Hit $100,000 in revenue, time to start looking up

I feel a bit sheepish posting this since I don't want to come across as bragging, but a promise is a promise, so here it goes...

I just recently surpassed $100,000 of revenue. Balsamiq has been in business for less than 5 months, so as you can imagine this level of success goes beyond my wildest dreams.

The Raw Numbers

My interpretation: not a lot of data here, but Mockups for Desktop sales are clearly growing (I guess it really does save people time and $$!), Mockups for Confluence had a bad October (not a big surprise given the financial markets meltdown), Mockups for JIRA is just getting started and Mockups for XWiki proves that it's really hard to charge for a plugin built on top of a free platform - not a huge surprise there, but I'm still bullish! :)

This is the same data, but stacked. October was lower than September, but still really good given the financial crisis. November is looking on track to be the best month yet. Also, these numbers are INSANE. :) It hasn't really hit me yet.

This chart tells me that it's all still very spikey and that I shouldn't try to make revenue predictions. It also tells me that I need to try to make it more predictable (more on this later).

Same data as above, but stacked. Notice how much less spikey this is (8 straight weeks of >$5,500 in sales). This tells me that having a portfolio of products is a very good thing. I'll be working on expanding that portfolio in the future.

the chart above is more interesting when you compare it to the one below:

Now # of sales doesn't necessarily map to "# of users", since a Confluence sale can be for 25/50/500 people and a JIRA sale can mean a whole company. Still, there's clearly a lot of demand for desktop apps out there (in this SaaS age, who'da'thunk'it!), but the margins there are way smaller than enterprise sales (duh!).

I am still confident that the plugin versions will grow over time relative to the desktop version, as more and more people "see the light" and start working in the cloud. In the meantime, thanks desktop lovers for keeping me in business! ;)

The next two charts are kind-of useless because the costs don't include my salary nor my rent, and some other small November expenses I haven't gotten around to recording yet. Still, I think they are useful enough to show how little out-of-pocket costs I really have:

I just like the slope of that one. ;)

Web Site Traffic

Some people have asked me for this in the past, so here's the chart with the # of visits since launch day:

I don't look at these too often to be honest. All the big spikes were blog posts that got picked up by Hacker News: they rarely correspond to big spikes in sales...still, knowing that thousands of people read this blog is pretty darn exciting.

That's great...now what?

When I started Balsamiq I thought that if everything went well, it would take about two years to get here. I was excited about the struggles ahead, the successes and the failures that were going to help me grow in those two years. So this kind of instant success, 18 months ahead of schedule, is a bit of a shock. I feel totally unprepared for it, so I want to be extremely careful about my next moves. I plan on doing a full round of one-on-one Skype sessions with my advisers soon, plus I have to finish 1.5 (I have a few bugs to fix and I'm waiting for a commercial Flickr API key...grrr) so I'll still be head-down coding for a little while longer.

Still, with over 800 customers to support, it's time to start looking up from the daily developer-work and ask myself some bigger questions:

  • where is my time spent every day?
  • where should my time be spent every day?
  • where do I need the most help, and what would it take to delegate it?
  • is it time to start thinking about adding a second full-time person to the company? (right now Balsamiq is a sole-member LLC, so I'd have to change that...it's a pain but I guess it's a good problem to have).
  • there's all this money in the bank now: how should it be best put to use?
  • what do I want to achieve in 2009, and how?
  • what about 2010 and 2011?
  • Is "adding flavor to Web Office Apps" still the right long term strategy?
  • how can I make my revenue more predictable?
  • to SaaS or not to SaaS?

Is Balsamiq no longer a startup, migrating towards "profitable and somewhat boring small business" status? I'd very much like that! Unfortunately, someone yesterday made me realize how far I am from it.

The "oh crap" question

Just yesterday, as I was preparing this post, someone emailed me the following (I paraphrase):

"We'd like to buy a big license. I was wondering how long you plan to stay a one-man company for. If you are in an accident, who will support us?"

And my world came crushing down. Though perhaps not the most tactful, the question is totally legitimate! I had a moment of panic imagining myself disappearing from the picture...what would happen to Balsamiq and its customers? Ouch, I don't know what sound implosions make but I'm pretty sure I heard it. Maybe it was my stomach.

