Why $10,000 MRR is closer than you think...

I've built multiple software companies from zero to one to millions of dollars in revenue, self funded and venture backed. Getting to your first 10k in monthly revenue is much easier than you think. But you're probably wondering, why am I saying this? Isn't it hard to start a company? Don't you need to raise money? Don't you need to be great at coding? Well, most of that stuff doesn't matter anymore. Writing code is easier than ever. And most software companies no longer require venture capital to get started. The truth is, the biggest thing stopping you is how you position your product and how you pick your initial audience and customers. Most founders get this terribly wrong and they think making money is harder than it actually is. So in this video, I'll explain the four steps to transform your idea into a money making product. By the end, you'll understand exactly what it takes to reach your first $10k in MRR. So to make this process more concrete and practical, we'll explore these steps through a real world example. I'll be talking to an actual founder who will share their experiences and challenges in four crucial areas. The first one is figuring out their pricing model. Number two, positioning the product. Number three, determine product sequencing. And number four, identifying and targeting the right customer segments.

Let's meet Tim. He's a founder at the start of his journey. But before we do that, here's five things you need to know about him and his company. Number one, Tim is a second time founder. Number two, he's been working on his current company for three months. Number three, it's self funded. Number four, it's not generating revenue. And number five, his biggest challenge right now is how to go to market. All right, let's hear from Tim.

I'm working on a company called Sasko and it's a marketing suite for SaaS companies which is about 20 times cheaper than the alternatives. It's so cheap because we built it with AI with a small team, but also it has a Costco style pricing model where there's a membership fee and then you just pay the infrastructure cost for whatever you use. So we spent the whole time keeping the cost as low as we possibly can. And yeah, that's where we're at. We're almost ready to launch. We're going live with analytics, email marketing and CRM and then follow up with knowledge base and customer support after that. And yeah, we just got to launch and so we're kind of going through the motions of like, all right, who was the target market? How do we communicate this well and it's kind of a bit of a complicated kind of pricing model, I guess. So trying to figure out, is this a good way of doing it.

When I hear a founder say that their pricing is complicated or that literally anything's complicated at this stage, I'm like, oh, my God. Why is it complicated? Why are you saying that to me right now? How do we make it not complicated? So the first thing is like, all right, I want to poke into that and be like, hey, can we just make it simple?

Initially, I went really deep down the Costco rabbit hole, and I was like, oh, my God, this business is amazing. The flywheel of the reinvestment from the membership is building the thing. I was like, this should happen for software. This is so cool. And that's why initially we're like, oh, that's a great pricing model. Let's do the same thing. But then trying to sell that to people, tell people about it, was where it got confusing because.

It'S just kind of complicated. You're like, oh, you're paying a subscription, and then I'm paying fees. What is this all about?

Did you catch that? Tim's trying to apply a novel pricing strategy to a SaaS product. I get why Costco inspired him. But here's the thing. Customers need simplicity. You've got to frame your pricing in a way that makes someone want to buy your product, and ideally in the way that they already buy. So the bottom line here is it's not a membership. It's a base subscription fee. Plus you pay for what you use. It's that simple. So up next, I asked him why he pitched his value prop around being cheaper. This is where things get really interesting.

We did initially have everything around it being cheaper and then talking to people, you're kind of then trying to have this uphill battle of, like, no, but it's good. It's not that it's cheap and it's bad. It's cheap and good, and then you got to try and tell the story why. So then we flip the other way. We're like, oh, it's all about the value and what you get out of it and everything. But then we made the pricing table where it's like you have a slider, and it shows you the comp of it. You know, what you would have spent somewhere else. And that was the thing that the energy from people, when they saw that, they're like, oh, is this real? And you're like, yeah, so you're doing.

Exactly what I would do in that scenario. Where you just don't talk about cheaper. So to me, this is a better pricing model. This is a better way for someone to get the capabilities that you are providing because it's more cost effective and there's not wastage. So I'd almost say that all these other, other products are wasting your money. That means that they're charging you for things they shouldn't be. For example, if you start adding a bunch of enterprise features and you provide them included because you know you're making money on the metered side anyway, you don't need to have all this upsell and upgrading. The bigger issues are, can you commit to that?

If you could commit to that? Yeah, game on. Because that's a positioning thing that like literally I think the competitors to you, they won't be able to do because their business models are dependent on a completely different method of charging and framing how they and why they charge. The thing I'll leave you with on the pricing is the price. And the price methodology that you use has to align with the customer and has to be spot on with what difference they're looking for from you. If pricing is the thing you're doing differently. But I would argue that pricing isn't the thing you're doing differently. The thing you're doing differently is what you folks are doing to invest in the business, using the pricing model as a way to do that. But at the same time, you're basically just saying, we're bringing what SaaS is supposed to be to the Surface, which is software as a service, which means we are always going to make it better. You're just saying that we're not going to charge you every time we make it better. We're not gonna charge you more every time we make it better. We're just gonna keep making it better. And you're gonna pay for usage more than you're gonna pay for a flat fee that includes usage that you might not use or tries to charge you even more for usage on top of a hefty fee, on top of add ons, on top of these things. So it's like, you know, frankly, if I were building this business, I would be studying more of Basecamp and 37signals and how they think about Basecamp in particular, because they know how to go on the attack.

