This will be a short one as I’ve been moving around for the past few weeks, with more travel ahead, and limited opportunity to write.

It’s important that I reset my brain and body a little bit, but even more so based on this month’s results and the attention I’ll need to give to the apps on my return.

I think December was our worst month yet in terms of MRR growth. I’m pretty bummed out to be closing the growth stage with two straight down months.

I don’t want to hide behind seasonality despite having data showing it had an impact.

It’s clear the Shopify app store changes have negatively impacted not just my apps but also the apps of other developers not in the 95th percentile of rankings.

There’s a case to be made here for pushing off roll-up until recovery is made, but there isn’t anything specific one can point to that has created the effect I’m observing.

Nothing has fundamentally changed on any of the apps, but both experienced greater than usual churn.

For the first time ever, Reconcilely posted two double-digit churn months. It had never had a double-digit churn month before (notwithstanding the months following the launch of the product).

I’m not particularly concerned — because the products haven’t changed — but do intend to action some items against these results.

Namely, I’ll need to focus just about all of my time to recover the app’s rankings on the Shopify App Store as the current situation can simply be described as less installs and more churn.

Not something I’d want to either let happen, roll-up with, or hand-off to a buyer. This needs to be fixed, so that’s what we’ll do.

As of today though, Fund 1 performance breakdown goes as follows:

• capital invested 21 months ago: $573.5k

• cash returns collected: $476.14k

• current cash-on-cash rate: 4.9% monthly, 59% annually

• portfolio valuation: $1.51m

• total value against invested capital: $1.99m

• total multiple on invested capital: 3.46x

This past month has been quite slow in terms of production considering the end of year holidays and any travels implied by the new year.

We made some very large strides in terms of performance optimization for Reconcilely, migrating away from IBM’s Compose for the database over to Heroku, mostly as a factor of consolidating access and resources on that platform.

That move saved about $300/mo, and rapidly increased the speed of the application, which has a tangible impact on the user experience contained.

Churn was greater than normal, but what hurt us was refunds — and this month’s refunds came from a single customer in a story that all but infuriated me tbh

A customer had signed up for a $1,000 plan but had forgotten to use their trial. No worries, we said, we’ll extend the trial into the new year by a month.

Regardless of why, the customer insisted on being refunded so they could sign up again in the new year when they were ready to use their trial.

Not really a problem in of itself, as things should cancel out.

But not quite! As a partner, when I process a refund, it is immediately deducted from any upcoming payouts. The payment made by the customer never actually gets cancelled on the card. It just gets cancelled out by being refunded on the next bill.

The issue with this is that I’m financing those refunds as a partner. I incur the cashflow impact of that refund immediately, and only observe that revenue later on when the payment (that was to be refunded) gets processed into the next partner payout.

This is unacceptable in my view, but I’m not going to scream and shout about it. It’s just another brick in the wall as far as working in the Shopify ecosystem is implied.

If you’re planning on working on a Shopify app, make sure you’re working on a piece of the workflow that is aligned with what the company messaging is currently (or will be) about, otherwise you’ll find yourself paddling more often than you benefit from the ecosystem’s built-in demand for apps.

In the end, I’m most annoyed by the timing of the results than the results themselves as it means I have to shift my focus at the last moment.

I can begin to prepare Postcode Shipping for a transaction, but I think I’ll need to hold on to Reconcilely for a little while longer so I can make adjustments and/or observe an end to current seasonal effects on churn and installs.

Current fund lifecycle stage

✅ Buying (02/2021 - 05/2021) 
✅ Fixing (06/2021 - 08/2021)
✅ Improving (09/2021 - 12/2021)
✅ Growing (01/2022 - 12/2022)
→ Roll up (1/2023 - ?)
Exit (? - 4/2023)

I’m suspending the roll up focus so I can give Reconcilely some attention in areas where seasonality may not be a factor (i.e. the new App Store has shuffled rankings and I may have to do a bunch of experimenting to re-earn them).

Fund Activity

• Funds Deployed: $573.5k

• Products: Reconcile.ly, Postcode Shipping

• Closing MRR: $28k

• 30-day Revenue: $28.27k

• Rolling cash-on-cash return: $476.14k (+83% / 0.83x)

• 30-day revenue growth: -$31.4k (-8.5%)

• Current Total ARR: $335,500

• Cumulative valuation increase: $936,640

• Portfolio Valuation: $1,510,140 (+163.32% / 2.63x)

• 23-Month Total Return (MOIC): 246.34% / 3.46x

It’s been quite a lazy month all things considered.

But it felt good to decompress a little bit. I have better clarity now and enough motivation to see the rest of the journey through without feeling like I’m dragging myself to the finish line.

Both myself and Eric feel similarly as far as leaving meat on the bone goes. There’s much we didn’t get to get to, and in a way this feels like a dangerous fork in the road.

I don’t mind extending the fund lifetime because (1) these are my funds and (2) we’re playing with house chips at this point.

But this may not be a precedent I’d want to set for myself moving forward. The point of a plan is to follow it.

If you need to adjust, adjust. But if you need to adjust again, maybe you need a better plan to begin with.

That’s how I’m sort of feeling about it, though I recognize the purpose of this fund was to make my teeth and learn the lessons I need to learn.

Importantly, there’s a case to be made about opportunity and leverage cost.

The reason I’m doing a ~2 year lifetime is so I can stair step 5 times in a decade.

Five exits in a decade, compounding up in size each time, likely ends up in the type of destination I’d want to be ~8 years from now.

By delaying the second stair-step, I rob myself of leverage I could apply to move to the next stage.

So the comfort offered by the products we’ve invested so much time and energy into is a bit of a warning as far as sticking to the plan goes.

