Hello! Who are you and what business did you start?
Hi, my name is Todd and I’m a serial entrepreneur. After a long history of building various businesses, I created ByteStand, a friendly software development company run by ecommerce nerds who get excited about weird things like “cross-platform integrations” and “fulfillment networks” and “coffee”.
We design Shopify apps, with three apps currently in the app store and over 2,000 shops using our software. Our two main apps are ByteStand and FBA Shipping, which were designed to help Amazon sellers diversify and generate more revenue by importing their Amazon inventory to Shopify and exporting their Shopify orders to Amazon for fulfillment.
We also created FreshCredit, Shopify's first true store credit app. Between all three apps, we generate about $17,000/month in revenue.
What's your backstory and how did you come up with the idea?
In 2015, I was selling overstock items on Amazon full-time. In any given month I had about 1,000-2,000 products, with a turn over rate of about 500 listings a month.
While perusing the Amazon Seller forums, I came across post after post of horror stories from fellow sellers complaining about being suspended by Amazon, often for barely any reason at all. This wasn’t writing on the wall, this was a sticky note pasted on my forehead. I knew I had to do something to diversify my business away from complete dependence on Amazon.
I decided to create my own store on Shopify. The only issue was how to move my constantly changing inventory. The logical first step was to simply start entering it by hand, one at a time. It took about 15 minutes to enter one complete listing with pictures, descriptions and all the necessary bits and pieces. 1,500 products times 15 minutes per product... it would take almost 47 days of work to enter my existing inventory, not to mention the 500 new products that came in every month.
Shopify has an extensive app inventory, but I tried one app after another to automate the process with no luck. I even tried going outside the app store. No luck there either. I couldn’t believe it, but there were NO apps to move inventory from Amazon to Shopify.
I decided I would have to create one myself. It couldn’t be that hard, right? Especially for a guy with zero software development experience, zero knowledge of programming languages, and zero idea of how to make Shopify and Amazon “talk” to each other.
Take us through the process of designing, prototyping, and manufacturing your first product.
I thought I could hire someone and they could create the app for me, knocking it out in a month or so. I started researching tech development firms. My first quote came in at over $100,000. My next quote cut that down by 25% but was still about $75,000 over my budget. That wasn’t going to work, so I went to Upwork and sought out independent developers. After spending $5,000 here and $1,500 there with nothing moving me closer to a solution, I realized that if I wanted this application built I was going to have to do it myself.
I’m a big believer in solving my own problems. ByteStand started as a solution to my own problem, nothing more.
My first step was learning a programming language. Shopify is written in Ruby on Rails, so I thought that was as good as any. With a book called Learn Ruby the Hard Way and about 100,000 searches through Stackoverflow.com, I was able to teach myself Ruby.
I coded up a very basic version of ByteStand. I then realized it was worse than bad, it was horrible. I needed professional help, someone who could take what was, in essence, a first draft and turn it into a polished product. I also realized I needed a database person as well as a Dev Ops person, someone to set up our servers so they wouldn’t get hacked. I turned back to Upwork and hired a Ruby Developer, Database Admin, and a Dev Ops guy. With a ragtag bunch of guys from locales around the world, we completed the app.
Funding for paying these folks came directly from selling my Amazon business for $30,000, plus about $20,000 in credit, plus the support of my wife, who works full time. If I had known that the cost to fund my apps would have been $60,000+ I NEVER would have done this. But it was a little bit at a time, so the full cost never hit me in the face.
As an aside, I’ve put my wife through too many businesses. She married a banker, but ended up with a serial entrepreneur and the roller coaster of emotions that comes with that. To try and appease her uneasiness of yet another business, we wrote down goals on her whiteboard, and I kept her up to date with regular refreshes of our numbers. I treated her like an investor, which she was. Three years later our old numbers are still there.
Describe the process of launching the business.
Prior to our release date, I was hitting the Shopify forums, setting up a one-page website to capture emails of interested users, lurking around Facebook groups with questions, and also trying to get a handful of beta testers to make sure this thing worked. By the release date (April 15, 2016), I was able to capture about 100 emails of interested Shopify store owners. On the day of release, I emailed those 100 store owners and crossed my fingers.
During the first week of being live in the app store, I wore out the refresh button on my browser hoping for ANY downloads, ANY installs at all. By the end of the first two weeks, we had 10 paying customers and almost $1,200 in revenue. I couldn’t be more proud.
