time was almost solely recruitment! For a few months, I was just on AngelList, LinkedIn, local dev communities, social media, etc., trying to track down people with the right skills and the inclination to work with a tiny team and a developing tool like ours. Eventually, I did find a great front-end dev through AngelList. He was quite early stage, but super enthusiastic and had a real eye for problem-solving, so I took a chance, and he's been with us ever since. He worked with React, primarily, and he set up a development workflow in Heroku to start building a UI for our existing back-end system.

Our two developers started working together, and by around September 2017, we had a working system that I could test out. I had hoped to launch our beta in September, but, thanks to some unexpected problems, we changed a bunch of things to improve the system. We were originally processing files as we went along, but it was sooooo slow. We had to change the whole process to log user input along the way, and then only apply it all at the end. So we finally managed to launch our open beta in January 2018.

Throughout, I was splitting my time between running ThePodcastHost.com and Alitu. We secured some local research and development funding (through the local government, designed to help companies take risks and build new products), but we had to match it. We used the income from our main site to fund development, so part of my job was to continue to grow client income, affiliate income, and membership income within The Podcast Host. Alitu took most of my focus, though!

How have you attracted users and grown Alitu?

We launched the open beta to our existing email list of around 5,000. I sent out a few teasers in September and October 2017, drip-feeding details of what Alitu was and what it would do for people. This led to a wait list of sorts, which was really just a tag inside our Convertkit account. The wait list grew a little cold, though, through November and December as we were more and more delayed by pretty big final hurdles (working with big media files through a browser is a bitch). So, by the time I launched the beta sign-ups, we only got around 50 active users from a wait list of approximately 400. That was a learning moment for me - either keep the teases until you know you're ready to launch or, and this might be the better route, turn them into a narrative and make them ongoing. I think if I'd treated the tease emails more as a behind-the-scenes story released every couple of weeks from September through to January, it would have kept people much more involved. Instead, I just did a standard “coming soon” announcement two or three times, and then failed to deliver on the “soon” aspect.

I invited in blocks of 50 users at a time initially, which worked out well. The 1st week, about 15 signed up, from an initial block of 50. And that uncovered a few problems, which we fixed. Then another 50 invites, and another 10 to 15 users. That uncovered another few problems. I felt that drip-feed beta launch worked well, so we didn't have a huge influx who all experienced the same problem and were put off. I found that beta users are often willing to put up with glitches and a rough app, but it still doesn't take much to put them off coming back.

One thing I did, which may or may not have been a good decision was that I signed up beta users with a payment method. The message was, "I want help from people who are serious about using the app, so I'd like you to commit now. You won’t pay a thing until the beta is over, and I'll tell you in advance when we go fully paid, but we're treating the beta as a free trial, and you'll get a big beta discount when you eventually pay for the app." This did heavily cut the number of users who signed up, but those that did were serious, gave the app a good go, and helped us out a lot in testing. I wanted to go for quality over quantity in this respect.

The beta went on for around five months. Longer than I'd have liked, or expected, but again, working with big and very varied media files, and trying to create a new method for editing audio turned up a whole lot of unexpected problems! Finally, though, we launched fully live in June 2018. By that point, we had around 60 beta users, and thanks to our “commit early” method, the barrier to convert to paying users was low. I was delighted to see half of them, 30 beta users, pay that first month (with a beta discount of 30%, taking the price down to $18 per month). I launched fully to our mailing list as well (at around 7.5k by that time) - three big announcements over two weeks. And....crickets. We got around ten sign-ups. I'll admit, I've never had great success from big fanfare launches, for this or previous products like courses or our membership. At the end of launch fortnight, I ended up with around 40 paying users. That was demoralizing. Nothing for it but to forge on and just start to build Alitu into our main funnel.

I started to include adverts for Alitu on our main website in the form of banners telling people what it could do for them. Then we built in-content mentions into articles. For example, if we posted an article entitled “10 Ways to Make Editing Easier,” we'd include a mention at the end such as, "And if you want a tool that does this for you, check out Alitu!" I also included a mention of Alitu inside our How to Start a Podcast article, which does really well on traffic, as well as our 20-day start a podcast email sequence that 30 to 40 people sign up for each day. I slowly got that all done between May and August, and by August sign-ups started to really kick in. But it was a slow few months, going for 40 to 50 users between June and August! By the end of August we were at 64, then 84 at end of September, 99 at the end of October and 127 at the end of November. Now, we've added Facebook retargeting too, and that's working really well.

For me, building a deep, reliable, and steady funnel has always been far more successful and important than big fanfare launches. That work has paid off in our ThePodcastHost.com income and is now starting to really kick in with Alitu as well.

