In early 2011 I was looking for my next thing. Long ago I learned that when I’m not learning I’m not happy. And in early 2011, aside from hosting our first successful MicroConf, I wasn’t doing many things that scared me.
Which told me I needed a next thing.
My book was selling well. I had a portfolio of 8 or 9 small apps and websites. But nothing was pushing me to expand beyond my current mental limits, and I knew that within months I would start to feel a tinge of burnout and apathy that would eventually turn into genuine unhappiness.
I had spent the previous 10 months hanging out with our newborn, working 12-16 hours a week, and making an income comparable to what I had made working full-time.
Life was good, and I had to go screw it up.
With patience as one of my least prominent traits I didn’t want to spend 6 months coding, and 12 months launching/learning/trying to find product/market fit.
So I took a page out of my playbook and went on a search for an acquisition larger than any I had previously attempted.
I’ve already detailed the acquisition in a 3-part blog series, so I won’t rehash it here. But suffice to say I spent almost every penny in my business account to buy a SaaS app that looked like this:
And was able to turn it into this:
And 10x the revenue in 15 months, via steps I outlined in a MicroConf talk a few years ago.
Things were good while I was growing HitTail. I was often frustrated with how long each step took, but I was learning huge lessons along the way.
Another Next Thing
And then things changed…and I had another “what’s next?” moment.
This was partially due to Google pulling Not Provided out of its hat in 2012/2013 (which we worked around pretty easily, but it did scare me for a couple months). And partly due to the massive amount of learning I had packed into the revamp and growth of HitTail.
It became apparent during one of my semi-annual retreats that I needed to find my next thing. Again.
The next thing turned out to be Drip. I won’t go into its origins here since I’ve detailed them elsewhere. But suffice to say, at a certain point Drip’s growth curve became such that it didn’t make sense for me to focus even a few hours a month on any other products.
So I began divesting myself of my portfolio of websites and web applications.
I shut a few of them down. I sold one for a few thousand dollars when someone made me an offer out of the blue. I gave my share of another app to a business partner.
And then there was HitTail. It was making too much money to shut down or give away. But luckily, but this time a secondary market for web applications had started to develop.
Finally, A Secondary Market for SaaS Apps
A few years ago, the options for selling a small web application were bleak. I didn’t know of any reputable brokers. Flippa is akin to selling at wholesale (and dealing with a lot of uneducated buyers in the process).
Having developed a relationship with FE International over the past several years, I chose them to assist with the HitTail sale.
And a few months later (after what felt like hundreds of hours of due diligence work, but was more like 40-50), I found myself staring at a newly augmented bank balance and my list of applications that had once approached a dozen in number….now standing at 1.
It’s all about Drip, baby. And that focus feels great.
Take note: if you acquire an app be sure to make an announcement like this and email every email list you have. The excitement of new blood investing new effort into an application is typically a good source of trials.
So What Did I Learn?
As soon as news of the sale hit the front page of Hacker News questions started coming in: Would you do it again? Was it a financial win? What did you learn?
Here are a few things:
#1: “Stair-Stepping” Is Very Much Alive
I’ve come up with a name for this approach of starting small and working you way up through larger and larger opportunities as you gain experience, skills, funds, and confidence. I call it Stair Stepping.
This move from HitTail to Drip marks my next stair-step, from step 3 (recurring revenue) into an as-yet-undefined step 4 (might be: more recurring revenue in a larger and more competitive market).
Had I tried to launch Drip in 2011 without the experience, skills, funds and confidence I gained from growing HitTail, I would have had my ass handed to me.
Launching and growing Drip has been hard. I honestly don’t think I could have pulled it off P.H. (pre-HitTail).
The more I learn, the more I see Stair Stepping as an optimal approach for maximizing results while minimizing your chance of failure. It’s not the fastest path, but a predictable one.
#2: Money Makes Things Easier
I was doing fine before HitTail. As I said, I was working 12-16 hour weeks, hanging out with my kids in my non-work hours. And making a full-time income (akin to what I made as a contract developer in California).
But one night in the middle of a conversation about earnings, money, and other financial stuff I asked my wife: “What would having more money allow us to do?”
She rattled off a number of things, but the ones that really hit me were:
- Be more generous
- Save for the kids’ college
- Have more control of our schedules
- Feel more security about the financial present/future
Notice none of the things she mentioned involved buying stuff. Aside from nerdy t-shirts and good whiskey, I don’t care much for stuff.
So I hadn’t given much thought to making more money once I’d hit that “good enough” mark back in 2008/2009. But this conversation changed the game for me.
Within a year, HitTail had changed our standard of living and accomplished most of the things she mentioned during that conversation, including allowing us to help friends and acquaintances out of a few financial situations, bringing the kids with us for a month in Europe/Thailand each year for the past 3 years, and generally feeling more definite about our financial future.
I’m not in a place where it would be possible for me to never work again. But HitTail was a noticeable step towards that possibility. It gave me a glimpse of what that might feel like.
Let me be clear: I don’t think you need buckets of money to be happy. And, in my experience, “more stuff” is a ridiculous reason to seek more money.
But you can do some crazy generous and interesting things when you have a bit more breathing room.
#3: Buying is Better Than Building
I’ve been singing this tune for a long time. But acquiring an application that already has product/market fit puts you 12-18 months ahead of starting from scratch.
Like most founders, I’m impatient. And leaping ahead is so much easier than building something from nothing.
By my estimation, I think acquiring HitTail condensed my career timetable by 18 months. And removed a lot of anxiety and stress of the pre-p/m fit thrashing.
#4: A Team of One Can Accomplish Crazy Things in the 2010s
The amount of leverage one can achieve given marketplaces like Upwork, metered hosting like Amazon’s AWS, inexpensive payment gateways like Stripe, and the myriad of other tools that are multiple orders of magnitude cheaper than they were a decade ago, is mind-blowing.
My journey with HitTail would have been impossible 10 years ago.
I believe today is the best time in history to be a founder. And it’s especially easier for a single founder given the power of outsourcing and today’s global labor pool.
The day the HitTail sale closed I received a few congratulatory texts from close friends.
At this point, after weeks of due diligence, I was emotionally exhausted. Selling something of this scale is hard. You don’t think it’s going to be that hard, but it is.
There’s an emotional component as you constantly wonder if the sale is going to fall through. You don’t sleep well. And you have a hard time letting go of something into which you’ve invested so much time, effort and emotion.
But sometimes it’s the right thing to do.