Profitable, in 3 weeks!

Sorry for tooting my own horn here but I think my current and potential customers will be happy to hear that business is going well, so here it goes.

Exactly 3 weeks after launching, Balsamiq Studios LLC is now profitable.

A few more details, in the spirit of openness:

The Costs

So my total costs were $4,268.35, which break down like this:

The lion share is lawyers fee: I could have saved money if I incorporated myself or wrote my own EULA, but I'm much more comfortable knowing that a professional lawyer did those (I use a pretty large firm in San Francisco). The telephone costs are mostly for the Skype-enabled cell-phone which I bought, which allows me to do world-wide customer-service from wherever I am. The Taxes are the $800 that California wants from any LLC, just for existing. The software is SnapzPro and Screenflow, which I used to do my demo videos. The rest is small stuff.

Disclaimers: the costs above don't include my salary (now steady at $0) nor the taxes I'll have to pay on my revenue next year. They also don't include some business-related expenses that I made before incorporating like my Macbook Pro. Basically the costs are those listed in Balsamiq's bank account transactions page.

The revenue

There are 4 sets of columns because this chart counts weeks starting from Monday, but since I launched on a Thursday the first week is really 4 days, and the current week is not finished yet.

Here's the revenue breakdown by product and by # of sales:

Basically I had 2 Confluence sales and 40 Desktop sales. Can you see why I am focusing my advertising efforts on the Confluence version? :) BTW, I am extremely surprised and excited about having those 2 sales under my belt already, I fully expect that most sales of the Confluence version will take much much longer. It hasn't been a month since launch so no trial period has expired yet. I am also considering tweaking the pricing model for the plugin version, more news on it soon.

The Cash Flow

Here's the breakdown of my costs and revenue for each month since incorporating:

And here's the all-important cash-flow chart, the one I was so wishing to go above the 0 line until it finally happened yesterday:

Of course being above that green line is no guarantee of staying above it, but it sure is a good feeling, for now.

Some Lessons Learned

  • The predictions I had made back in Feb to convince myself to start Balsamiq were absolutely and totally WRONG. I mean, not even close. In those I had no customers for the first 3 months and was in the hole for 44K, and not $2,400 like it ended up happening.
  • It's never been easier cheaper to start a software company. If you are on the fence, I hope the numbers above will convince you to "just do it" and join the party.
  • being flexible and quick on your feet is essential: 74% of my current revenue comes from something I didn't intend to sell at all, and changing my mind took some convincing by some of my early users.
  • I am incredibly lucky to have chosen rapid-prototyping as a the problem to solve for my first  plugin/product. There was clearly a need and a pain there, and most people so far like my solution.

The road ahead is long and fraught with peril, I have a ton of work ahead of me and I am excited about it. Knowing that my company is (so far) successful gives me a sense of security and motivation that makes me even more committed to doing the best I can to keep it that way.

And who knows, one day I might even be able to pay myself some salary! ;)

Ok, time to get back to work for me. Those bugs won't fix themselves you know... :)

UPDATE: this post was picked up by YCombinator's Hacker News forums, and it sparked a nice little conversation there, both about Balsamiq and about proper grammar, of all things. Check it out!

Comments (28)

  1. You bought a cell phone? Finally! As soon as the 32GB model comes out…

  2. Hi Peldi, Congratulations on your early success. I can really see your product being useful. Doing prototypes *IS* a pretty big pain point.

  3. As a usability professional, I would say that there is definitely a niche market for this type of product. Congratulations on the success! The hand-drawn style is very appealing and should encourage rapid development iterations.

  4. Hi, I don’t see any advertising in your cost breakup. So, I am wondering the reason for no sales in the first 3 months and then all of a sudden a spike, that too continuously for two months! Any idea why you are now getting the sales? I am wondering if your website is now showing up in the SERPs for the right keywords? How did you manage to get the potential customers to visit your website?

