$30K in Debt to $100K MRR in 6 Months: Our Journey Building Launchpeer
When my wife and I started our company Launchpeer, we had no idea what we were getting ourselves into, and I’m glad we didn’t. Looking back, if I knew the first 18 months in business would be filled with heartbreak and depression for me and my family I doubt we would have made the leap into full time entrepreneurship.
I mean, I was making almost $100K/year at my job, there was no real reason for me to leave. It was a great place to work, full of the type of fringe benefits corporate types make fun of like beer on tap, unlimited time off and bring-your-dog-to-work-Fridays. For a 26-year-old husband and father of two young boys, there couldn’t have been a better place to be.
But we just weren’t satisfied.
My extended family thought my wife and I were crazy when we decided to start our own company. Friends said we were insane for leaving such great gigs. Even our initial senior developer co-founder bowed out before we even got started because the leap was a scary one. Other entrepreneurs understood though; that insatiable appetite for something more, even though most of the time we don’t know what ‘more’ is or how to get there. We just know we’re going to do something and figure it out along the way.
So that’s what we did. With no savings, no safety net and also no more senior dev co-founder anymore my wife and I decided to start Launchpeer, a web and mobile development agency focused on startups.
Let me clarify what I mean by no safety net, because I think that’s a loose term used by a lot of people to describe entrepreneurs taking chances. My wife and I had no savings. Zero. We had $100K+ in student loan debt, $5K+ in credit card debt, a mortgage payment of $1500/month and two car payments to make.
As a homeless teen my family was able to provide no assistance other than the occasional call to ensure we hadn’t actually lost our minds, considering the $100K/year job I had was almost 5x more than anyone in my family had ever made. My wife’s family was not in any better position, and with her family full of state and federal employees success for them leaned much more toward a safe pension plan over the wild ride of entrepreneurship.
I’ve had a lot of people ask me recently how we grew our company ‘so fast’ and whether we had it documented somewhere. Well, here it is. Unfortunately when you’re neck deep in trying to grow a company from the brink of collapse to where we are today blogging about your experiences can be an overly daunting task. Now that we’re in a great stable spot, here it is.
When we started Launchpeer the only two team members were me and my wife. She had graduated from a code bootcamp not too long before and was working at another company in town working on development projects from some really major brands like Burt’s Bees and Colonial Candle. I’m an Army Veteran who snuck into the tech world through a great, admittedly embellished resume. I had worked with major defense contractors building software for them as a business consultant, the farthest thing from working with startups.
We both saw a hole in the market though for an agency where startups could go, get treated fairly both in terms of pricing and processes, and who cared about their success (truly care, not ‘billable hours’ care).
When we finally quit our jobs we had just one single client. We promptly hired two full-time contractors to help us fill the gap in terms of development (we were a development agency after all) and set out trying to build the company.
We sucked at it.
Now, we were great at working with our clients, the few there were. We just weren’t very good at sales or marketing. Being skilled in a trade (development and business consulting) is far from being great at growing a company organically.
We didn’t have the cash to spend on ads or sponsorships, and we weren’t working with large companies on a big project that could fund our growth. Instead we were clawing our way through the trickle of leads we got going to local startup events and conferences. I felt like a door to door salesperson begging for a lead, except my ‘doors’ were connections made at these events.
Desperation began to sink in. The realization that we were burning the little cash flow we had from rising credit card balances and student loans (yes, I stayed in school just to take out more student loans to help pay our living expenses).
Desperation leads to fear. Fear leads to anger. Anger leads to hate. Hate leads to suffering (thanks Yoda).
I started to hate my business. I blamed all our troubles not on my own lacking, and not on how we did business, but on the business itself. So we changed it. We lost focus on what we set out to do and instead changed our marketing, messaging and sales pitch to target any and everyone.
I mean, it worked for all my friends at other agencies, why wouldn’t it work for me? I’m sure you’ve seen it; that vague messaging agencies have about how they ‘build awesome products for cool people’ which really just means ‘do you have money? Great, we’ll do whatever you want us to.’
That loss of specialization mixed with our lack of sales and marketing skills almost tanked us.
At this point we were making a measly $4000/month. Barely enough to pay our contractors let alone ourselves. My wife had to go back to work to help cover our bills. I stayed at home with our 4 year old son, working 80+ hours per week not really doing anything except worrying. I’m sure me staying up till 2pm monitoring our social media didn’t account for any increase in sales, but I felt I had to do it or else I wasn’t doing ‘enough’.
