How Nathan Barry Turn ConvertKit Into An $8M+ Business
The Early Days: Building An Online AudienceNathan started blogging in 2011.
It was really because I wanted twoNathan was eager to leave his job behind and stake out on his own, and was soon inspired to take the next step toward that goal.
1) I wanted to make money from the internet so that I could quit my job, and
2) I wanted to be known and I wanted to be able to form relationships with people. I wanted to be able to send an email to someone I thought was cool, and they would respond like we were peers.
I saw making a blog as the easiest way to do that.
I only had an email list of 800 people or so at the time, but there were some bloggers who had published eBooks and publicly shared their revenue numbers, and that made me realize, ‘oh, you can make some money publishing an eBook, even to a small audience.’The App Design Handbook came out in September of 2012.
So I decided to write a book on how to design iPhone applications.
I launched the book to my list, and within 24 hours, I made $12,000. I was at $20,000 by the end of the first week.
That was an inflection point for me.
But I didn’t want to just sell an eBook. Afterward, I wrote about every single detail of the launch on my blog, and I got all of this attention for that.
Lesson 1: Teach Everything You Know“People weren’t just saying, ‘cool, you made an eBook’, but they loved that I blogged about the entire process and shared everything I learned along the way.”
Keen to keep the momentum of his successful launch and post-launch buzz going, Nathan turned his attention to writing a second book. And it didn’t take him long.
Through blogging, I built this habit of writing a thousand words a day.
Once my first book was published, I just rolled the habit into writing another book on designing web applications.
Lesson 2: Create Every Day“I published my second book 90 days after my first, because it turns out that if you put 1,000 words per day into it, you can write a book pretty quickly.”
Nathan’s second book performed even better, bringing in $25,000 on the first day. But it also taught him a valuable lesson that would plant the earliest seeds of ConvertKit: that email marketing was very, very powerful.
Realizing the Value of Email MarketingAs Nathan planned the promotion for his second book, he got a tip from a friend that may have changed the course of his career.
I was talking with a friend who had been doing online marketing since the early 2000’s, and he had all these stories about the times when Pay-per-click ads were a penny apiece.This was also when Nathan began to realize that, despite email marketing’s effectiveness, there wasn’t a product that worked the way he wanted it to.
I asked him: hey, are you using this email marketing thing? It seems to be getting better conversions than Twitter and Facebook for me.’
And he just raised his eyebrows, looked at me and said: ‘uh, yeah, it’s always been that way. Where have you been?’
I was definitely a latecomer to it, but I just found email to be so much easier. It was easier to get someone on an email list, because I could offer them something for it, like being the first to know when my book comes out, or I could send them a free eBook for signing up. That’s so much more compelling than ‘follow me on Twitter.’
So it was actually easier to get email subscribers than it was to get Twitter followers, and then when I looked at the conversion rates in my book launch, the value of a Twitter follower versus an email subscriber just wasn’t even close. The email subscribers were 15x as valuable as the Twitter followers.
We looked at the click-through rates, conversion rates and purchase rates, and that was it: I decided that I was done focusing on Twitter as a platform.
I kept learning all of these best practices. For example, setting a drip follow-up sequence after someone opts in.Rather than keep wondering, Nathan decided to try and answer that question himself.
I was starting to feel this problem of ‘I have all of these really great posts from 2012, but nobody is ever going to see them.’ Well, the drip sequence solves that problem, because now when somebody signs up for my email list, they’ll get my best content automatically delivered to them.
Content upgrades were another big win for me, as well as tagging subscribers; for example, tagging subscribers who had purchased before so that I could personalize my emails to them differently.
I was using MailChimp at the time, and all of this stuff was just such a pain. I felt like every time I learned a best practice, I had to fight with MailChimp just to get it implemented.
And that got me thinking: ‘what if there was an email platform built for people like me? One that was still affordable, but has tags and smart automations and other features that actually help people be better at email marketing.’
Kickstarting ConvertKitConvertKit didn’t start as a business. It started, very publicly, as a project on Nathan’s blog.