  5. Hi there. The reason there aren’t any sales in the first 3 months is because I wasn’t “launched” yet. I launched on June 19th, a little over 3 weeks ago. The reason you don’t see any advertising-related cost is because I haven’t spent a cent on it. Balsamiq is showing up OK in the SERP I care for, and I attribute it to a text-heavy website and basic SEO practices (nothing fancy here). As for how I got people to come to my site, that’s a topic for another post, but I basically followed some good advice: http://www.balsamiq.com/blog/?p=58

  6. Congrat’s on your first months sales, this is really nice to see and I’m extremely proud and pleased for you. May it be the start of much, much more!

  7. Congrats on being profitable! I knew you would do it :)
    I am looking forward to seeing the “reached $100K sales” post and then the “reached $1M sales” post.
    You are off to a great start and I know you will keep it up.

    Please keep making some awesome plugins and sharing all the valuable lessons you are learning.

    Ciao, il mio amico!

  8. Congrats! It’s really a great product. Everyone I’ve told has loved it.

    Thanks for sharing your story to fellow micro-ISV’s. It’s inspirational and informative.

  9. Wow, congrats !!!
    Its interesting to see that 2/3 of the cost went to lawyers. As they say, doesn’t matter who wins or loses, lawyers always win :-)

  10. Congratulations on the successful start. I’m going your route myself and would like to know, what did you do to market to your initial customer base?

  11. your graphs look so nice. what did you use for them? congratulations btw!

  12. That’s really impressive, three weeks, I would be happy with an ROI of three months…

  13. Raphael, I will write a post about mISV marketing soon.
    pearl: Excel 2008 for mac.

    Everyone: thanks for the nice words! :)

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  15. Congrats on early success, two things though:

    1) Incorporation articles and sample EULAs are available for much more reasonable fees online. Your local library or Small Business Administration probably has a bunch of Nolo books on incorporation.

    2) Why incorporate in California? You voluntarily signed up for $800 a year contribution, instead of incorporating in Delaware or Nevada.

  16. Hi Alex, thanks for the tips, I was aware of both but chose to go with a lawyer because even trivial legal matters like setting up an LLC give me a great deal of stress…I really don’t want to mess it up, I’d rather pay for a professional to do it right…I have heard too many stories of people doing it themselves and then having to pay a lawyer to fix their mistakes, and I know I would be one of those.

    As for why California, it’s because that’s where I was residing, and my accountant really stressed the fact that I should incorporate where I intend to do business most…I don’t know why he said that, but I trust him.

    In other words, for these topics I decided trust the judgment of professionals instead of trying to learn how to do it myself…one can’t learn everything! :)

  17. WOW!!! Congratulations!!! You are actually “making money” in this Web2.0 world! Bravo!! I’m speechless and proud of you too!!

  18. As a web developer I absolutely hate doing mock-ups of web apps and websites; your product looks like an ingenious (and maybe even fun) way of doing this quickly and easily. I think the fact that you’re already making money on it is a testament to the product and your skills.

    Best of luck with future growth.

  19. Man no surprises thats such a nifty app. I just tried this for 5 minutes you are too smart a guy to not be profitable in 3 weeks!

  20. Great news and three weeks is no small feat!!! Your app is one of the most creative and original I’ve seen in a long time. I specifically like the way with which a person can fill in data. That’s kind of revolutionary.

    Your efforts have inspired me and I made my first mini-app product sale yesterday :)

    Keep up the amazing work.

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  23. Hi Peldi

    Congratulations! I am sure your company and you would do very well. It has started showing up.

    You know, i didn’t know you were behind this cool product until I read Ted’s blog.

    All the best

    -abdul

  24. Pingback: Interview: Giacomo ‘Peldi’ Guilizzoni, Balsamiq Studios | App The Rent

  25. Hi!
    Congratulations and thank you for sharing. So if your salary id $0.00, how do you survive? Do you have other income?

    Once again. Thanx

  26. Congrat!! You’re smart :)

    Huy Nguyen
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