Here I am, trying to be the "champion of one-man businesses", blogging about it all, trying to convince people to join me in "the future of software companies", and there I was: stumped by a simple, OBVIOUS question that hadn't even crossed my mind until then (and in retrospect, I'm glad it hadn't).

So...I think the days of Balsamiq Studios as a one-man-company are numbered. I don't really feel like I have reached my limits in terms of how much I can do by myself (I'm still not working crazy hours), but I'd be doing my customers a disservice if I didn't seriously start thinking about growing the company. And the numbers above tell me that I can afford to at least start considering it.

Like I said, I want to be extra careful in the next steps, so I'll take some time to do what's right for the company, my customers, and my sanity. :)

As a first step, I have asked Mariah to help me with the philantropic efforts. It's a baby step, but it lets me change the web site text from "I" to "We" everywhere, which is a GREAT feeling (check out the updated company page for instance).

I have also had a very good experience with my first contractor, and I have hired a second contractor for a surprise little project starting on Saturday (stay tuned). I'll take it as practice in having people work for me.

Now, if you're reading this and are thinking "this guy is ripe for the picking", please abstain from making acquisition or "partnership" offers. This kind of challenge is EXACTLY what I was looking for when I started the company, and I am still LOVING EVERY MINUTE of this Balsamiq adventure. I want to stay independent, at least for a while longer, and grow the company organically, as needed. I am lucky to have great advisers and I'll be looking to add a few more to my board (more about that in another post). That said, if you have some "immediately useful" advice for me, feel free to email me or leave it in the comments (I'm thinking books or blogs to read, people to talk to, that sort of thing).

So that's the status update. I don't think I'll share more revenue numbers for a while, if everything goes well things should get "boring" on this front (i.e. predictable with a steady and manageable growth).

As for everything else, I will keep sharing at every step of the way, there clearly isn't enough info about the organic growth of bootstrapped companies out there.

Onward!

Peldi

[Update: you can follow some comments on the Hacker News thread about this post]

[Update #2: OMG my favorite blogger Marshall Kirkpatrick covered this on ReadWriteWeb, and Jason Fried posted a comment! My head is seriously spinning right now]

[Update #3: I forgot that RWW was getting syndicated by the NYTimes. THIS is wild]

Comments (61)

  1. Peldi – I’m so impressed! Kudos!

    J

  2. Congratulations! I just want to tell you how extremely inspiring your story is, and give you my deepest thanks for sharing this openly. You might have a point in growing the company – after all, it might even be considered greedy to be raking 100 k per monht yourself :) – but please don’t let it go to your head. It would be such a shame to see a story like this end up in a company that’s grown too fast too quickly. All the best.

  3. Congratulations! Very, *very* inspiring.

  4. Thank you for sharing some very inspiring numbers. This may finally be the kick start I need to start putting my ideas into code. And it looks like I’ve found the software to put together my mockups.

    Thanks

  5. Congratulations!

    Do you have numbers about operating systems: how many of your customers use Windows/OS X/Linux/etc.?

  6. Wow, congrats Peldi!
    A huge thank you also for sharing this, very inspiring indeed, and highly motivating!

    Keep it up,
    J.

  7. Congrats Peldi! Since you asked for comments I wrote some up: http://www.userscape.com/blog/index.php/site/comments/advice_for_peldi/

  8. I think your approach to hiring a few outside contractors and thinking of it “as practice in having people work for me”, is the right approach. Don’t rush into hiring people and continue to outsource as much as possible outside of your core competencies. Great job!

  9. Peldi – Congrats!

    You might want to read this Joel Spolsky post: http://www.joelonsoftware.com/articles/fog0000000024.html

    An oldie but seems appropriate.

  10. Awesome post! Thanks for sharing figures and glimpses into your future plans!

  11. @Peldi – That is excellent. Congratulations! I love to see a great product achieve great success. Keep up the good work.

  12. Really great post. Thanks for sharing this. I’m one week away from launching my one-man startup too, and your experience is giving me a lot of hope I can also have good traction even in a tough economy. I found this post via Mike @ Atlassian (I go way back w/ Atlassian… helped them w/ the JIRA 2.0 workflow support years ago). You’ve got good company with Atlassian and I wish you all the luck. I’ll be following your developments closely.