Two weeks after I launched my Designing Web Applications book, I published a post telling people that I’m starting the web app challenge, in which is my goal is to build a SaaS company.
Lesson 3: Work In Public“I had decided I was going to start a SaaS company, but before getting to work, I decided to tell everyone about it.”
I said, I don’t know what the SaaS company is going to be yet, but I’m going to generate $5,000 in revenue within six months. The other limitation I set was that I was only allowed to put in $5,000 of my own money, so the rest would have to be funded by customer pre-orders.The strategy didn’t just hold Nathan accountable to his audience; it also won him the support of some very smart people.
And I was going to blog about the entire thing.
People loved it. They’d reach out to me—people like Hiten Shah, David Hauser and Amy Hoy—and they’d say, ‘hey, if you need anything, just let me know.’Now, Nathan didn’t hit his goal. After six months, his product reached just over $2,000 in monthly revenue. He had spent his $5,000, along with another $8,000 generated from customer pre-orders. But while he didn’t have $5,000 in monthly recurring revenue, he did have a product, and some early traction. Still, he wasn’t sure what this would turn into.
Successful people want to help someone who’s already in motion.
They get all of these people who just want to pick their brain, and everyone wants to help entrepreneurs, but they want a return on their investment. The return isn’t money back, the return is the good feeling of somebody taking that advice and turning it into something real.
So if you’re already in motion and you’re making things happen, then people are going to see that and want to help you, because they know that you’ll make something meaningful out of their help.
Declining Sales, and Doubling DownNathan was working on the app part-time, while putting the rest of his focus into his books and online courses, which were doing well. But his limited attention meant that the business remained stagnant...until it began to decline.
I kept working on it, but it didn’t take off in the way that I expected it.The decision took Nathan some time, but in the end, it was clear.
From June 2013 to October 2014, ConvertKit declined in revenue. We went from $2,000 a month to $1,300 a month.
Those graphs aren’t supposed to go down and to the right.
I had all these ideas about why that could be happening: maybe it’s the wrong market, maybe I’m not the right person to grow it, maybe the idea is bad, or maybe I just haven’t put enough time into it.
I had a conversation at a conference with Hiten Shah, the co-founder of KISSmetrics, and he just said: ‘look, you should shut down ConvertKit.’
First of all, very few people will give you the advice you actually need to hear. Most people would be like, ‘oh yeah, keep going, that’ll turn into something someday.’
But he said that I should shut it down. And I was thinking, ‘well that’s not a very nice thing to say to someone who’s been working on something for a year and a half.’
He told me, ‘you’ll be successful in whatever you do, you’ve proven that with the books and courses, but ConvertKit’s not working. Shut it down, move on and don’t let it hold you back.’
And after I thought about it for a few minutes, Hiten added: ‘Or, you can take it seriously, give it the time, money and attention it deserves and build it into something real. But what you’re doing is not working, so either shut it down or double down.’
At this point, ConvertKit was not covering basic operating expenses, and I had a lot of trouble deciding what to do.Nathan put $50,000 of his savings into ConvertKit, and began a period of growth that’s still going strong today.
But the mental framework I decided on was to ask, ‘do I still want this as much today as the day I started, and do I still want to be the CEO of a SaaS company?’ Because if the answer is no, then I should shut it down and move on.
You shouldn’t feel handcuffed to something just because you started it, but I realized that I still really wanted this opportunity.
So then I asked myself, ‘have I really given ConvertKit every possible chance to succeed?’
Because if the answer is yes, then something was wrong. Maybe the timing is wrong, or the product is wrong, or the market is wrong, or I’m the wrong person to do this.
But for me, the answer was no. I hadn’t given it my best effort.
That means that there was a disconnect between what I was saying—that I really want this—and my actions.
I realized then that if I shut it down, I’d always wonder what would have happened if I had just given ConvertKit the time, money and attention it needed. Could I have made it work?
I wasn’t willing to let that remain an open question, and that’s when I decided that I’d give it my absolute best shot.
How ConvertKit GrewFancy digital tactics might be the preferred growth channel of choice for many new tech companies, but for ConvertKit, Nathan decided to focus on what worked. And what he found to work for him? A combination of good old-fashioned sales and extraordinary customer service.
