Maintaining a Strong Product Vision to Bootstrap to $75,000/mo

Hi Jan! Tell us about yourself and what you're working on.

I'm Jan Schulz-Hofen, and my business is Planio. It's a collaboration tool for people like me: developers. It brings together issue tracking, project management, a help desk, and Git hosting in one place, and it's based on the open-source project Redmine.

I started Planio in 2009, and today we serve 1,500 paying customers all over the world with a team of 9 people. Here's a little video of how that went down.

How'd you get started with Planio?

Back in 2009, our day-to-day life at Planio was software projects for clients. While I really enjoyed client work, I always had the feeling that I was on a treadmill of endless new projects, trying to strike the balance between paying the bills and being overloaded with work.

At the time, we used Redmine, an open-source collaboration tool, to work with clients. Often, at the end of a project, the client would ask whether they could keep the tool.

And that was the seed of the idea behind Planio — an idea that has resulted in a business that will do over 1 million dollars in annual recurring revenue in 2016.

How'd you find the time and funding to build everything?

We started offering a hosted version of Redmine-as-a-Service to a handful of our agency clients. The early revenue wasn't enough to support even one person. Therefore, I kept running the agency, and I handled everything from support to sales to server administration on my own. Running both businesses at once was tough, obviously, but it meant that I could grow the business without venture capital.

Can you talk about the tech behind Planio? What tools are you using for development and hosting?

We are and always have been a Ruby shop — that's why using Redmine was a no-brainer for us when we first started out as an agency. Redmine is one of the oldest Rails-based open-source projects that's still currently maintained. Over the years, my company has become a major contributor. In fact, today we donate back most of the features we build for Redmine with only a few exceptions, for instance our more advanced pro features CRM & Helpdesk and Team Chat.

We're also big believers in devops. That means we don't have separate dev and admin roles at Planio. Technology-wise we, of course, use Chef, a Ruby-based infrastructure automation tool. We've actually automated the heck out of everything using Ruby and Chef at Planio: from setting up servers and Planio accounts, to procuring and extending SSL certificates, to billing and creating invoices, and even checking our bank accounts for manual client payments.

Speaking of payments, starting a SaaS business that needs to accept credit cards was harder in 2009 than it is today. We didn't have Stripe and we didn't have Recurly and the like. So we've built everything from scratch, on top of the amazing SaaS RailsKit by Benjamin Curtis. It may sound crazy from a 2016 point of view, but I'm actually quite happy that we have these things in-house today, as it provides greater independency from third parties and saves quite a lot of money once you get to scale.

How have you attracted users and grown Planio?

It all started with a post on the Redmine.org forum almost 7 years ago announcing the launch of Planio.

Our relationship with the Redmine community has been something we've focused on. At Planio all of our engineers (5 in total) are core Redmine contributors. Personally I've been an active contributor since 2010. That has meant that a lot of our customers come from the community.

A second big win early on was when Software AG, one of the largest software companies in Europe, became a customer. That gave us a cushion in terms of revenue, and it gave us credibility with other larger companies. Now, we're quite proud to be serving big brands such as Allianz, Seagate, Staples, Citrix, etc.

What's the story behind your revenue?

When I look at our revenue growth over the last couple of years, it's a linear line that has grown steadily since the beginning.

I think it demonstrates all that's difficult and great about SaaS as a business at once. When you sell 39 euro/month subscriptions, you won't see massive jumps in revenue. Yet, it slowly accumulates until it's enough to support you and a whole team.

Here's what our monthly recurring revenue growth looks like from May 2011 until October 2016:

That's some impressively linear growth. What are your churn rates like?

Our churn rates are quite low — around 1.5% per month — which I am quite happy about. One could say that it's due to the fact that it's a lot of hard work moving away from a full suite of project management and collaboration tools once your entire team and data are on it.

However, we've always said that we only want customers to stay with us because they're happy with Planio — not because it's too hard to leave us. That's something many new clients ask us about: "What happens if I ever need to cancel? Who owns the data?"

The answer is very clear at Planio. We call it our Data Freedom principle: Our customers are the exclusive owners of their data. Period. We have a feature you can use to download full SQL backups of all your data that can be readily imported into a standalone vanilla Redmine on your own server. In my opinion, it's a very good insurance policy in case anything happens to your SaaS provider. Our customers absolutely love it. A policy like that gives you great peace of mind, and I'd love for more SaaS providers to do the same, actually.

