Ep. 17 - From side project to $17,000/month business

In this episode, Alex, a Romanian developer, tells the tale of how he and his friends grew their small side project into a $17,000 a month business. In the beginning, they were coding in a Starbucks. Now their team has grown, they've sponsored 20 hackathons around the world, and business is booming. Here's their story.

Written by Alexandru Paduraru: http://twitter.com/axelut

Read by Quincy Larson: https://twitter.com/ossia

Original article: https://fcc.im/2F5yfQX

Learn to code for free at: https://www.freecodecamp.org

Intro music by Vangough: https://fcc.im/2APOG02

Transcript: 

In 2014, my friends and I set out to build the best possible web design tools. We built UI kits, Admin Dashboards, Templates, and Plugins. We’ve always tried to create products that are helpful in the development process, and that we ourselves would use for building websites for clients.

From a revenue’s perspective, if we don’t take into consideration the Black Friday sales (which doubled the amount that we made in November 2016), we are grossing around $22,000 per month. Part of that goes toward paying our affiliates’ commissions, collected VAT, payment vendors’ taxes, and other expenses. We end up netting around $17,000 each month.

In this case study, I’ll share exactly how we built our products and grew our business. You’ll hear all about:

What motivated us to start our startup, Creative Tim, and how we built our initial product

How we got our first users

Marketing strategies we used to grow

How our business model works

The story behind our revenue sources

Biggest lessons we’ve learned so far

1. What motivated us to get started with Creative Tim and how we built the initial product

We started out as a two-person agency in Romania with no funding from third parties. We didn’t have enough cash to rent an office — even desks at a co-working space —so we just worked out of a Starbucks. We were barely able to pay our daily living expenses by doing work for clients.

Creative Tim was a side project that we thought would come in handy to web developers like ourselves. We noticed that we were always “reinventing the wheel” when working with clients, and creating the same items over and over again for their websites. So we wanted to create a few standard components, like login and register modals, calendars, wizards, headers, and footers.

Over the span of a few months, we dedicated our time to implementing the platform and a few freebies (alongside the agency work). In the beginning, we didn’t have any Twitter followers, Facebook fans, or email list subscribers. We posted a lot of stuff about our freebies on various design forums and we used the “stalk web developers on Twitter” technique to spread the word about our products.

2. How we got our first users

At first, nobody really understood what we wanted to do. They didn’t understand the value we could provide by helping them improve their businesses. We decided that it would be better to create a more complex product that would help people understand what we were doing 🤔

We launched the Get Shit Done Kit, a UI Kit based on Bootstrap. It was featured on Designer News, and it was quite popular. We got over 11,000 users from that source, which was a huge spike for our business.

Then two weeks later our startup was featured on Product Hunt. That gave us another spike with over 5,000 users. After that, the situation was stable, and we graduated from 0 users/week to a consistent 2,000 to 3,000 users/week.

A couple of months later, motivated by the success of free Get Shit Done Kit, we released Get Shit Done Kit PRO the premium version of GSDK, with more components and ready-to-use example pages.

Initially, we only made a few sales. The product was generating about $200/week, which was not nearly enough to sustain our business. At the same time we were working on a web project for one of our clients.

Then in December, we got published on Bootstrap Expo, the most popular gallery for showcasing websites created with Bootstrap. This was another important spike for our business. Since all of the people who go to Bootstrap Expo for inspiration already know Bootstrap or have previously worked with it, they were the perfect audience for our business.

Later, we discovered that getting traffic on your website is not enough to create a long term relationship with your users, and most of them forgot all about us after their first interaction. We did some research and discovered what most marketers probably already know: people forget things that they aren’t reminded of. Then we implemented the “Remember us email system” following the rules from the forgetting curve.

We wanted to give our users a reminder that we still existed and that we’re a valuable resource for their projects or their clients’ projects.

Currently, we send emails at the following schedule:

After 3 days from their first download, we send an email with other recommended products.

On day 10 we send an email requesting feedback and asking if they need help.

On day 15 we remind them that they can upgrade to PRO.

On day 30 we ask them again for feedback and offer to promote something they’ve built in our gallery and social media.

We send a final reminder on day 60.

3. Marketing strategies we used to grow

Most of our marketing strategies consisted of submitting our content to different communities like Reddit, Product Hunt, Designer News, Hacker News, and GitHub. Some important subreddits that work well in our area include /r/web_design, /r/html5, /r/frontend, and /r/webdev.

We also paid between $100–200 for newsletter campaigns a couple of times. Even though the ROI ratio matched the amount we invested, the campaigns did not meet the expectations. (Maybe this was just in our case, that wasn’t profitable and it works better for others.)

Then we paid $400 for Get Shit Done Kit PRO to appear in the Sidebar.io newsletter, a curated list of the 5 best design links made by Sacha Greif. This was a very rewarding newsletter for us, generating about $1,500 in sales.

Then we purchased the “Review + Newsletter” package ($550) from eWebDesign. There were about 5,000 users who participated in the giveaway, and the total sales amounted $2,800.

We also thought about different places where we could find web developers who could use our products, and we realized that hackathons were exactly what we needed.

Presenting how our tools can help during the Hackathon

Subsequently we started talking to people that were organizing hackathons to offer them free licenses for our “premium products.” We sponsored over 20 hackathons in different cities around the world (you can check them here).

All the developers were happy to get free licenses, which made us happy that we could help them create better projects faster and they also found out who we are, so a win-win situation.

Critically, being physically present at some of the hackathons also gave us a lot of information about how the developers were using our products and how we could improve them in order to make them more user-friendly.