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

Right now, my focus is growing all three of our main revenue streams: affiliate, membership, and SaaS income. I'm finding that there's a really strong synergy between all three, building on the content we publish. We put out a minimum of two articles, a podcast, and a video every week, which directly helps our affiliate income through honest product reviews and recommendations. Then, once the content has grown a bit of traction, it tends to convert our two main products - either our membership or Alitu. In my experience, it's never a bad time to start creating helpful, valuable content, and it fits into all levels of your funnel.

The second part is that the two products themselves have a lot of cross-promotion opportunities. In the Academy, we teach people how to run a great podcast, and with Alitu we offer something that makes running a great podcast easy. I'm already finding that Academy members are pretty likely to sign up for Alitu, and vice versa. And at this point, I still haven't made much effort to cross-promote. In the future, I plan to offer a bundle of both at a reduced cost, and to offer coupon codes to members of either one, to persuade them to join the other.

One experiment worth sharing was around our sign-up process. I mentioned above that I originally intended to go for commitment over volume, and that meant we asked people for payment details to get into the free trial. At one point, I got frustrated by the low conversion rate on our landing page and decided to try a no-card sign-up. I assumed our conversion from free trial to paid customer would drop, but hoped that sign-ups would increase enough to still end up with more incoming paying customers. Our conversion from trial to paid was really good before the change, averaging around 50%, but we were only averaging one to two sign-ups per day, meaning we were averaging around 25 activations per month at that point

Once we made the change, a strange thing happened: our sign-ups went up, as expected, but conversions dropped way below even what I'd expect with a no-card sign-up. We went from one activation every day or so down to one activation per week. Going by those numbers, it seemed that having to enter card details was putting off even people who would have happily kept paying for the service. I trust that the vast majority of people who stay signed up do so because they want to, not because they forgot to cancel, because stats show they use the service and we get very few refund requests. So, it seemed that the “enter payment” process was a real barrier when it was required at a stage later than sign-up.

After about three weeks of seeing our activations plunge (only three new paying members in those three weeks, as I recall) we changed back to requiring card details during sign-up. Our conversion stats returned to even better than before, and continue to grow now, even though we put the “payment” barrier in front of a free trial. Right now, we get around a 2.9% conversion on our landing page - that's sign-ups to trial. And then still approx 50% conversion to paid. So it doesn't seem to put people off too much, and it cuts our support load and server load a great deal in the process.

What are your goals for the future?

My first goal for Alitu is to match the income from the rest of our business. If I can bring Alitu up to a $14,000 MRR, then it'll match our ThePodcastHost.com income, and really justify the time we've put into it. That level will also cover the monthly costs of maintenance and development, plus allow me to hire a marketing person. Marketing is a big part of what I do, but I think we will need someone who has it as their sole role very soon.

Right now our traffic on ThePodcastHost.com is in the 200,000 unique visitors per month range. That traffic is the main driver of sign-ups for Alitu, directing readers and listeners towards the tool. We grew that from around 120,000 last year, mostly through our regular output and a fair bit of SEO work, and think we can do even better this year thanks to a big update we're doing to the website right now, due to launch in January. Through that, I aim to double our traffic by the end of 2019, to 400k unique visitors per month.

I plan for our website relaunch (on ThePodcastHost.com) to do something even more important, and that's to significantly increase our conversion from consuming our general content to viewing the landing page of either our Academy or Alitu. Right now, this is pretty low, in the 1 to 2% range. But, I'm redesigning our blog post and podcast episode page layouts to really highlight the tools that are most helpful to the user, and at the best possible time. That means tailored box-outs which refer to "tools that'll help with [this]," for example. The redesign is really focussed around directing readers and listeners to the resources that'll help them most, chief among them being our paid products, Alitu and the Academy. But, directing towards affiliate income related tools will also be a bonus in this.

The biggest roadblock in this is pretty closely related to the last aim, and that's to take on, full-time, another three staff, two of which will be developers. I have four part-time developers working for the company right now, which is fine for the moment, but the part-time nature does hold us up. Communication and progress can be slow at times. We need to either upgrade our current part-timers to full-time (preferred, but not possible right now) or recruit some new full-time devs.

The trouble is, recruitment has been really difficult. It feels to me, right now, that developer salaries are in a bit of a bubble. I can't even seem to recruit remote graduate engineers for less than what I’d consider a very high wage which, as a bootstrapped company, is difficult. It seems that there's so much VC funding floating around right now that funded companies are just throwing money at devs of all levels, which makes things hard for those of us that aren't quite so flush!

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

There are a couple of things I'd definitely do differently, one of which was integrating Wordpress as our membership management system! When Alitu was first created, I used Woocommerce subscriptions as the sign-up, payment and authorization system. In some ways, it made sense; I knew the tool well, already paid for it, and it was relatively low-cost and self-hosted. But, over the first few months of working with real customers, it became pretty obvious that integrating with a tool like that is a really bad idea for SaaS. The main reason being that we were authenticating in a way the Woocommerce hadn't planned around. It worked just fine initially, but the trouble is updates. Woocommerce is a great product, well supported, but that means it also moves fast. Over the span of three months, the way it managed its users changed twice, and each time it broke our authentication system, which is obviously not good. Luckily it was still during beta, and we didn't have a lot of users, but it still put us back.