What do you mean by that?

They're just very good at talking about the competitors and their point of view on marketing is like, if you're into the things we're saying and you're tired of these other tools for this reason or that reason or the other reason, we're the tool for you. If you're not, we're not the tool for you. And that's okay.

So they don't take a Persona view on this today. They take a view of all those other things suck. We don't.

Yeah, I think that's brand aligned to where we're coming from.

Notice the shift here from focusing on price to focusing on value. This is crucial for any startup trying to stand out in a crowded market. But here's the kicker. It's not about Sasko being 20x cheaper. It's about asking, why are you wasting your money on these other tools that are worse? So now, after we've simplified his messaging, we've moved on to Tim's next challenge. Product sequencing. This is gold for any founder struggling with which features to prioritize. Pay close attention.

I'd be really interested to hear your take on, like, what's your gut feel for this kind of thing? Are you like, oh, okay, this sounds really interesting. It could really work. Or is it like, oh, my gosh, this problem is really, really freaking hard.

I think every, every, every day that goes by, the problem gets easier. Um, but this is coming from someone that built a bunch of analytics stuff before, graph databases or Hadoop when we first started kissmetrics. So I guess my take is it's easier than ever. On the data side, I think the problems that you have are still the same as 20 years ago. Those problems are how do you build a great product based on the tech that's available? And you could argue the bar is higher because a lot of great products have been built in the last 20 years that solve these marketing and analytics problems. So I think what you're. Underneath your concern, it sounds like it's more like we have a lot to build, but your model is predicated on having a lot to build. But is it possible? Yeah.

And if you work with a bunch.

Of design partners, you can help. It can help you sequence and prioritize. I'm really into sequencing products.

Yeah, talk to me about that. I find that that's a really hard part at the moment. We have, you know, so many different things we could do.

I don't believe in the MVP model because people have butchered it, not because I don't believe in it, but. So I call them step ones. And the idea of a step one is that you're finding the right entry point to earn the right to do more for the customer. And there's always a correct Point, I don't know what it is for your product, you're going to have to really think through what are the right starting points that align with the customer, that earn us the right to win there and build more for them. So at Crazy Egg, could we have built a funnel tool and then went into heatmaps? Probably not.

Right?

But can we build heat maps and make everything page centric and make it about pages on a website? Absolutely. You gotta earn the right. And you earn the right by building something that they love, which allows them to tell you what more they want from you and then you decide how you prioritize those things. But your sequencing is almost like you have 50 ideas in your product. It's probably like that big of a list.

Five million. Yeah.

And so out of that, what's the right starting point? So you're not trying to plan out like all the 49 ideas, you're just trying to nail that one idea so you can determine based on nailing that one idea what is the right 49 and the next one to pick off.

I think what we want to do is have 50 odd companies that are sort of design partners, where we work really closely with them, understand exactly what they need, and sort of plan the roadmap out on top of whatever they need. So that's kind of the phase, is getting to the point where that's the goal. It's just to recruit a bunch of companies that fit a couple of those types of user and then kind of go from there and just let it open up, not have any paywall or, sorry, any wait list for access, because currently it's waitlisted. But then as it grows, that's fine, but really, really focus on this small group of companies.

Early access can be a game changer, especially if you have a strong value proposition. These early users are usually goldmines for product feedback. But here's the million dollar question, maybe the billion dollar question, how do you get those design partners? For Tim, the answer isn't to open up the product just yet. It's about reaching out directly, pitching the product, explaining why it's perfect for his first customers. So to dig deeper, I asked Tim about his core customer profiles. Listen to how he breaks this down.

So then the challenge is maybe going, who do we pick the laser on? We have three different types of users at the moment. The one we don't have is the one that's like us, which is only our company.

Because it works so well for us. And that was what we needed. But what we found is that there's kind of higher switching costs because people already have systems in place and processes. So you kind of need to build the feature parity before and the trust I think before that switch happens. And then there's like indie hackers or bootstrap startups, but they don't have any money. So on one end, great, right? That's perfect. This is an exact fit for them because they're trying to save as much as they can, but on the other end they don't spend much money. And then we actually have a couple of agencies that are pretty interested because they can run one system and put it across everything and it makes it really easy for them.

What you'll probably see is some type of customer is going to be more lucrative than another. But some other type of customer could be the one that spreads word of mouth. So indie hackers will probably spread word of mouth and agencies will probably be more lucrative for you between those two segments. And then the third of like rip and replace. That usually does happen over time. As people hear about you, how are they going to hear about you? Most likely indie hackers, maybe the agency. So you kind of want to think about it like all these groups could be useful. Who are the easiest to get to? How much do you have to pay to get them? And like with indie hackers and a few of these categories, the products they use spread virally.

Yeah, that was my previous company. We did almost no marketing. We had millions of people use it. And that's kind of the strategy for this is to say most other SaaS products, you have this margin and this cost per acquisition in ltv and you're going to spend that to attract those customers. But that's kind of built into the price that you have to charge.