We can buy ourselves another quarter, maybe two at most. But then we’ve got to take our chips off the table and move to another table.

This is not so much from a flipper point of view at all as much it is about optimizing for the best next move as early and as quickly as possible, all the time, until you reach your destination.

Product

We took the time to deal with some technical debt that had been slowing down the application. We trimmed the database size by a very large margin by removing old data that could be fetched back from Shopify if the need ever arises.

Also, we completed a Database hosting migration away from IBM Compose (which is deprecating/closing in March 2023) over to Heroku, which the app also happens to be hosted.

That saved about $3,500/yr in database costs with the bonus of having both the app and database hosted in the same place.

Very happy with some new functionality we’re shipping which should positively impact upgrades in the short term.

Specifically, the feature offers multi-currency logic for Paypal orders which allows invoices to follow the exact currency of the order rather than being converted over to the merchant currency.

This kind of feature started recurring in customer support threads, and is a perfect example of only being able to discover new product opportunities if your line of communication with your customers is clean, clear and regular.

Before building the product, we researched and discovered at least 30 merchants who are likely to upgrade their account to access this new feature, be it due to reaching out for it directly or by exhibiting similar attributes as those who have reached out.

Once it’s live, we’ll create a campaign in January to launch this to the new customers and offer them a one-time offer to upgrade.

Elsewhere, QBO has eluded us for months, and I’m not happy about that.

It’s not rocket science — and it’s practically all done — yet priority has consistently been given to other things that either had to be fixed due to time-sensitive reasons or simply as a factor of not recognizing just how close the main large prize is.

For example, entering this month we chose to optimize for performance because a really large customer — larger than we’d ever seen — had signed up and made us reconsider whether our current dev ops would be able to deal with the volume implied by launching on QBO.

Either way, the obstacles are all gone and it looks like strides are being made towards the prize.

My focus is going to be shifting towards App Store Optimization for the next little bit. I’m not sure if changes to the app listing still reflect immediately; if not, it will impact the amount of tests I can conduct per day.

Fund

LP Fund is in a holding pattern at the moment considering both the time of year and the timing of the first fund.

One thing at a time, and easy does it at this critical juncture.

Most of the content for the LP package is planned out, but not produced. It’s probably going to be easier to do that once Fund 1 is closed and/or as we get a clearer idea of what asset we will be acquiring first, and using which vehicles.

So as not to string anybody along, the plan is simply to follow up once there is something to follow up with, and then to become more regular with communications from that point on as things oil up.

Please do feel free to get in touch if you want to chat/explore. I’m happy to bring you up to speed, give you a general idea of what we’re thinking and collect your feedback.

Like everything, this will be iterated upon until we’re ready to pull the trigger with the right people.

Lessons & Learnings

Not much could have gone different had I done things differently. Sometimes that’s the way it is, and the only option is to react and to make decisions that positively impact the future.

On our end, that means moving forward with MRR-producing features, while putting a special emphasis on App Store Optimization to curb the current trend and kickoff the new year with strong growth, at which point I’ll revisit the roll-up and make a decision from there.

In the meantime, I plan on flying out for a week for some quality time with family, but will be back with a vengeance at the end of the month.

For now, I invite you to join me in putting physical and mental health first, so you can maintain your energy and motivation and stay on-pace and consistent with your personal roadmap.

In the end, we’re wrapping up the Growth stage for MicroAngel Fund I posting approximately 3.5x in 2 years. Not the 4x I was hoping for when I moved the goal posts, but still an incredible journey and win as it relates to my original investment all the way back in February 2021.

In allowing myself to dream a little bit, I charted out the next 4 “stair-steps” over the next 8 years, assuming I continue doing exactly what I’m doing, just a little bigger each time.

I’m excluding cash-on-cash returns as I expect to continue using those mostly as personal income/dividend — at least until revenue volume makes it efficient not to take more.

If I continue on 2-year stints, the next decade (including the last 2 years) would look something like this:

Step 1: $575k → $1.5m (3.5x, -300k on exit to personal balances)
Step 2: $1.2m → $3.5m (3x, -600k on exit to personal balances)
Step 3: $2.9m → $8m (2.7x, -1.5m on exit to personal balances)
Step 4: $6.5m → $16m (2.5x, -3m on exit to personal balances)
Step 5: $13m → $30m (2.3x, close fund)

In that scope, I’d be squarely leaving the Micro-SaaS market if I follow the above roadmap, and odds are quite high there are teams involved in most of the following products I’d look to personally acquire and grow.

But that gives me a general idea of where I’d like to be 8-10 years from now assuming 4 more runs at the bat, with a slightly declining expectation for returns as I go to account for the size of the deals, and the type/risk of moves made in that timeline to achieve those numbers.

I also appreciate having a clear idea of how my own personal balances would grow every couple of years (without being overly or needlessly exposed to income taxes on either the personal or corporate side) while maintaining enough in the company to field strong offers and achieve my returns along the way.

I’m blessed to be on this journey, and I hope to continue inspiring you on yours through this newsletter.

For now though, please do accept my best wishes for a happy, healthy new year full of positive surprises, wealth and luck!

Until next time!

I feel a period of transition starting to happen, as my mind regularly drifts away from the portfolio towards other projects, my wife’s business, and my interest continues to grow to move on to the next great adventure.

As of today though, Fund 1 performance breakdown goes as follows:

• capital invested 21 months ago: $573.5k

• cash returns collected: $447.87k

• current cash-on-cash rate: 5.4% monthly, 65% annually

• portfolio valuation: $1.67m

• total value against invested capital: $2.11m

• total multiple on invested capital: 3.69x

In a way, pushing the 24 month timeline to 27 months was the correct financial call as it enables me to collect all of my initial investment in cash-on-cash.