I would cold email people, or ask for intros, or email friends who were bloggers, and I’d say: ‘hey, what are your frustrations with MailChimp?’It wasn’t long before ConvertKit’s hands-on growth strategy began to work. Just a few months later, the company was bringing in $5,000 per month. The following year, that would leap to $98,000 per month. And it hasn’t slowed down since.
From there, people would go on and on about their frustrations, and it’d be fun, because they’d be the exact frustrations that I had with MailChimp, which let me tell them about why I build ConvertKit.
At that point, I’d try to get on a call with them and show them the product and close the sale.
Sometimes it worked, but I’d keep running up against the same objection over and over again: they’d say ‘oh I’d love to switch, but switching an email provider is so much work.’
At first, I’d say things like ‘it’s not that much work, you just import your subscribers and fill out a form, it’s not that hard. And it was clear that they didn’t believe me.
So one time, out of desperation, I blurted out ‘it’s not that much work, and to prove it to you, I’ll do the migration for you for free.
In the sales process, people had hung all of their objections on the idea that it was too much work to switch, and I learned that if I took that objection away by offering to do the switch for them for free, that took away nearly all of their reasons for not doing business with us.
So that’s how we got customers. I would spend all of my time exporting subscribers from MailChimp, and swapping out signup forms on our customers’ sites.
And I’d do it for accounts of any size. The first site I did that for was a $29/month account.
Working In NichesAnother key reason that ConvertKit grew was Nathan’s focus on attacking small markets, one at a time.
Going after a niche is so useful. And I mean really specific.
A niche of a million people isn’t a niche.
If you’re trying to do direct sales, find a niche of 100 people.
For example, I’d start by thinking about professional bloggers, and I’d narrow it down further, so let’s say food bloggers.
So, now we’re talking about selling email marketing for professional food bloggers.
But there’s still a ton of professional food bloggers, so let’s narrow it down further. How about email marketing for professional paleo recipe bloggers?
Well, it turns out that there’s even a lot of those. So let’s go deeper: professional paleo recipe bloggers who are women.
Now we have a niche.
Here, I’ll take the most popular blogs in that niche. They’re easy to find because they all follow each other and talk to one another; they hang out in this echo chamber.
And I’ll try to sell to just one of them. As soon as I get one, I leverage that to get the rest of the niche using ConvertKit. That way, when I name drop someone in a sales call, I’m not name dropping the biggest name on the internet. These people don’t care if Google uses us.
Instead, it’s like, ‘oh, this person who I know and who I saw at this conference two months ago is using your product? That’s pretty cool.’
And so in that way, I’m dropping the most relevant names.
This also creates buzz within the echo chamber, because people would reply to my emails and say, ‘wow, that person is switching to ConvertKit? I keep hearing about you guys, it’s like everyone is switching to ConvertKit!’
When in reality, it just seems that way because the niche is so small.
How To Use 5 Seconds of Courage To Win at NetworkingNathan attends a lot of conferences; not necessarily an easy task for an introvert.
When I used to go to web design conferences years ago, I would talk to literally three people during the entire conference because I didn’t know anyone, and I certainly wasn’t going to introduce myself to people.Conferences have helped Nathan build a powerful network, and they can help you, too. Here’s his strategy for meeting VIP’s:
I just wouldn’t get up the courage to do it.
Things finally clicked for me when I heard the idea that ‘all you need is five seconds of courage.’
It’s so true if you think about it; it takes just five seconds to walk up to someone and introduce yourself. And it helps with the fear that I’m going to impose on someone’s day, or or ask them a stupid question or something like that. Because all I’m going to do is take a few seconds to walk up, introduce myself and move on.
Before I go, I make a list of everyone I want to meet at the conference.
Take a conference like SaaStr, it’s 5,000 people in San Francisco. Obviously I’m not going to meet very many people there out of the 5000.