I started drinking, smoking and generally just being a depressed, horrible, anxious person. I was desperate to make any sale I could, no matter who the client or the terms. I swear I probably changed website copy weekly just grasping at straws to see if something stuck. Nothing did.
At the time I was laser focused on the problem being me. I felt there had to be something I was missing that could turn the company around. Some piece of wisdom I hadn’t read in the million business books I read or podcasts I listened to.
Midway through year two I had had it. I was exhausted of running the company. Tired of robbing Peter to pay Paul, missing mortgage payments, having our electricity shut off three times, and not providing my family the life I thought we should have.
So I got desperate.
Turning The Ship
Instead of my desperation turning into fear, this time my desperation turned into action. Crazy, insane action. See, I had already started applying to other jobs, already built the casket for the business, wrote the post-mortem and was ready to hang up the towel.
I had nothing to lose.
So I did what I should have done in the very beginning. I listened.
The few customers and leads we had up to this point were all telling us something that was drowned out by a ‘that’s just not how it’s done, it’s impossible’ voice in my head.
They hated that pricing wasn’t transparent.
They hated that it took two to three weeks to get a price estimate for a development project.
They hated that project management wasn’t completely and utterly transparent.
They hated that there were large deposits, a difficult thing for a cash strapped startup trying to work with us.
They really hated how hard it was to know what steps to take to go from idea to launch and beyond.
They were all telling me these things, obviously not directly, but in their actions, their phrases, their rejections of our proposals and definitely their body language.
I just wasn’t listening. I was 27 now, and who the heck was I to go against what all my counterparts had been doing at other agencies. Wasn’t there a reason they took weeks to get a quote? Didn’t let developers talk directly to customers? Didn’t allow flexible founder-friendly pricing?
Well, the voices telling me not to do it were drowned out by my ‘who gives a shit’ attitude now that I was ready to bury Launchpeer anyway.
I promptly stayed up for 48 hours straight and edited everything; our website, social media channels, proposals, terms, pricing, all of it. I put our pricing on our website so everyone could see it. I created pre-defined packages so customers knew what we did and how we did it. The biggest change of all was removing all vague language from our website. We were no longer ‘Launchpeer — we’ll do anything for a buck’ and instead turned into ‘Launchpeer — we build startups’.
It was a crazy move. It worked.
Now it was about April of 2016 and with the last few dollars we had in our account I decided to throw some money at PPC ads on Facebook to see if this new Launchpeer remodel would resonate with prospects.
Within a month we signed 10 new customers. The best part was, these people didn’t take a month or two or three to close. They took less than a week. Why? Because they were already qualified. With pricing now on our website the chances that a lead would schedule a call with us without being okay with our prices was small.
Our small team of 4 (yes, we were still 4 people) was busting at the seams so we decided to bring on our first full time developer, Mike. It was one of the scariest decisions I’ve ever made. It’s one thing to jump into entrepreneurship and know that your life is in your own hands, but it’s a whole other level when you know you’re also now responsible for someone else’s livelihood.
Hiring Mike started a domino effect. More and more customers were hiring us, which allowed us to hire more and more people which allowed us to do more and more work.
Between the time we hired Mike (July of 2016) to December of 2016 we went from 4 people to 18. We went from ~$5K/month from various projects to over $100K/month.
To this day (May of 2017) we’re still hiring about two people per month, and steadily growing about 20% month over month. My wife and I still run the business together by ourselves. No board, no investors, no debt.
The most questions I get are about what we did between July 2016 to December 2016 when we started the big spike in growth. Below are a few key points I think attribute most to how we did it.
1. Clear Value Proposition
The first and most obvious reason for our turnaround was throwing our entire business model out and getting back to our roots. People thought we were crazy building an agency for startups because the initial assumption that it won’t work is from an assumption that startups are the problem; they don’t have enough money, are difficult to work with, etc. (their words, not mine).
We instead took the approach of looking through the eyes of an entrepreneur. If I was trying to build a tech startup, what would I want out of an agency? Transparent pricing, fast turnaround times, ultra-transparency, and passion for the problem I’m trying to solve.
With those things in mind we changed all the copy from our site from generic cookie cutter agency speak to copy that spoke directly to an entrepreneur’s problems and problems, making it clear that we ONLY work with them and no one else, no matter how much money others have.