But it was bound to produce this mental state, as I’ve struggled to maintain motivation and am very much feeling the effects of burnout at this point, as I push myself to the finish line.

Thankfully, as Fund I is approaching the end of its lifetime, the future is getting clearer.

The MicroAngel DAO team pivoted into the founding partners of Fund II, which is an LP fund we are organizing to provide the MicroAngel playbook as an accredited investment opportunity.

The development of the next iteration of the MicroAngel brand also means that for the first time, I’m starting to become intentional about the brand itself so it can grow into something greater than myself.

I’m partnering with 4 awesome individuals who have followed the MicroAngel story from the beginning.

I’m excited for us to tell you all about our experience organizing the fund, raising from LPs, acquiring and growing the products we acquire, and exiting in time to return value for our investors.

In terms of the fund itself, I spent a solid chunk of the month otherwise occupied with the DAO proposal I’m working to deliver against, with the majority of my work in the fund being in the back-office.

Caught up on bookkeeping, prepared tax declarations, and advanced our R&D tax claim application, which is still blocked due to documents we need to have after remittance.

I didn’t get to put in any work into product, so I continue to appreciate the efforts Eric is deploying against any fires that come up.

Speaking of fires, Reconcilely cashflow took a hit as a result of a bug that was introduced last month, and which wasn’t fixed in time relative the expectations of new customers.

We earned a few strong yearly customers, but subsequently lost them due to the bug, and it showed in the latest payout.

It’s important to consider that the cashflow gains you get from monthly yearly plan subscriptions — that is, earning new yearly customers every month, at the same pace — those are not MRR. They’re still straight ARR, and their MRR of course is represented as 1/12 of the ARR value.

But what happens when the yearly subscriptions happen every month?

At which point do you start considering that monthly cashflow injection to be recurring?

Well, for the past 3 months it has been very much recurring. And it would have recurred this month too, had we not lost the 4-5 new customers who have represented that gain.

Really sucks but that’s a factor of trying to improve the product. Can’t be scared to break things provided the end-result is a stronger, more bullet-proof product.

In that pursuit, the product reached a total of 200 unit tests across the different functions and use cases we have run into.

This allows us to continue improving the product without much fear as it relates to Tier 1 bugs; but it is still possible such bugs could come into existence without their use case being handled in the unit tests.

In those instances, we must add the test and the code to satisfy the new use cases and march on, just a little stronger.

We successfully transitioned the apps to the new Shopify App store by way of refactoring the listing copy to be compliant with its new format.

I find that installs have slowed a little bit despite the apps gaining in terms of ranking positions — this is purely a seasonal factor that I was able to verify against last year’s numbers.

January, February and March should be strong months.

Onwards!

Current fund lifecycle stage

✅ Buying (02/2021 - 05/2021) 
✅ Fixing (06/2021 - 08/2021)
✅ Improving (09/2021 - 12/2021)
→ Growing (01/2022 - 12/2022)
Roll up (1/2023)
Exit (2/2023 - 4/2023)

Fund Activity

• Funds Deployed: $573.5k

• Products: Reconcile.ly, Postcode Shipping

• Closing MRR: $30.58k1

• 30-day Revenue: $31k

• Rolling cash-on-cash return: $447.87k (+78% / 0.78x)

• 30-day revenue growth: -$4.7k (-1.26%)

• Current Total ARR: $366,972

• Cumulative valuation increase: $1,094,026

• Portfolio Valuation: $1,667,526 (+190.76% / 2.90x)

• 21-Month Total Return (MOIC): 268.86% / 3.69x

The little issue we experienced last month got priced in November’s first payout. It made me realize a shortcoming of my reporting now that yearly plans are being sold and relied on.

Specifically, I’ve been calculating most of my stuff on an ARR and cashflow basis. Since we’d add yearly plans every month, it made cashflow feel like MRR was actually growing by as much as the ARR (as we pocket that revenue immediately, and this happens each month with each new customers).

Obviously, the MRR growth is not the value of the yearly plans. So when a yearly plan fails to convert the following month, I cannot consider that to be MRR churn, even though I’ve seen monthly recurrence from the yearly plan sales.

Despite that, I’m still reporting a -12% cashflow deceleration on the Reconcilely side, which of course is relative to last month, when the yearly plans converted just fine (as usual).

So even though cashflow might have decreased by -12% as a result of not closing yearly sales that month, MRR has actually gone up slightly as a result of adding other new customers on monthly plans, which didn’t impact cashflow nearly as much as yearlies, obviously.

I don’t particularly mind the false negative of reporting valuation decrease against churn that isn’t necessarily there, but I do expect to do a full audit by year’s end (or shortly thereafter) to qualify my revenues and numbers per the CSV exports directly.

End of year slump

Installs are down slightly, and it looks to be a seasonal effect.

Last year was the same — folks don’t care much about accounting during BFCM month (that’s the month to make some money!).

Inevitably, January and February are very busy months and I expect installs to follow through. That’ll be a good time to be launching new features which are in the pipeline.

Support volume went way up this month, with a bunch of corner cases making it through the cracks as a result of a bug that was introduced last month.

The thing about asynchronous products is that if something breaks, nobody is immediately affected because the value being delivered (an invoice) is very rarely needed on a real-time availability.

A bug that prevent invoices from being sent is not a big deal the day the bug happens, but it does kickoff support debt like a spring getting compressed.

A growing number of customers have invoices that aren’t being sent for the use case affected by the bug. So eventually, when folks start looking into their bookkeeping (i.e. at the beginning of that week), they all run into the fact they’re missing invoices at the same time, and a support spike occurs.