  13. Your posts keep me going. Congratulations and thanks for sharing.

  14. Great to see your success. Cheers to you and everyone else who ignores the “free free free!” advice and instead builds a product worth paying for. Well done.

  15. Congratulations. It’s inspiring to hear about your success. You may want to be careful with that potential client wanting a big license. As the 37 Signals guys say, you can end up becoming a slave to a big client like that. Obviously you will have to expand at some point, but if single clients that make up a significant percentage of your business, it can ultimately prevent you from taking the company where you want it to go.

  16. Oops, that last sentence should be “…but if you take on single clients that make up…”.

  17. Wow, that is just amazing, congratulations! And great that you share everything with us, it is really interesting to read.

  18. Hi Peldi,

    We are a two person CRM company and we do a lot of outsourcing concerning training, consultancy, developement etc. We swore to stay a two person company as long as possible, because well we like it that way! Anyway we get the same question all the time: You’re a two person company what happens when you get into an accident or dont like it anymore? to be honest we cannot give promises in that field (and i am not sure if the question will dissappear when we hire one,two or even three employees.) Instead of taking care of the question we acknowledge the danger and we give our customers a good way out. Our customers have a very powerfull and detailed export tool. so if something happens, or they dont like our service anymore, they can export the data and import the data in a easy way into another CRM solution. Maybe you can provide something like that as well, it could work?

    Michael

  19. Like Patrick said, Atlassian is a solid company. I honestly believe their company is one of quality and usefulness.

    Keep up the excellent work. Like I told Patrick, I just need to balls to do what you guys do. Get out there and do something that you enjoy.

    Your product in three words:

    Simple
    Easy
    and USEFUL!

    Keep up the excellent work. I look forward to hearing more about how you grow and scale. Keep me posted.

    Best Regards,
    Richard L. Burton III

  20. I recommend Eric Sink’s ‘The Business of Software’, particularly in relation to your strategy question. That book will tell you to listen to your customers and the data you have gathered. For example, it seems like the desktop market is larger and more profitable than you anticipated.

  21. Peldi,
    congrats – I found Balsamiq via an inspiring article on NextWeb a few months back. I’ve been following your blog and twitter ever since and became a customer just last week. I would echo all the comments here in saying yours is a truly inspiring story – to get to profitability and this level of success in such a short time as a one-man operation is an amazing achievement (it reminds me of the PlentyofFish.com founder’s story).

    As far as suggested resources you might find useful:

    -biggest one will be talking with other founders who have been in similar positions. You should reach out to the Plenty Of Fish guy and see how he’s scaled things and answered the “hit by a bus” question to preserve his product and mission in the unfortunate situation where he became incapacitated. You’re in a cool position right now where you’ve earned the right to reach out to these people and they will probably be responsive.

    -reading materials: check out “eMyth” by Michael Gerber – he’s all about working _on_ your business vs. working _in_ it and the difference between creating a “business” and a “company.” It’s cool that you’ve done this all on your own but it’s a business as long as it requires your involvement for daily operations. It becomes a company once you’ve turned it into a class and can instantiate it with the labor of others. Also consider reading “Founders at Work” by Jessica Livingston – she’s wife of Paul Graham and runs the Y Combinator program. Tons of experiential wisdom in there from 32 startup founders – successes were interesting and the disasters were more interesting. You’ve already got an advisory board which is great.

    -I’ve found great value from listening and conducting podcasts with company founders. Obviously if you can have direct communication with them it’s preferable. But i’ll load up my iPod with past Venture Voice episodes and similar podcasts and listen to those interviews at the gym. There’s always a nugget of insight or vocabulary I come away with from those conversations. I’ve conducted a bunch myself here (including Jessica Livingston) if you’re interested: http://www.grid7.com

    Way to go man. Great product. Great transparency of practice. I look forward to watching what you can do with the company and seeing the valuable lessons you blog about here.

    Sean

  22. You’re a hero to children everywhere.

    We’re all rooting for you here.