But they release the entire attendee list in the iPhone app beforehand, and so as I’m sitting on the plane, I’ll scroll through that entire attendee list and make a note of everybody I think I’d like to meet. I end up with a list of 25 people or so, and that’s a lot more manageable.
Then it just becomes a matter of, ‘ok who do I know that knows that person? Where is that person hanging out?’
I’ll usually start off by sending them an email or a Tweet that says something like ‘hey, really looking forward to meeting you at SaaStr’, and if they respond positively, I might even pick a time and ask them if they want to meet for coffee before registration.
Now, this doesn’t always work, but it has resulted in some really great meetings for me.
In the early days of ConvertKit, I went to a conference where Neil Patel was going to be speaking. I was a big fan of his stuff, and I emailed him to see if he’d have lunch with me. Of course he was really busy, and said ‘no, I have all of this other stuff going on.’
But then I ran into him at one of the workshops, and even though he didn’t know me, he remembered me from the email. It wasn’t a cold introduction; I could walk up and say ‘hey, I’m Nathan’, and he responded ‘oh yeah, you emailed me, I’m sorry we couldn’t meet for lunch.’
But then it turned out that as we were talking, his plans got canceled, and we went and grabbed lunch.
So I try to have as many touch points as possible before I walk into a conference with the people that I want to meet. Then during the event, I try to make sure that I say hi to everyone.
But while everyone is crowding around someone and telling them how big of a fan they are, I’ll just walk up to them and say ‘hey, I’m Nathan, we talked a little bit over email, I just wanted to say hi so that you have a face to put to the conversation. I know you’re busy so I’ll let you get back to your conversation.’
I’ll engage for just a few seconds and move on. When you’re a speaker at a conference, everyone is in line to meet you and tell you how much of a fan they are; so when you walk up and say hi like a friend would and walk away, it sets you apart. It makes it look like your time is valuable, too, and it lets you email them after the event and say ‘hey, we met at SaaStr.’
Nathan Explains The Three Business Philosophies That Drive HimThe philosophies on Nathan’s wall—Teach everything you know, create every day, and work in public—are clear in the story of his career. But just in case they aren’t, here’s some context directly from Nathan:
Teach Everything You Know
I had this interaction with someone the other day. They have a big software company and I noticed that they sponsored a popular podcast.
I emailed them and said, ‘how is that working out for you? I’d love to know.’
This is someone that I’ve had a handful of phone conversations with, and I know them pretty well.
They responded, ‘as a general rule, we don’t comment on things like that, especially if it’s working.’
I realized that most of the business world sees things that way, and I have the exact opposite philosophy.
I’m going to tell you that I did this thing and it didn’t work. And I’m going to tell you about it if it did work. And I hope that you’ll copy it and build a successful business from it.
And if someone competes with me with that information, well that doesn’t really bother me; I work in one of the most competitive industries on the internet, so it’s not going to make my life much harder to have 37 competitors instead of 36.
Teaching everything you know is great because, first of all, it pays it forward and will help someone else succeed. And second of all, it’s just great marketing.
Create Every Day
When I was trying to write a book, and I was working on it inconsistently, I wasn’t making any progress at all.
So I just decided to write a thousand words a day every single day, no matter what. And guess what? That’s how you end up writing a book in 90 days. And another one. And then started a company.
If you create every day, that’s the kind of thing that can happen.
Work In Public
Show the byproducts of your work. If you let people see the process and not just the end result, they’ll be happy to share it with others and do your marketing for you.
If you go all the way back to Marco Polo, he was not the first person to explore the silk road or even the first Venetian to go to China and come back. He was just the one who wrote about it.
There were all of these other people who were first and second and fifth, and the tenth guy comes along and documents the whole process, and today we all know Marco Polo. And the ten guys before him are like, ‘what about us?’
Well, they should have done their work in public.
Nathan’s Required Reading
Groove’s blog subscribers tend to be voracious readers who work tirelessly to better themselves and their businesses. That’s why we’re asking each of our interviewees to share their favorite blogs and books. Nathan’s picks:
The two books that I make everyone in the company read are Anything You Want by Derek Sivers and Rework by Jason Fried and David Heinemeier Hansson.