Posted May 9, 2022

Omar Farook

Company News

Create beautiful marketing graphics at scale.

Company News

I wasted £250K+ of my SaaS startup's launch revenue so you don't have to💸

Company News

Company News

I wasted £250K+ of my SaaS startup's launch revenue so you don't have to💸

My journey started back in 2013. I was pursuing my career as a motion designer, when I stumbled upon entrepreneurship by accident. Buying and selling whitelabel products via Amazon FBA - it was by far the easiest business model that my designer brain could understand. Using my design skills, I knocked up a strong set of story driven product imagery and sold out in my first month. The Amazon seller community took notice and very soon my e-com design agency was born.

By 2016 we had a small team and demand for our work grew. As a result we realized a gap in the market. There was no E-com focussed design tool that could help entrepreneurs quickly drop a simple product photo on a template, remove the background and showcase features through beautiful graphics.

I hired my first developer who is currently my CTO. Also my mentor in business saw the potential in the idea and joined me as a co-founder (COO). We started working part-time on a basic MVP. We launched that MVP on September 2019 on Product Hunt with a limited lifetime deal to get initial traction and fund our roadmap, it was an incredible launch! Our deal leaked into many early adopter communities. I wrote a detailed article about it here:

We built our lifetime pricing model into incremental increases and drove scarcity at the end of every month before prices went up to drive bigger sales. On Black Friday, using a combo of both community led marketing, email marketing and retargetting ads we drove a lot of FOMO for the deal at the time! By the end of the deal period we had crossed $300K in sales.

My gut feeling was to move slowly, focus on user feedback and careful implementation on the product side. My co-founder was pushing for aggressive marketing activities. Both our goals were valid for sure. We met more or less in the middle, but the combination of both required us to spend more cash to achieve those goals. So we hired a few people between both marketing and product.

This is where our mistakes started to snowball.

Mistake 1 - Scaled Marketing Too Early 📈

After Black Friday we thought an aggressive amount of activity on social media, would create engagement that would drive sales. What we realized was that the frequency of posts and content was not what truly drove sales. It was a combination of PPC to drive leads and sales, customer success to help users troubleshoot and a little founder led activity on community channels to build trust and reduce refunds. Always think about what is the minimum you need to sustain the existing growth. What we instead did was hired 3 marketing leaders, 1 of which we fired in December 2019. To drive the tech side we hired an exclusive marketing led IT expert. In truth we only needed our PPC person and customer success.

Mistake 2 - Realizing success in Lifetime Deals does not always = success in MRR 🍎/🍐

I had a huge gut feeling that we were not ready for MRR growth, my domain expertise sensed that our lifetime deal was successful due to a few unique USPs that we had; we were one of the first to have an AI background removal tool integrated way before even Canva, plus we had a range of e-com tools and e-com template bundles. But we gave it a shot anyway in January 2020. We still had a few organic hits coming to the site from various sources. We closed our lifetime deal and switched on MRR. All we heard was crickets...

We were able to acquire tonnes of free signups but hardly any paid users. MRR users are fundamentally different from a lifetime deal user. MRR users need a specific problem to be solved really efficiently before they decide to pay. They have 100s of layers of objections while prospecting a new tool. Lifetime deal users on the other hand do not care about any of this, all they care about is getting a great deal to an attractive alternative tool with a few USPs and an ambitious roadmap.

Mistake 3 - Spending too much on Ads for MMR growth 💰

With such little MRR growth, we tried our best to scale using ads since it did work well for lifetime deals. We spent around $50K and only secured $2K in MRR. There was lack of accountability and direction between myself, my co founder and our head of marketing. We've recouped that money now, but at such an early stage I wished we were more careful.

Mistake 4 - Juggling too much and facing burn out 😖

As the face of the company, and visionary for our product, I was torn between community activities, marketing, product building and team management. I was spread way too thin which hindered the critical thinking on product innovation and time to learn and pick up new skills. It also made me slip on holding my co founder and I accountable on how we were spending money.

Mistake 5 - Building new products without making the first asuccess 🧱

In February 2020, we decided to build another SaaS product which was an AI based BG removal tool to replace the API we were paying for. Although it made sense at the time, it was the worse decision we ever made. What we thought was only going cost us $10K ended up becoming a long term project which we invested close to $70K over 2 years. We tried to recoup the costs by launching a separate lifetime deal, but of course such a utility product was never going to even come close to the revenue of a full suite design tool. In total we probably generated $20K. In the end this product turned out to become a completely redundant technology as so many different versions of it started making an appearance; iOS even has built it in into their photos gallery. We repeated this same mistake a year later and built a Logo creation tool called Logoflow hoping it would generate a decent cashflow, but it flopped too.

Mistake 6 - Not investing in a UI/UX team that truly understood design systems and high fidelity prototypes 📲

Despite not being an expert at the time, I knew about scalable design systems and their value. We were on the hunt for a UI/UX designer and had a new prospect at the time based on a recommendation. He said all the right things, and seemed to tick all the boxes. His proposal was full of big impressive product ideas and concept designs. So we hired him. The problem was that he had great ideas and clean design, but non of it was systemized nor scalable. He was not utilizing Figma's full capacity. On top of this there were so many static screen states but not every click was accounted for.

Since we didn't know any better, we endured with this designer for 1 year to get our 2.0 version out. On Black Friday 2020 we did another lifetime deal to grow our cash reserves, at that time we knew we had to change how we designed our product. We switched to a new UI/UX team that cleaned up our entire design ecosystem on Figma and helped deliver our new features much faster.

With a strong UI/UX design system and execution process, you can skip months of complicated dev handoff documents. Changing and iterating your product design will take minutes not weeks! You can literally ship a much better product 100x faster.

Mistake 7 - Over innovating for the sake of it and making poor product design choices.🧐

UI/UX is everything for a tech startup. Your product philosophy is what will make you win. What makes you different and unique is mostly your user experience. My favourite example is Figma; they overtook 2 longtime players (Sketch and Adobe XD), by just simplifying the user experience and making it more accessible! To get your product right, it's about identifying how you will be different between the major players, and why that difference is important. User feedback is important but remember they have no filter and are prone to shiny object syndrome - if you only go by their demands, you will end up designing a Frankenstein product which is what happened to us initially.

Also we would sometimes suddenly ship random things as experiments, mostly to do with purchase flows and onboarding behaviours.

So much time and money was wasted in dead user experiences.

Product visionaries must mostly stick to common principles and not reinvent the wheel but improve the wheel only when it makes sense and not just for the sake of it. It must be intentional + executed in a smart and intelligent way.

These were all the mistakes that attributed to so much money down the drain in our first 2 years. I wish I could change our choices, but honestly we either didn't know any better, we were inexperienced, we sometimes took things for granted, and we did not focus on the right areas during specific stages.

2 years after our launch, we secured $2m pre-seed VC funding to build the ultimate collaborative content design tool for professional designers and non designers alike. However I still have a slight gut wrenching feeling that I carry with me thinking that my financial situation would be completely different had I taken some of the profits to invest in my personal goals before I got investors involved.

This is the reality that I would like to share with the hope to help other founders learn from my experience.

In summary, once you launch and you see the sales roll in, never take it for granted, keep your team lean, focus on making a superior product and make smart product decisions. Make sure you nail your UI/UX ecosystem to make product iteration, testing and development 100x faster. Always scale your marketing proportionally to your revenue growth. If you can, try to cash out a bit earlier than later on, sort out your personal life so that you can go full steam ahead especially if you decide to raise funding with a VC later on.

The path to Glory begins here

The path to Glory begins here