    Raphael Lee
  23. Hi Peldi, I think you are prove that increased transparency in a new start up goes a long way. Keep up posted on your future ups/downs :)

  24. How about a hosted version. I think it has much more potential than Jira or confluence and can match the desktop sales. I know that I’d be happy to pay $10/month/user to use balsamiq.
    Yes, I know that it involves maintaining servers and all that hassle, but it’s probably the next frontier for you. And it’s hard to beat recurring revenue :-).

  25. Man! You are like a inspiration to all of us out here. Brilliant!!

    It’ll great if you can detail step by step like how you went about doing it.. We can learn a lot from it. Of course not asking you to spoon feed us but the whole journey of ideation, product, marketing, sales etc.

    Kudos yet again. Looking to hear from you soon. Also let me know if I/We can be of any support. :)

  26. I am impressed too. Will try to learn from you success story.

  27. Great product. I use it all the time. Well worth the $$

  28. Pingback: Balsamiq: $100k in 5 Months. (Nice Business Model). « Digital Industrial Park

  29. Well, now I don’t feel so bad letting you pay for brunch ;)

  30. Great news!

    Now, please don’t sell out out Microsoft!

    Wireless_phil
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  32. Your first “bigger question” should be: “What do I want out of this?”

    Many people make the mistake of thinking they want to grow their business/company so they setup systems, get offices, hire staff, negotiate loans etc. without really knowing why. They end up finding out that what they really wanted was what they had in the beginning – a small profitable business that allowed them to do what they enjoy, freedom to allocate their time as they want etc.

    So what about the other items like support, increasing sales etc. Well one way is to work with partner company/ies who can do the things you are not that well setup for.

    The answer to your “oh crap” question: “Sure I may be small but you will get immediate and efficient answers to your requests. In respect of support if I am no longer available: for $xxx I will setup an agree that makes the source code and detailed development notes available enabling you to contract a 3rd party.

  33. Peldi, it’s been so much fun to follow your progress and read about your success. Why? Because you are an incredibly nice person and deserve it.

    It’s one thing to make the right business decisions, but you are a “mensch,” as my grandmother would say, and I think that carries you far.

    Can’t wait until you’re posting about your first $1 million in revenue. :-)

  34. Congrats Peldi !
    I agree with Micheal and Johans. Don’t think becoming a ‘real’ company is the absolute solution.
    There is an anectote by H. Böll which IMHO sheds a light on the ‘business thinking’.

    The story is set in an unnamed harbor on the west coast of Europe. A smartly-dressed enterprising tourist is taking photographs when he notices a shabbily dressed local fisherman taking a nap in his fishing boat. The tourist is disappointed with the fisherman’s apparently lazy attitude towards his work, so he approaches the fisherman and asks him why he is lying around instead of catching fish. The fisherman explains that he went fishing in the morning, and the small catch would be sufficient for the next two days.

    The tourist tells him that if he goes out to catch fish multiple times a day, he would be able to buy a motor in less than a year, a second boat in less than two years, and so on. The tourist further explains that one day, the fisherman could even build a small cold storage plant, later a pickling factory, fly around in a helicopter, build a fish restaurant, and export lobster directly to Paris without a middleman.

    The nonchalant fisherman asks, “Then what?”

    The tourist enthusiastically continues, “Then, without a care in the world, you could sit here in the harbor, doze in the sun, and look at the glorious sea.”

    “But I’m already doing that”, says the fisherman.

    The enlightened tourist walks away pensively, with no trace of pity for the fisherman, only a little envy.

    http://en.wikipedia.org/wiki/Anekdote_zur_Senkung_der_Arbeitsmoral

    Joachim
  35. Congratulations on your successes!

  36. Inspiring. Good luck!

    Chris Pszeniczny
  37. I’ve been following your story on Hacker News since I first heard of your product. I just wanted to say congratulations on your continued success, Peldi! Keep up the great work. :)

  38. Thanks so much for sharing these numbers. It’s a real inspiration! And it’s very pleasing to see a fantastic execution of an idea be justly rewarded.

    After doing the research for an excellent mockup tool myself and realizing that there wasn’t one (until Balsamiq came along) these numbers don’t surprise me.