You might be thinking ‘aren’t you leaving money on the table not serving people other than startups?’ Completely understand that, but the funny thing is in addition to closing way more startup clients than we did before with the new copy, we also get approached a lot by non-startups for help. Restaurants, corporations, gyms, all want to work with us because of how we operate, and they all see the value our founder-friendly processes can bring to even them.
Ugh, looking back on our old branding I can’t believe I let it go on that long. It’s not that it was bad, it was just mediocre, and the color scheme was all wrong.
The new logo and branding signified a changed company, which signified to the world that Launchpeer was no longer the company of old, but a new, better version that knows exactly who we are, what we do and that we do those things well.
3. Hyper Targeted Marketing
Before we had a clear value proposition marketing was impossible. What events we attended, blogs we wrote and sales pitch we gave were all over the place. Not necessarily a recipe for great marketing campaigns.
After we identified our ideal customer we were able to change our entire marketing process. We knew exactly what blogs to write, what podcasts to go on, what publications to get featured in and the types of events to go to or sponsor.
Our team set out to structure a content marketing strategy that focused on bringing our ideal customers to us. Each piece of content we published spoke directly to issues faced by early stage entrepreneurs and startup teams. We drove traffic to those posts mostly through PPC ads on Facebook, spending about $10–15/day and always made sure we had some sort of appealing lead magnet for people to opt into.
To this day we still utilize that strategy, though our type of content has expanded to include videos and our own podcast. We do no traditional outbound sales (cold calls or emails), and don’t do events or trade shows. Every one of our leads comes from two places; content marketing and referrals.
4. Hiring Proactively
It’s still scary for me to hire people. I’m not sure it’ll ever go away, but it’s one of those things we entrepreneurs have to get over in order to grow and thrive, especially if it’s a services business you’re running.
I personally tried to do as much of everything in the business for as long as possible, wearing twelve different hats and ultimately becoming a bottleneck for development, project management, sales, marketing and more.
If I could go back I would have hired each of our team members at least a couple weeks if not a month or two earlier. The problem for that with most entrepreneurs is when we start making money the last thing we want to do is give it up to someone else. If you want your business to grow though you have to.
The first team member we hired was a developer, for obvious reasons. Aside from developers the next team member we hired to replace me was a project manager, reason being so I could focus on sales. Make no mistake; a founder should be involved in sales for as long as possible, and even after. The person most qualified and passionate about the product is the person who should be closing, or helping close, deals. That’s the same for a services business or a SaaS company, albeit in different forms.
Although we’re growing at 20% month over month for a consistent time now, there have been a couple months in there, especially early in our growth curve, where we left a lot of money on the table because we didn’t proactively increase our capacity as much as we should have.
5. Stay Lean
Launchpeer doesn’t have a fancy office. We’re not in downtown. We don’t have cold brew on tap, big parties, large conference rooms with window walls. We’re in a comfortable 2000sf office in the suburbs of Charleston, SC where our neighbors are lawyers and doctors. That’s not to say we don’t have a great office, but what makes it great isn’t the amenities (although we have a fridge always stocked with PBR and La Croix), it’s the team.
We’re preaching to our clients every day the importance of being lean, building a startup with purpose and not being frivolous with the relatively small budgets they have. We practice what we preach.
Every dollar we spend, whether it be on marketing, sales, bonuses, amenities or thirsty-Thursdays, is spent ‘on purpose’. Doing this has allowed us to grow the business organically without taking outside capital or running up large amounts of debt.
6. Continuous Improvement
I mentioned before how listening to our customers changed the course of our business from the brink of collapse to what it is today. That listening should never stop.
Never get to the point where you’re growing and things are great, and you get complacent. Complacency kills growing businesses. Always listen to what your customers are telling you, continuing to improve your processes, website, marketing and other processes.
You’re not special. Someone is coming for you. If you don’t keep improving you’ll either get buried by them or, more likely, you’ll bury yourself under your own complacency.
Some words of advice. If you’re just beginning to take action on your idea, be bold and understand that it won’t be easy or what you expect and that’s what makes it exciting. If you’re in the midst of toughing out missed mortgage payments or power bills, start asking yourself the tough questions about whether your business is really solving a customers problem and if not what needs to be done to change that. Finally, if you’re growing and out of the rough patch all entrepreneurs go through, congrats and make sure you keep that foot on the gas.