This isn’t particularly good or bad, it’s an ebb and flow of what can happen as a result of research and development. Things can break when we make large changes, and provided we mend those in time and backdate any affected invoices, nobody is affected.

The problem is that I’ve noticed escalations have been taking much longer.

That has been a factor of the bugs introduced and not being solved in a reasonable amount of time, which had an impact downstream on new customer churn (bug affected new users mostly)

Those bugs plus the escalation failures this month means we failed to retain one $490 customer and 2 $990 customers who had signed up, which is a damn shame, and reduced collected cash by about 12% for the month due to this variance.

Reporting refresh & audit

With the roll-up period starting as of January, I’ve been meaning to audit my reporting and do a full run-through of my bookkeeping, regular and SDE P&L, and general performance of the whole fund leading up to the exit.

I’ll also need to invest some time to compile the unit economics that buyers will be asking for.

I realized my reporting doesn’t very accurately capture the ups and downs created by the new yearly signups since a lot of it is ARR based and some calculations are MRR based and dividing by 12 doesn’t always capture the full story.

Collected cash takes a dive if our new yearly plans don’t convert well that month, and creates a seesaw pattern I hadn’t considered as a result of simply adding new ARR divided by 12 into the MRR calculation.

Not that it’s entirely important in the long run at all but represents important context for a buyer who builds enough confidence in new yearly plan conversions every month to consider that MRR (which it officially isn’t).

Yearly plans need to be treated as mega VIPs.

They are a true double-edged sword.

They can very rapidly amplify the run rate, but can also cause a crater in the cashflow if they don’t come in like they regularly do, especially if due to a failure in support escalations.

Moving forward, I should have clarity on current MRR vs. new MRR rather than simply recording collected funds and reverse-engineering MRR growth from that.

This way, any yearly signups that fail to convert won’t negatively affect MRR churn, as it is not yet churn.

App store changes

The Shopify app store completed a redesign and I must say I’m very impressed with the quality of the listings. They’ve done an excellent job of putting the information merchants are looking for front and center.

I also appreciate the work they’ve deployed to better educate merchants who are logged out.

I’m not sure if or how applications that don’t follow the current trend (i.e. that’s Checkout Extensions right now) will be able to collect attention or be featured by the staff.

Thankfully, our rankings slightly improved as a result of the new changes brought to our listings.

I took the chance to completely rewrite our value proposition and benefit hooks so they would make the most of the space made available by the new Shopify listings

Unfortunately, the line breaks are stripped out of the text, so the delivery of the main paragraph is impacted. But so far, seems like nothing has completely cratered though I’ll really know after the new year.

During BFCM, nobody focuses on tax and/or touching critical infrastructure like shipping rates.

So everything becomes stable for a little while, then rapidly takes off again as tax season comes about and/or EOY profitability push merchants to improve shipping rates.

I took the opportunity to review messaging and tighten up the value proposition and key benefits, which had a tangible impact on the quality of the new app listings.

I couldn’t find the motivation to create a video for each of the listings, mostly as a factor of being focused on solving open issues (and ensuing consequences) created by bugs that were introduced to the code early on in the month.

Not a huge fan of the explainer videos offered by the many agencies who offer these kinds of services, and would probably gain much from creating an authentic video for both apps myself.

Really looking forward to not relying on the app store as much anymore, but I’ve failed to properly equip my new prospecting partner with a working Sales Navigator account due to some weird account issues on LinkedIn — and I have no interest in creating a fake persona.

I’ve been in a support loop hell with LinkedIn to get Sales Navigator back to my grandfathered account.

I’ve had that account for nearly 10 years, and pay like $99/yr for Premium. Unfortunately it looks like they removed Sales Navigator from the grandfathered account, which I’m trying to get back as that’s what I signed up for.

In the meantime, this is impacting my ability to do prospecting.

What have you been using to turn company names and domains into qualified leads?

DAO Proposal progress

My main ‘side hustle’ the past two months has been building the Triwizzy Tournament for the Doodles community, as a result of a passed DAO proposal that funded the project with about $100k.

I’m creating a platform to house and manage an annual creative competition that anyone can sign up to, with several challenges available and awesome prizes up for grabs for the winners.

A fantastic change of pace that brings me back to my B2C days in gaming and esports. I made my teeth creating one of the first eSports platforms of its kind, and am pretty intimately connected to the workflows of league, ladder and tournament management.

Of course, the main difference and challenge here is that I’m building a Web3 product.

Though I’m not committing any of the results to the blockchain, must of the functionality I’m building is either token-gated or requires an Ethereum wallet to work.

For example, access into the app is token-gated to holders of the ‘Wizzy Hat’ NFT. And that NFT will be made available for claim and public sale based upon a variety of factors.

It’s a fantastic learning experience attached to an excellent purse of funds I can use to expand Web3 investments at a time when fear, uncertainty and doubt are starting to bottom out.

It does take a lot of time lately between managing contractors and my own work. Though I’m having loads of fun, I’m looking forward to delivering the project and returning to full focus my own devices.

MicroAngel LP Fund

Despite the DAO project being on hold, the growing community has remained hungry to participate and to that end I’ve joined forces with the DAO founders-to-be to launch the first LP fund for MicroAngel.

In doing so, we’ve taken the time to explore what we’re trying to build, and where the MicroAngel brand fits into that.

There are 5 of us spread across North America with a wide variety of expertise and complementary skillsets. And the business we’re aiming to launch will build upon three core competencies:

1. Building up the MicroAngel brand as a foremost thought leader in the microacquisition space, and a source of insight to MicroSaaS founders and limited partners across the web.