My goal was to grow to 100 customers by the end of the year. I wish I could say there was some algorithm I developed to define exactly how many customers I SHOULD have on X date. Or I was consulted by the Greek God of Business and she declared that 100 customers would be an admirable goal in my first 6 months. But I did nothing like that, all I did was the business equivalent of sticking my thumb in the wind. I thought if I had 10 customers in April I THINK I can get to 100 by the end of the year. Thankfully we more than doubled that goal and had 266 users by mid-December of 2016.
And now a couple years later I really don’t do things that much differently. I simply look at our growth rate now, which is about 5% monthly revenue growth, and project that out until the end of the year. Taking into account our current revenue, and the current growth rate I’m hoping to hit an MRR of $20,000 by the end of this year.
How we determined pricing
Outside of the development of our apps themselves, pricing was THE most difficult decision and one I struggled with for months. I talked to everyone I knew that had anything to do with any business. Hell I even talked to a friend of mine who sells real estate. What I struggled with was how to capture revenue, and not turn away customers at the same time. I immediately threw out the freemium model, knowing that I couldn’t work for free.
We also struggled with users who would want to take advantage of us, by downloading the app, receiving the value from the app and uninstalling prior to any charges taking place. I also wanted to offer some level of a free trial to prove to users that the app did work, and I REALLY liked the recurring revenue model of software as a service. I had experience in project based work and did not want the weight and stress of not knowing what next month’s revenue would look like.
To complicate things even more, Shopify offers the ability to charge by usage, so in our case we could have charged our users by the number of products that they upload / download. Which we still may do, but in the end we went with a couple different structures that would accomplish most of our goals. We decided to charge by the total number of products a shop has, which breaks down as follows:
- 100 products or less - 1 week free then $10/month after that
- 500 products or less - $15/month
- 1k products or less - $50 once and then $20/monthly with the first month free
- 3k products or less - $125 once and then $30/monthly with the first month free
- 5k products or less - $200 once and $50/monthly with the first month free
- Finally a custom plan for any number of products.
Another factor was keeping things simple, if we could I’d much rather have less plans than more, but this breakdown has worked well. Also I didn’t think we would get much in the way of custom users, but surprisingly enough we have over 20, with stores ranging in size from 7k products to our biggest customer who has over 150k products.
In the end what I realized is that pricing can change, at the time I felt like it was going to be set in stone. I would create a pricing model and that was that, the market would support my model or the apps would die on the vine. This isn’t the case at all, we’ve adjusted our pricing a half dozen times so far, and the market provides instant feedback. Which is so lovely, even in the case when too many angry customers sending me emails complaining that my pricing is OUTRAGEOUS. If that happens, then maybe the pricing is too rich, and needs to come down. But we’ll always pay attention to our customers feedback, and adjust accordingly.
Since launch, what has worked to attract and retain customers?
I’ve tried Google Adwords and Facebook ads, but paid ads have never worked for us. We get some traffic, but very little follow through. Same thing with social media posts. We get a little traffic, but nothing worthwhile.
Instead, what has worked is creating a blog with great content that’s easy to read and actually helps. Not all our content is even specific to Shopify or Amazon, but it’s still useful and engaging. We have articles about my startup journey, how to get media coverage for your products, and how to create awesome product photos. We try to follow the 80/20 rule – 80% informative, helpful content and 20% promotional content. Currently, we’re averaging over 300 visitors a day to our website. The blog has also helped us improve our SEO. We're now on the first page of Google results for several keywords, which drives a good bit of traffic to our site.
We capture emails from website signups and every install of our apps. We’ve grown our list to almost 5,000 emails, and we send out at least one monthly email via MailChimp with links to our latest blog posts, as well as links to our apps in both BigCommerce and Shopify. We also follow up on all new installs and uninstalls via email.
Here is a report from an email that was originally sent in October of last year:
We also answer questions and share helpful content in various online forums, including the Amazon Seller forums, Shopify forums, various Facebook groups, and a couple of subreddits. (Reddit readers, you've probably seen posts from gennifer_bytestand before!)
We’ve been lucky to gain exposure in the Shopify app store as well, being highlighted a half dozen times spread between our three apps.
How are you doing today and what does the future look like?
Since that initial launch in April of 2016, we have expanded to three Shopify apps, two of which were completely written by me, as well as two BigCommerce apps that are basically copies of their Shopify brethren. Combined we have over 2,100 customers and our monthly recurring revenue has just crested over $17,000.
We've had a lot of employee turnover, but things seem stable now with our staff including me, our lead developer, our database manager and our dev ops guy. We also hired someone last year to take over our help desk and marketing.