In March 2015, we finished the agency’s contracts and we switched from “Agency mode” to “Startup mode.” With some revenue in the bank and a few monthly sales, our team moved to working full time for our startup. As we put everything together and constantly launched new products, our sources of traffic and revenue grew.

4. How the business model works

We realized that the best business model for Creative Tim was freemium: we create high quality freebies that help web developers build great websites, then release the PRO versions for those freebies, which contain more elements, sections, plugins, and example pages.

At this moment, we have 8 premium products, each of which have their own freebies. Their prices range from $19 to $599, depending on the license and archive type (HTML, HTML + PSD, HTML + Sketch). The freebies appear everywhere on different communities, blog posts, newsletters, and social websites — and they are driving all of our traffic.

Our business model: create high quality freebies that help web developers build great websites, then release the PRO versions for those freebies which contain more elements. 👌🏼

The basic idea is that those freebies are always appearing on top 10 lists in these big communities. Each post that’s in the top 10 (depending on how big is the community) gives us between 1,000 and 15,000 targeted users in one day. You can imagine how much that would cost if you wanted to do a regular targeted marketing campaign. 😮

Some examples:

Paper Kit — 380 upvotes on Reddit

Material Kit — 560 upvotes on Reddit

Light Bootstrap Dashboard Angular — 210 upvotes on Reddit

Material Kit — 180 uvpotes on Hacker News (peak position 9 with over 14,000 users coming to our website in 1 day)

Material Kit — 860 upvotes on Product Hunt

etc… you got the idea

5. The story behind our revenue sources

Direct Product Sales

Here we have the regular sales that are done on our website, which are worth about 24% of our overall sales. This doesn’t include the Big Bundle.

What is this Big Bundle, and how did we create it? We noticed that some of our users were downloading all our free products. (When I say all, I literally mean all of them in about 2–3 minutes after they have created an account.) We also noticed that some of our clients were purchasing all the products that were premium.

So we decided to test a new product called the “Big Bundle” which gives you access to all our products with huge discounts (over 60%). This big package was getting around 6–8 purchases per month. Since the prices for this Big Bundle is $299 (instead of $500) for the personal license and $669 (instead of $2,127) for the developer license, it’s a good source of revenue and a great deal for the web designers and agencies who are using our products for multiple clients. It’s a win-win situation.

Affiliates Sales

We’ve created an affiliate network, and our affiliates are very happy because they get 50% to themselves from each transaction. For example, one of our most important affiliations is done through a very popular GitHub Repo: Bootstrap Material Design (17,000+ stars on GitHub). Currently, affiliates account for around 25% of our overall revenue.

Organic Search (SEO)

We saw that we were also getting around 22% of our revenue from SEO. So we decided to invest more in SEO, we brought on an SEO consultant, whom we pay around $500/month to improve our products’ ranks in Google.

Other revenue

The remainder of our monthly revenue comes from Facebook, Twitter, and our newsletter. Here’s how our revenue has evolved over time, along with some historically important moments, so you can understand why it has grown in some months:

6. The biggest lessons we’ve learned so far

It sounds cliché, but having a great product is crucial.

A lot of founders really struggle trying to market and sell something that people don’t want or don’t need. If your product is crap, there is no marketing strategy — and no source of investment — that can keep it alive for long.

At the moment, our products are used by over 134,000 web developers around the world. We have people from Microsoft, Ubisoft, Vodafone, Orange, Harvard University, Stanford University, and governmental institutions downloading and using them as different internal tools, and we’ve sponsored more than 20 global hackathons from 14 countries.

Don’t look to be the next Facebook. Try to solve a real problem instead.

Every step in our development seemed like the natural thing to do at the time. Looking back at our evolution, we wouldn’t change anything. But with all we’ve learned, we could definitely do everything faster the second time around.

We’ve always created and improved our products based on our customers’ feedback, and that is the best way to develop a business. It doesn’t matter what you personally like — you need to make sure you solve a real problem for a real customer.

Read, read, read.

In the past three years, I’ve read more than I’d read in my entire life, and this makes me feel great. Here are some of my favorite books, which I recommend to everybody:

How to Win Friends and Influence People — Dale Carnegie

Zero to One — Peter Thiel

The Hard Thing About Hard Things — Ben Horowitz

Law of Success — Napoleon Hill

Think and Grow Rich — Napoleon Hill

Good to Great — Jim Collins

The Lean Startup — Eric Ries

The Charisma Myth — Olivia Fox Cabane

Lean Analytics: Use Data to Build a Better Startup Faster — Alistair Croll

I really do think that the secret weapon is to deliver great products combined with a great user experience and a great customer support.

The best decision that we made was to put our customer in the first row, and make sure that they were receiving a great UI kit/Dashboard that really solved their problems. That guided us through the whole journey. Our secret weapon is that we deliver great products combined with a great user experience and great customer support.

Everything is possible.

We are living in a world where anybody can become anything they want as long as they want to invest the amount of time that is needed. I’m saying time, and not money, because we all have time. I want to recommend two books that talk about this: Karaoke Capitalism by Jonas Ridderstråle and Kjell Nordstrom, and Zero to One by Peter Thiel (a PayPal co-founder).

At this point, there are no limits. You can go anywhere on the planet and you can talk with whomever you want just by contacting them through social media. Today an ordinary person can achieve more influence than the president of a small country. Think of those Instagram accounts with millions of followers. If I — a regular guy from Romania — can build a profitable business in 2.5 years that is making 60x my country’s monthly minimum monthly wage, then boy, just about anything is possible.

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