2. Engaging and create value to a pool of limited partners using the MicroAngel playbook used in Fund I with cash-on-cash returns and exit distributions as the primary mode of returns.

3. Operating and growing the products we acquire to tangibly impact the run-rate in the early stages of ownership in pursuit of reaching valuation and liquidation goals 24-months later.

In the end, our approach will be very familiar to MicroAngel subscribers:

👉 We acquire high-cashflow, profitable software products
👉 We hold products for an average of 24 months before exit
👉 You earn quarterly dividend from quarterly free cashflows
👉 By exit, we’ve doubled valuation with a proven playbook
👉 2x your investment 24 months later on product exit
👉 Liquidate your profits or compound into next acquisition

Naturally, we can’t advertise this anywhere. So we’re starting to kickoff conversations with different subscribers, friends, family and other colleagues who would like to gain exposure to this asset class.

I’ve noticed PE is often compared to VC where it comes to returns.

But the two are different asset classes. An investor like a family fund that wants exposure to high technology should aim to be an LP in both VC and PE because they are exposed to different kinds of deals.

The opportunity

Traditionally, you either invest in startups directly as an angel or into a VC fund as an LP. In both cases, you’re looking for a 10x return. You’re making several small bets early that you can double-down on later in the hopes of producing a 10x-100x outcome.

But both of those approaches rely on the startups selling for millions for you to make those returns.

That means high-risk, high-reward.

The math works out provided you are exposed to enough deals so your winning investments more than make up for your losers and the sum of all parts is still profitable.

Turns out not many VCs are able to do that consistently. Many end up returning as little as 2x or 3x over a fund lifetime of 5-7 years.

Kind of like gambling.

Our opportunity is not to compete against VC but to provide an alternative investment that helps spread out some of that risk via a repeatable, straightforward process that doesn’t depend on the same variables or dealflow.

This often translates to more medium risk with just as high of a reward in the long-term.

Instead of a potential 10x in 7 years, it’s a near guaranteed 2x in 2 years, every 2 years.

2x every 2 years for 7 years is still still 10x, but with this model, the LP gets 3 chances to exit fully or compound profits by rolling them into the next deal.

The asset class we are exposed to is NOT on the radar of VCs either because they are too small to interest them, which means they are not ‘venture fundable,’ and that means outside of venture scale and into ours.

We focus on the cashflow and scale of the cashflow as a regular and consistent means of delivering value rather than only hoping for a massive outcome downstream.

This VC approach often pushes entrepreneurs to try and raise as much money as possible as quickly as possible as the primary method for increasing valuation quick enough to stay the course for a shot at the moon.

Yes, post-money valuation can grow as a result of selling equity, but the real earnings-based valuation inevitably catches up, especially in the context of going public where that metric becomes the only source of truth.

VCs don’t invest in niche products due to the lack of moonshot — but a moonshot is not required in this playbook; in fact this a slow and steady approach instead that provides clarity on value and consistent and frequent returns.

Think Warren Buffett meets MicrosaaS!

The MicroAngel Podcast

Good friend and fellow microangel Vahid Jozi and I are planning on launching the MicroAngel Podcast, a new destination for MicroSaaS founders focused on buying, growing or selling their products for freedom and profits.

Our goal will be to interview some of the space’s most talented founders and to dig deep into specific things they’re doing to improve the valuation and run rate of their products.

The idea is to enable listeners to walk away with at least one golden nugget each time they tune in, with content that enables both you and the community to come together and benefit from the ecosystem.

It’ll also be a fantastic way for the brand to spread its wings across different media and social platforms. This should result in the community blossoming both in terms of the Discord membership and the LP pool itself.

Look out for some teasers s00n! 👀

Learnings & Adjustments

I’m mostly staying the course this month and trying to get through some of my deliverables on the product-side.

I’d like to unblock some of the initiatives that are currently at a standstill and pay close attention to the App Store rankings over the month as competitors inevitably jostle for better positions.

By year’s end, it will be time to start packaging at least one product for sale — and the prospect of doing that is very exciting both from the perspective of inking in paper profits but also to reclaim some mindshare in pursuit of making good on the Reconcilely opportunity before handing it off.

I expect to list Postcode Shipping on MicroAcquire sometime in January, and will thus get started preparing any necessary paperwork and details that will make it possible for potential buyers to make a decision, an offer and an acquisition of our product.

Until next time, thank you for checking in and take care of yourself!

It’s ironic:

Some of the months with the best performance end up being months where I barely get to make any new moves.

Yet the seeds we’ve planted continue to bear fruit every month, further improving the performance of the portfolio.

The two primary flywheels contributing to Fund 1’s returns are cash-on-cash returns from monthly free cashflows and valuation gains enabled by MRR growth.

As of today, Fund 1 performance breakdown goes as follows:

• capital invested 21 months ago: $573.5k

• cash returns collected: $416.8k

• current cash-on-cash rate: 5.5% monthly, 66% annually

• portfolio valuation: $1.71m

• total value against invested capital: $2.13m

• total multiple on invested capital: 3.71x

Something I had always planned around is the implication of buying at an attractive multiple on my returns.

Since the start, I’ve modelled after a minimum acquisition multiple of 4x, but have consistently received offers and observed the market operate far above that.

I often receive emails from MicroAcquire detailing new listings.

In the rare instances where Shopify apps in the >$100k ARR range are newly listed, they often come attached with an asking ARR multiplier in the 6x-10x ARR range, which makes most of us — but not all of us — balk at the price.

Despite this, this inventory quickly sells, and demand continues to outstrip it. Bidding wars are commonplace now that microacquisitions have gained popularity amongst micro PE funds and microangels alike.

Despite the market remaining red hot, I always planned to sell both apps together so they could benefit from the same multiple.