Yeah, I think that's aspirational for your business. And if that's really what you're going after, I would be very deliberate about the hypotheses around that and proving them right or wrong. You're. You're bringing the inspiration to the table for the customer. And I don't think that's how it works. I think it's about translating that inspiration to something the customer can essentially consume. It's like, hey, I have this business criteria I wanna solve for. I'm like, yeah, okay, how does that align with the customer? And that's what I'm saying. Build the hypotheses and figure out how it aligns with the customer. Same thing with your member thing.

Right.

There's just a pattern here where you're like, optimizing for this ideal business for you, but you don't know yet how the customer is gonna perceive that.

I want you to pay close attention to this next discussion. We're about to uncover a classic mistake that founders make. It's subtle, but it can make or break your startup. Watch how Tim realizes what he's doing wrong.

That's why I went to basecamp and recommended them, because they have perfected the translation that we're talking about. Because here's the thing. If your cute things that you're inspired by don't matter to the customer, why'd you do them? And some of these, I don't know the answer. I'm not trying to be an oracle and be like, oh, I know that's gonna work, or that's not. That's not the point. The point is seeing a way that it seems like you and your team are thinking about things and just try to give you a 1 degree tweak so they could think about them better. That's all. That's all I'm doing. But I found the pattern. I'm excited cause I found your pattern.

I like it. Does this translate well to say, look at it through like just the customer's lens of like, cool, that's the thing you want to ship, but how do you just get out of your own way and look at it through their lens of like?

So if this were like the big thing, which I'm hearing is a big thing for you, I'd be actually spending more time pre launch on figuring that out what is the right point of view to bring this inspiration we have of why we're doing this, how we're doing it, and what are the words to use with the customer. So like, if anyone's done business in the past and got to some level of success, they're doing this. They're doing the trial and error. I just want it to be conscious. And I'd rather make it more closer to the scientific method by having a hypothesis of what you think's gonna happen before you actually go try it. Right. That way at least you can get that rigor of getting better and better at predicting. Because here's the thing, this is kind of the unlock that's super hard for people to understand. But at some point, you need a visceral, intuitive understanding of the customer. So you can almost predict with 100% certainty what's going to happen if you say or do X, Y or Z. Whether it's a product feature, you add something, you Say, on a sales call, et cetera. And this is just a life skill. I mean, I can go pretty broad and meta on this, but it's very important to figure out what. What needs to be said so the other side understands where we're coming from and how much it aligns with them.

And it's almost, in a way, hard to do it when you're the customer.

That's right.

You got it. I know what I'm doing.

You nailed it. You nailed it. We've circled back to that point. That's such an important point, because what I like to say about that is eventually your customers outnumber you.

Yeah.

It's their opinion that matters, not your opinion. And when you start from. It's an idea we had that we wanted, you could fall into this trap.

Here's the key takeaway. As a founder, you need to develop an intuitive understanding of your customer. It's not just about your vision. It's about how your vision aligns with customer needs. But so many founders forget this, even though it's a key pattern across successful software companies. Now let's walk through the next steps for Tim and Sasko. This is where it all comes together.

You have pretty good intuition out the gate, but then, like you say over time. Yeah. You don't want to make all your money off yourself.

Like, I don't think in a SaaS product, I'd say you're signing up for a membership. That's the best example I have for you because I think you've already dealt with learning that that's not a good idea.

Or do you think it's good to have a spread?

I think it's indie hackers and agencies. Yeah, it's agencies that work with a lot of SaaS businesses. And I think it's indie hackers that are trying to build SaaS businesses. I try to get different stages of those indie hackers, too. Not just ones that are early, but even ones that are mid or later.

Yeah.

And just. Just feel it out to see if they're willing to replace their stuff with your stuff and all that stuff.

Yeah, yeah.

But you already found those two and you have good reason to target those two. I would probably start there. I think your intuition about those, the indie hackers as a starting point, and then as you build more product, you find what parity looks like for getting someone to switch. Really smart. Makes a lot of sense to me.

Okay, cool. Yeah, that's cool. That's fun, too.

I like the community. It's pretty interesting. I understand it well and it's cool to alleviate some of their problems. Like, oh man, I'm struggling with putting all these things together, what to use and stuff.

Yeah, I get that. That's right. A lot of marketability there that hopefully will give you better results than in the past.

Yeah. Yeah, I definitely need to look back on that. It's been a while.

Yeah.

Cool. I mean, like, I feel I'm pretty clear about what my next steps are and it's been really, really interesting. So yeah, I appreciate it.

Tim's struggle is super common. So many of us founders find it challenging to go to market and acquire those first paying customers, even if we've done it before. But here's the thing, it doesn't have to be that hard. With the right approach, hitting 10k MRR.

Can happen faster than you think.

Here are the three key takeaways from today. Number one, simplify your value proposition. Number two, ensure your product aligned with actual customer needs. And number three, be super selective. Prioritize which customers to target in your go to market strategy. I really wish more founders nailed these three things, but customer alignment requires asking a radically different set of questions. Instead of asking how do I create the perfect business or product? You should be asking how can my product address actual unmet customer needs? So now get away from the whiteboard and go talk to your customers.