In the end, we decided to go with an established subscriptions platform designed specifically for SaaS businesses: Zoho Subscriptions. That meant that it was way more stable and had a lot of tools we could tie into and take advantage of. In the future, I'll also pay a bit extra and take a bit more time to use tools that are specifically designed for the context they'll be used in.

Another thing I'd do differently is to go smaller even sooner. I mentioned cutting down the video functionality I had planned. I think, doing this again, I would cut it even further to get our beta started earlier. I think with an even simpler MVP, perhaps cut our editing tool and do automated processing only, we could have started to build hype around Alitu much earlier. Don't underestimate the power of having something, anything, live and usable, at the earliest possible stage. That means you start to build an audience. You start to build awareness. It's really hard to speed that up, so the earlier you do it, the sooner you'll grow to scale.

Have you found anything particularly helpful or advantageous?

A couple of years back, I found the ConversionAid podcast (now called The SaaS Podcast), by Omer Khan. He's a great interviewer and talks to some of the best SaaS creators in the business. I've learned a ton from that Podcast.

Similarly, I found Scott Barstow's blog, which had some excellent resources. His series on documenting a software product really helped me out at the exact time I needed it. Nathan Barry's writing around pricing and staff profit sharing were also insightful for me. More recently, I've been following a lot of Justin Jackson's work, and I love following the Build your SaaS podcast that he runs with Jon. It helps that it's in the same industry as me, but I think their experiments and debates apply anywhere!

In terms of our own situation, there’s no doubt that we have a big advantage in the form of my existing content site, ThePodcastHost.com, and the length of time it’s been around. I started writing that back in 2011, and it’s grown with the podcasting industry. Content is a huge marketing advantage, and the credibility of that brand has grown over the years so that, now, it brings in significant traffic that I can direct towards helpful, useful products that I honestly think will be valuable to them.

Related to that, I’ve grown my own experience in presenting at events throughout the same period of time. I enjoy public speaking, and I’ve put a lot of work into getting good at it. I’ve spoken at events around the world like Inbound, Problogger, Podcast Movement, the Content Marketing Academy, and many others, and I know that the visibility that’s caused and the credibility it’s grown has helped in how ThePodcastHost.com has grown over the years, and how Alitu is growing now. Getting on stage isn’t the most scalable of marketing tactics, and it has to be used carefully. For example, I think it’s easy to get wrapped up in ego and end up spending far too much time at events and away from building your product. But, when it’s used well, and sparingly, it’s really powerful.

Finally, on advantages (or lack of them!), I'm not a particularly organized person, but during the course of building Alitu, I've had to manage so many new things that it's forced me to get organized and develop a system for it. I actually ended up doing a conference talk on that in front of 350 people last year, after people started to notice my writing around the project management and productivity systems I was using. Over the past three years, I've developed a bunch of tools which have helped me in a huge way. I think about it as if I'm building my own bosses, at various different levels.

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

Here are most of my learnings, including a few relatively often-said ones that probably deserve repeating, since I didn’t listen the first time!

1. Go small and get something live into the world, as soon as you can.
2. Document the process! Use social, video, podcasting, blogging to show people the creation of the product. It’ll help build an audience ahead of launch.
3. Create other interesting content along the way that really helps the target audience for your product.
4. Don’t overthink the tools you use - I’ve found it’s near impossible to truly evaluate things like subscription platforms, support tools, etc., without using them for a week or more. So, just pick one that has decent reviews and go with it. I spent days researching platforms and still ended up choosing ones that didn’t suit and having to extract ourselves, then build in new ones.
5. Start recruiting earlier than you think, if not straight away! It takes bloody ages to find good people in the first place, and it’s worthwhile having a month or two part-time trial anyway, so the process can take four to six months, from first starting the search.
6. Spend more time recruiting than you think. During times when I’ve been trying to find a full-time dev, I’ve spent a couple of days per week on this. That’s nearly half of my working time!
7. Don’t listen to people who say you can’t make it work as a single founder. If you find a great first, second, third employee, then you can give them equity, and they become your founding team. That means you can actually test those potential co-founders over time, before committing. And because you’re paying them a salary, they’ll often buy-in for far less equity.
8. Don’t rely on big fanfare launches, killer product hunt releases, or shiny new growth hacks. Build your product around a steady and reliable funnel that will predictably recruit users over time.

Where can we go to learn more?

If you fancy starting a podcast, check out our starting guide. And if you want to make it easy, of course, go to Alitu.com! Always happy to chat on here or on social - fire any questions in the comments below, or tweet me @ThePodcastHost. I also do a bit of behind the scenes stuff on Instagram from time to time, @the_podcast_host.