Has anything in particular (pricing changes, new features, updates to your business model, etc) helped move the needle with revenue growth?

One change that materially impacted our revenue growth was tweaking the pricing of Planio.

Back in February 2016, we adjusted our pricing to better fit how our customers were actually using our product. We moved the limits on the four regular plans (Silver, Gold, Diamond and Platinum) to roughly the 25, 50, 75 and 100 quartiles in terms of number of users and number of projects, excluding outliers. That has meant that we now have an even distribution of new customers across our plans, whereas previously the majority of customers were going for our bottom two plans. In hindsight, I think we should have started experimenting with pricing earlier.

What are your personal and business goals for the future? Are there any big challenges you see on the horizon?

I am always excited when I see how many different people across the globe use Planio daily, and how we're able to provide the service to these people with a small, distributed team.

My goal for Planio isn't to become the largest project management company in the world. Instead, my goal is to offer the perfect set of tools for our niche of customers.

We also don't attempt to grow the business too quickly (and possibly unsustainably) in the hopes to attract investors or a potential "exit".

Planio generates solid revenue (and profits) now that comfortably support our little team and myself. Our user base and revenues grow slowly but very steadily. Having worked in other startups it's a total game changer to be able to grow a company in this way, especially when it comes to things like culture and hiring.

Planio feels a little like a family business, which I love. Oh, and I even get to go on holidays, sometimes! :-)

If you had to start over, what would you do differently?

When I launched Planio, I only bought the .io domain for the website. At the time, I assumed that we could buy other top-level domains such as planio.com at a later stage. I did, however, register a national trademark for Planio in Germany.

Unfortunately, another company came out with a project management tool using the .com domain. We were able to come to a resolution of the issue, with the other party renaming their product — thanks to the trademark. Unfortunately we still don't own the .com domain and the whole process has taken a lot of time and used up resources that would have been better invested in growing the business.

Therefore, my advice is to register a national trademark and buy all relevant domain as soon as practical. I've seen so many fellow founders having to change their name due to issues like this. It's always a huge productivity killer.

What do you think your biggest advantages have been?

The first customers of Planio were clients of my development agency, LAUNCH/CO. That means that I had a really close relationship with them. They weren't just abstract customers. I could ask them what problems they wanted to solve, and then solve that problem with Planio for them.

Secondly, we are big believers in the dogfooding approach. From issue tracking to Git hosting, from team chat to time tracking and the support helpdesk, we use all Planio features ourselves in our day-to-day work. I think using your own product for eight hours a day is a great way to push yourself to improve it constantly. Personally, I would struggle to build a product for an audience I don't share the same needs with.

At some point in 2015, after we had just launched our own team chat feature in Planio, part of the team wanted to start using Slack. The reason for it being that Planio Chat wasn't great yet and was still a litte rough around the edges. I asked the team to stick with Planio Chat, saying "let's get through this". We did, and forcing ourselves to use a not-so-great-yet product made us iron out many bugs and come up with tons of improvements to our team chat which make it a really awesome part of Planio now. It's tightly integrated with all other features, its chat logs show up in Planio search results side by side with other things and it's an overall experience that would have never been possible with Slack.

What advice would you share with aspiring indie hackers?

I would advise people to not go down the venture capital route until you've explored other options. When you bootstrap your business, you keep a lot more options for a successful outcome on the table.

There are also other ways of financing your product development. For example, some of our larger customers sometimes request specific features in Planio. If they're willing to pay for the development costs and it's a good fit for the product, we'll build the feature for them.

When we do that, we always make sure to negotiate terms allowing us to use the feature for Planio itself. Especially in the early days of Planio, this approach helped us a lot in building out the product without having to tap into our savings too much.

Obviously, you need a strong product vision for this approach. Not every feature your customers request will be helpful for the entire user base, and if you blindly add everything a customer would pay you for, you might end up with a big ugly mess of features which nobody would want to use.

Where can we learn more?

You can try out Planio via our website. I'd love to hear from you about how you find the product, what you like about it, and what you'd improve. Because you are an Indie Hacker reader, I'd also like to offer you a full 3 months of Planio for free. You'll get the special offer via this link.

We also write about productivity, projects, and bootstrapping at our blog at plan.io/blog, so please do stop by!

Finally, you can also leave a question in the comments below.