    It really goes to show that in software there are plenty of things which seem like they surely must exist yet don’t. For instance there are shockingly no kick ass SOAP tools in the Java ecosystem.

    BTW how the heck do I find an RSS feed to your blog?? I keep looking, thinking I must be missing it and then give up. Sorry if I’m missing the obvious. Enlighten me :)

    Brendan Patterson
  39. just found the RSS feed. Ignore my question. I can’t find anything in the refrigerator either till my wife points out it is an inch from my nose.

    Brendan Patterson
  40. I found this post and then your app. Looks great, you deserve your success. Cheers – Steve

  41. I can’t help but notice that the XWiki version isn’t selling. I can’t help but wonder if it would if you combined XWiki + Balsamiq Mockups into one application. In addition to selling “Balsamiq Mockups for XWiki”, you could be seeling “Web-based Balsamic Mockups standalone”. Someone who doesn’t currently use your supported wiki’s might be immediately turned off as it stands.

  42. Peldi! This is fantastic. So immeasurably proud of you and all your hard work!!

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  44. That’s impressive, good work Peldi! All the best for the future!

  45. Peldi… Congratulations and don’t let your success get you down!

    I’ve been using Balsamiq Desktop on a client projects for the past two weeks and it’s proven invaluable. We’re even considering purchasing a Jira license as part of a forthcoming requirements/UX/IA/development process alignment.

    Regarding your growth from “one-man-show” to “business” don’t be afraid to reach out to the open source community with you app/framework. I would point to the impressive model that ExtJS has followed in going from just another one-man Javascript/AJAX library to a community-driven business that eschewed old-model product licensing in favor for new-model support licensing.

    If you build a community-based business around yourself, the next time you get asked the question, “What happens if you’re not here/involved anymore?” you can answer, “The thousands of community developers will carry that torch.” QED.

    Just an idea. Wonderful product… keep it up!

    cheers,
    Etienne


    Jean-Etienne LaVallee
    iflection! Innovation Group, Inc.
    Richmond, Virginia, USA

    Jean-Etienne LaVallee
  46. Pingback: Interesting article about selling your own software

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  48. Fantastic achievement.

    Just a small counterpoint to some of the comments on “don’t really need to grow”, “the happy fisherman” etc – while they all sound nice unfortunately the economics of business does not work that way. Profitable businesses have to grow for various reasons – one of them is simply supporting the growing user base, and the other is to deal with marketing expenses to counter competition, inflation, changing technology and so on. It’s almost inevitable – so keep your eyes focused on profitability (and not revenues alone) but put in the necessary effort to grow.

    To put it simply – there is good growth (where profitability is maintained) and bad growth (where topline grows but profitability decreases), just try to get good growth :)

    CounterPoint
  49. Your story is an inspiration to us all. Fantastic product, fantastic growth. Well done!

  50. Congrats! It’s great to see some one succeed, and nice to see the openness! Rock on!

  51. Pingback: Developers are blinded by the light | Zen and the Art of Programming

  52. I love your product, an amazing way to simplify a common problem.

    With regards to your support issues and the worries of your customers in buying from an one-man shop I’d recommend reading these two books which may give you some practical advice on how to automate some of these areas:

    The E-Myth revisted – How to define processes that anyone can follow
    http://www.amazon.com/E-Myth-Revisited-Small-Businesses-About/dp/0887307280

    http://fourhourworkweek.com/

    - How to automate support so that you’re spending your time improving your product, not writing emails.

    Looking forward to seeing the next steps of your business!

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  57. Respect for sharing this data with the world! Most companies chicken out fearing that this data will be used against them and other corporate paranoia. It’s nice to see someone who’s brave enough to do things out in the open. I’m sure that in the long run it reaps some great fruit too.

    BTW, I used to work for a several men operation and even then people emailed us fearing that we would disappear. It seems a general fear people have about new companies and businesses. Excellent of you to address it heads on.

    Ido Schacham
  58. Dude, you are an inspiration.

    and you are spot on about not enough organically grown startups bootstrapping their way to success.

    Wishing you all the best and love your work!

  59. Pingback: What Transparency is Like | Startup Web Guide

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