I would justify my asking multiple on the basis of the apps’ individual merits but recently, my perspective has been changing.

With Reconcilely starting to really separate from the pack, it begged the need to revisit valuation across the portfolio.

That is, considering an asset can, in fact, breakout and begin rapidly growing which would be conducive to greater asking multiples above what I’ve planned so far.

Somewhat separately, I had a few check-ins this month with different interested parties for both apps. It seems like a deal for Postcode Shipping might start to materialize soon.

With Reconcilely rapidly catching up to our minimum monthly burn, it might become possible to offload Postcode Shipping so we can focus fully on Reconcilely, without suffering a context in which we burn funds.

As that, of course, would be a non-starter.

I did some work on our app store listings considering the deadline for the new designs/requirements is December 1st.

I’ll have to complete this work going into November to ensure we’re satisfying all requirements to stay competitive on the app store (or better).

It’s mostly collateral to make. New screenshot sizes have inspired me to create new screenshots altogether. Same thing with app videos. Hopefully I can put a 60-90 second spot together for each app using Canva or something. Nothing crazy, promotional only.

Kicked off some new outbound resources to give things another go, and we’ll see soon enough if those bear fruit.

This new sales channel could have a dramatic impact on both ARR growth and monthly free cashflows implied by selling annual pricing plans.

Lastly, have been making some decisions regarding the DAO and laying the groundwork for what’s next considering our pivot away from the DAO context.

It seems our family can’t catch a break with kids constantly needing doctor visits, as well. I feel like I’ve spent half my month tending to my children’s health and it’s not even winter yet.

Just two short months left to the growing stage — in which we specifically try to commercialize the product work that has been done during the fixing and improving stages — before we start thinking about the next chapter for the fund.

I’m thankful for the progress so far and I feel vindicated by some of the performance gains that were enabled by the decisions I make every day.

It means things are going well, and it means I’m in a zone of comfort I’m looking forward to expanding next fund.

I’m still spending time building the Triwizzy Tournament for the Doodles community as part of a 60 ETH proposal to build the platform and execute the first tournament for the community.

Having loads of fun with it, though it can be a time sink. Honestly not too worried about it, as it does help keep sane in the midst of all the craziness of life.

If things are moving up and to the right in this playbook, you’re doing it well, and you can afford to play in between.

Current fund lifecycle stage

✅ Buying (02/2021 - 05/2021) 
✅ Fixing (06/2021 - 08/2021)
✅ Improving (09/2021 - 12/2021)
→ Growing (01/2022 - 12/2022)
Roll up (1/2023)
Exit (2/2023 - 4/2023)

Fund Activity

• Funds Deployed: $573.5k

• Products: Reconcile.ly, Postcode Shipping

• Closing MRR: $30.97k

• 30-day Revenue: $31.45k

• Rolling cash-on-cash return: $416.8k (+72% / 0.72x)

• 30-day ARR growth: $22.8k (+6.5%)

• Current Total ARR: $371,652

• Cumulative valuation increase: $1,139,728

• Portfolio Valuation1: $1,713,228 (+198.73% / 2.98x)

• 21-Month Total Return (MOIC): 271.42% / 3.71x

When I pair the run rate acceleration with the addressable market opportunities implied by the work we’ve done (releasing QBO, increasing ARPU and LTV dramatically 40%+ and opening up new lines of revenues at the mid-market, etc), it’s clear the value of the app is rapidly shooting up, and thus I’ve adjusted the minimum asking multiple for Reconcilely up to 5.5x.

Considering most of the portfolio’s growth comes from Reconcilely, the implied multiple added to the MRR growth have produced a large increase in the paper gains of the product.

To stay true to the monthly state of the product on a rolling basis, I now think of my asking multiple as a living thing that can change on a month to month basis predicated on reaching new product, revenue, retention and/or expansion milestones.

In other words, you can elicit a greater valuation out of an acquired product by improving its product. But you can also do so by unlocking new run rate improvements by commercializing the things you’ve built or improved during that time.

Provided we continue to grow the product, continue to unlock improvements in ARPU/LTV, and increase run rate by serving the upcoming QBO market, which dwarfs Xero demand by 10x on the App Store, we are poised to continue increasing the asking multiple.

This is a new dimension I hadn’t necessarily considered in the planning stages of the fund.

Yes, the Growing stage would aim to drive MRR so valuation would go up.

But I hadn’t fully considered how growth and product engineering might directly lead to new commercialization opportunities, which, if unlocked at least a little bit, radically increase the buyer’s likelihood to drive more value post-acquisition, and thus positively influences buying multiple.

This is one of the main reasons why I had chosen to focus on Reconcilely to begin with.

Its ceiling is many times higher than Postcode’s because the potential markets for the product can expand without the product itself changing all that much.

Consolidating efforts

Now that the run rate is improving, I can chart an estimated timeline to burn zero were we to operate only Reconcilely, which would allow us to exit our Postcode Shipping position, realize our gains with that product and maintain our velocity on the Reconcilely side without having to burn through funds (as Reconcilely would be able to support both myself and my partner).

Further to that, the general profitability of the fund would improve because the large bulk of our costs are on the Postcode Shipping side, and Reconcilely can be run on a very lean and inexpensive stack.

It’s good timing, as many of the funds and individuals who had expressed interest in both apps have recently been checking in for updates and to re-express their interest to acquire our products.

In particular, we have been in touch with a good partner to hand-off Postcode Shipping.

It’s somewhat of a lukewarm relationship, but objectively the best one considering the strategic value the app would represent for the buyer.

I’m comfortable with the idea of exiting Postcode Shipping because I don’t necessarily intend to work on it over the next two months.