We've been lucky that the economy has been good throughout our growth cycle. We have yet to experience what a downturn looks like in the ecommerce space. We also got lucky in our timing. Right when we went live, Amazon shut down their web store business, which was a direct competitor to Shopify. We definitely got quite a few installs from those sellers.
From a revenue perspective, I’m happy. From January 2018 to January 2019 we saw revenue growth of 42%, not including BigCommerce. Looking at the future, we're considering expanding to other platforms like WooCommerce. We also plan on adding a few highly requested features to the apps over the coming months.
Through starting the business, have you learned anything particularly helpful or advantageous?
Our biggest challenge to date has been finding high-quality developers. Upwork was great for small, short term projects, but I’ve had better luck utilizing small development shops closer to my east coast time zone. I just hired a brand new developer and things are going well so far.
After the startup phase, customers start to come to you and ask for new features. If one or two customers ask, that’s merely a blip. But when 10+ customers start asking for a new feature, then you have a trend that can form your plan for the future.
The biggest kick in the gut came when a copycat developer copied almost word for word our ByteStand app, down to using the same wording in their marketing copy. After the initial screaming at my computer screen, I took it as a challenge to be better. I hate to admit it, but the competition has been good for us. It has continued to push us forward with new features and innovations that our copycat is unable to foresee.
A rough spot with our apps has been the on-boarding process, meaning the process by which users configure our apps to work on their stores. Currently, we’re experiencing about a 35% first day uninstall rate on two of our three apps, which is not good. However we've improved that on our FBA Shipping app by simplifying the multiple pages of instructions to one page with a couple of bullet points.
We also automate as much as possible, write VERY clear directions, and provide additional support through our help desk.
What platform/tools do you use for your business?
I feel lucky living in the times that we do. Being a part of the ecosystem of the internet is a wonderful place to be, and our ability to leverage the wide range of tools out there is real blessing. We depend on and love the following tools:
- Help Scout - manages our email and chat help desk
- Asana - project management for issues, bugs, and features
- Digital Ocean - where all 57 of our servers are housed, they were recently purchased by Amazon.
- Slack - our remote team 100% depends on Slack, rarely do we send an email to each other
- GitHub - our code repository, or where we back up and keep track of our code and its many versions
- Cloud9 - my personal IDE, in other words where I write my code. I love C9 because my office PC is windows based, and C9 allows me to not have to worry about conflicts with my OS, setting up a virtual machine, worrying about SSL certificates, or public IPs. It’s awesome.
- MailChimp - we still use MailChimp, even though it’s pricey as hell. We like MailChimp for its design features, and ease of use.
- StackOverflow - This is really just a forum for developers. But I wanted to give it a shoutout as I’ve learned so much from there and have been helped out of the mud of my code countless times. Plus, I probably visit it at least once a day to see how I can write code better.
What have been the most influential books, podcasts, or other resources?
I’ve never been a big reader of self-help or business books. Maybe I should be, but I feel like the advice in the majority of those books is either old and dusty or painfully obvious with just a touch of common sense.
Instead, what I love are stories of founders' trials and tribulations. In that vein, my favorite podcast is called How I Built This with Guy Raz. When I’m feeling bummed, or stupid, or small, or like I don’t have enough money, or I’m a failure, or the multitude of normal emotions a founder faces, I turn on “How I Built This” and listen to successful founders who experienced the exact same thing. How they almost failed countless times, but eventually succeeded. It definitely brightens my spirit and propels me forward to the next crisis.
Advice for other entrepreneurs who want to get started or are just starting out?
I’m a big believer in solving my own problems. ByteStand started as a solution to my own problem, nothing more. I was cognizant of the idea that there were probably many other Amazon sellers who would want the same thing. Thus, a business was born.
After the startup phase, customers start to come to you and ask for new features. If one or two customers ask, that’s merely a blip. But when 10+ customers start asking for a new feature, then you have a trend that can form your plan for the future. We had a list of over 100 customers who wanted a specific feature in our shipping app. They told us what they needed, signed up to be beta testers, and when we went live, they gave us their hard earned money for a service that fit their exact needs. If you listen, it can be a wonderful feedback loop.
One pet peeve of mine that I have to share is the naming and branding of a startup. I think it should be the absolute last thing a new entrepreneur does, when most of the time it's the first. Looking for a website, picking colors, fonts, throwing around names - it's fun and important. However, it's also a distraction. What’s most important is answering the following:
- What are you going to create?
- How is it going to be different?
- How are you positioned against the competition?
- How much is it going to cost?
- Are you able to make money?
- Do you have the funds to go live?
These are the important questions. Naming and branding should be a treat that you get at the end of your hard work.
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