However, I’m not willing to forfeit the cash-on-cash returns I stand to collect provided I simply continue holding the app, with its incredible stability driving those returns.

When I started the fund, the CAD:USD exchange rate offered $1.25 CAD per USD, which was useful because I was holding the portfolio on a personal basis and declaring all of its revenues as personal income and benefiting for the exchange proceeds to basically pay for taxes.

This logic mostly stays true on the business side (~22% tax), so I hadn’t really thought about it too much until recently.

Specifically, last month I converted our payouts at a rate of $1.38 CAD per USD, increasing our net proceeds for that month by quite a margin.

We ended up closing the month over $41k CAD, and though the majority of my costs are in USD, the leftover profit from converting most of our USD balance to CAD provided a nice little boost to CAD balance.

As of writing, the USD is hovering around 1.31 CAD.

With the roll-up month approaching (January), I’ll need to do a little bit of bookkeeping and house keeping to cut out all non-standard spend so we can provide a clean profit margin on an SDE basis.

When the buyer acquires either product, what they’ll need to know is the margin moving forward — meaning what I spent up to now, including discretionary earnings is irrelevant — so they can understand their free cashflows and the fixed costs implied in operating the product.

As an example, all current payroll, mine included, is purely optional.

The support team we pay for is optional — though a resource for processing and resolving support inquiries will be required.

The trickle we spend on Shopify ads is optional.

The analytics stack we have implemented is optional.

Very few things really need to be in place for things to run properly.

It’s important to distinguish those from non-essentials so the latter can be discounted out of the costs for a more accurate profit margin the buyer would have moving forward.

I’m a little late on some R&D tax credit work so this admin stuff needs to get done, which means my upcoming month is 3 main things:

1. Reconcilely product engineering

2. Reconcilely accounting & bookkeeping

3. Reconcilely tax credit application for last quarter

Not amazing considering not many of these help increase our run rate.

Frankly, my one goal over the next 60 days within the Growth phase is to get QBO out of stealth so we can launch in the QBO App Store and hopefully double our run rate in time for the roll-up (and a potential increase to 6x+ ARR).

Outreach Try 2

In the past two months, I hired two separate resources to conduct some outreach but neither panned out.

This time, I decided to work with a small offshore agency out of Dublin with a different playbook.

Rather than playing on quantity, we’ll attempt a quality game.

Their mission is to take over my LinkedIn account and do high-touch research and outreach to a specific list of accounts.

This means taking the time to build a profile and case for specific accounts we want to work with and reaching out with a high degree of success.

The individuals doing the outreach will be product-educated while will enable them to serve a customized pitch to each lead relative to the solution those leads are likely looking for.

For example:

Reconcilely’s secret sauce is that it has an intelligent payout consolidation technology that allows it to send a single invoice to account for all of the activity that has taken place within a given Shopify Payout - regardless of the amount of orders.

This dramatically decreases the number of invoices created in the accounting system, which in turn reduces the amount of time it takes to reconcile bank account deposits against matching invoices.

Instead of matching thousands of invoices to a given payout deposit, a single invoice is created that exactly matches the payout and allows the merchant to reconcile payout transactions with a single click.

Merchants on the Pro plan save an average of 70 hours per month thanks to this feature.

That figure exceeds an average of 150 hours per month saved for Shopify Plus merchants.

That’s an entire full-time resource that merchants don’t have to spend on. It’s thousands a year they don’t have to spend and hours per month they can instead invest into growing their business.

All for $990 per year.

It’s a no brainer.

Using tools like Storeleads, we can easily identify merchants in specific geographies who use Shopify Pay as a payment gateway, which means our value proposition above is likely to be a strong fit with those segments.

Similarly, we aim to release the same consolidated invoice tech for all payment gateways, which would enable us to do outreach on a per gateway basis.

Tired of reconciling hundreds/thousands of PayPal orders in Xero?

We’ll send a single invoice to account for all of your Shopify orders paid with PayPal so you can reconcile your entire PayPal account with a single click.

This is a prime example of how improving what our product can do at a high level tangibly opens the doors to a greater addressable market.

Since we already have a means of reaching that market, it’s the market/fit that matters — and that fit is strong with the consolidation value propositions because they have a direct and real benefit (automation leads to time saved with zero effort).

Like last time, the success metrics for this new channel is to drive new revenue by signing merchants in the midmarket.

Specifically, we’ll aim to score points with Shopify + Xero customers in the APAC & UK regions who use Shopify Pay as a payment gateway.

It’s a nice, defined segment for which we have a very strong offer.

There are at least 100,000 stores which fit this criteria as of today.

Provided we can reach 500 decision makers per month, the goals I’ve outlined for the outreach campaign are to:

• Fill 2+ hours (4 demos) per day

• Maintain a demo closing rate of 50%+

• Produce 2 new customers per day or ~10 per week

• Focus only on the $490/yr and $990/yr plans

That defines a top line potential of $5k-$10k per week in additional cashflow based on the pricing plan mix.

If we focus on 500 decision makers per month, or 125 per week, and we want to close 10 customers per week, our success rate per lead needs to average 12.5%.

Which is pretty aggressive, all things considered.

To further reverse engineer the KPIs:

• 10 closes per week at a 50% demo conversion rate; coming from

• 20 demos per week at a 25% (?) demo signup rate; coming from

• 80 messages opened per week at a 25% open rate; coming from

• 320 messages per week (avg. ~2 messages/lead/week)

If we expect 1 out 4 users who open the message to book a demo, and we know we should be booking 20 demos weekly, then we need to get at least 80 message opens to book those demos.

If we we need 80 opens per week, and we estimate an open rate of 25%, then we need to be sending 320 messages per week across those 150 leads, or approximately 2+ messages per lead per week.

From there, we can try a 1-2-3 combination:

1. Outreach on day 0

2. Followup with a testimonial on day 3

3. Followup with loom video of product on day 5

The goal of each email is to earn a booked demo on my calendar.

Assuming we can book 4 demos a day or more, it is likely we’ll be able to drive 40+ new customers per month from this segment alone, which would represent a revenue acceleration between $20k and $40k ARR per month.

That’s not including the fact we would book those $20k-$40k immediately as we will be selling yearly pricing plans. The recurring nature of this sales channel could have a dramatic impact on monthly cashflows.

Provided this works, I’ll hire a closer to take over demos and remove myself from the process of this campaign.

I’d then build the next campaign, and hire another closer once that works, and so on.

Goodbye for DAO?

It’s been several months of researching, preparing, and building the initial community for the DAO.

Every few days, interested new members pop up in the Discord to ask where things are and how they can contribute to will this thing into existence with us.

But we’ve had to make a tough call over the past few weeks to completely shelf the DAO concept due to two things:

• the financial requirements implied by our legal framework; and

• the uncertain liability protection offered by that framework

In short, it would cost quite a bit of funds to get the thing off the ground in a kosher way.

Prohibitively so.

It doesn’t align with what I’m willing to personally forfeit to get it going.

But worse, the framework itself isn’t even guaranteed to work.

Uncle Sam could wake up any time and decide we’re in the wrong bucket, despite the way the companies are structured.

In short, the big issue is that if there’s a payment to token holders, it is automatically considered a yield.

Arguing our payments are compensation can only hold so far and represents a fickle defence in the event it is challenged.

This sucks hugely.

We want to build the DAO. And hopefully one day we will.

So we’re putting it down for now, and refocusing on what we’re trying to accomplish, and draw any possible precursor milestones we could accomplish in the meantime that better DAO legislation could come into play.

The goal is still to build a tokenized community of microangels — so we are likely to continue regrouping individuals building, buying, investing and financing microacquisitions into a single destination — and our NFT project can stand on its own within that context.

No promise of a yield.

From there, things can begin to take shape bit by bit.

We’ve had conversations internally around building DeFi products that this microangel community could consume as legitimate alternatives to other products and services.

One such idea is to build a decentralized protocol for non-dilutive acquisition financing:

A smart contract enabled by a liquidity pool driving a merchant cash advance offer that anyone could use, provided their business fits contract criteria.

In the meantime, the DAO founders (myself included) have been laying the foundations for Microangel Fund II (LP), which likely will launch as a separate brand, but which will effectively aim to offer the microangel playbook as an investment opportunity to any accredited investor.

More on that soon. Feel free to get in touch if you’re interested in LP participation.

Before I let you go, I’d love to get your opinion on what you would like to see out of this newsletter once the Fund I experiment is over.

I’ve a half-mind to start a microangel podcast and to really start driving community. Let me know if that sounds interesting, and of course as usual, I’m open to any and all ideas/feedback to help create more value for you.

That’s it for this month!

Be well :)

As of today, Fund 1 performance breakdown goes as follows:

• capital invested: $573.5k

• cash returns collected: $385k

• current cash-on-cash rate: 5.1% monthly, 61% annually

• minimum valuation: $1.4m

• total value against invested capital: $1.785m

• total multiple on invested capital: 3.11x

It’s been a good month overall, though not without its challenges.

The team’s been feeling a little tired lately. We’re due for a team retreat sometime, which would sync up well with an exit, to be honest.

Eric and I have both been doing a little traveling for a change of scenery and I think the impact has been mostly positive in what felt like a sideways month.

But I was once again pleasantly surprised by the performance of our annual plans and the insane cashflow boost they’re producing.

Work on product is moving slowly, but that’s alright. There was a similar lull in activity last year.

There was Rosh Hashanah and Yom Kippur recently and more holidays coming so it’s important not to try needlessly press on the gas while headed for a pit stop.

We parted ways with our team member working on Postode Shipping, which once again opened the question about potentially selling it.

Postcode Shipping is a truly incredible piece of software that provides a backbone of revenue that is very stable. Meanwhile, Reconcilely has huge potential and is blooming before our eyes as a result of the work we put in every day.

We often wonder whether it would be best to liquidate one of our apps so we could focus on another.

And every time, I am reminded of the incredible value delivered by the app we are considering selling, and I decide simply to hold on to it and the cash returns it provides.

We’re going to hit 70% in cashflow returns next month and we surpassed 3x total expected on the invested capital back in February 2021. I’m so excited to see this continue to gain steam slowly, surely, and I don’t intend to break that cycle until our planned exit time.

When I take a glance at the open listings on microacquisition markets, I notice very little supply in either app range, which is conducive to greater demand, and thus a higher multiple.

Gotta stay like water.

Current fund lifecycle stage

✅ Buying (02/2021 - 05/2021) 
✅ Fixing (06/2021 - 08/2021)
✅ Improving (09/2021 - 12/2021)
→ Growing (01/2022 - 12/2022)
Roll up (1/2023)
Exit (2/2023 - 4/2023)

Fund Activity

• Funds Deployed: $573.5k

• Products: Reconcile.ly, Postcode Shipping

• Closing MRR: $29.06k

• 30-day Revenue: $29.45k

• Rolling cash-on-cash return: $385.5k (+67% / 0.67x)

• 30-day ARR growth: $19.45k (+5.91%)

• Current Total ARR: $348,792

• Cumulative valuation increase: $821,668

• Minimum valuation (4x): $1,395,168 (+143.27% / 2.43x)

• 20-Month Total Return (MOIC): 210.48% / 3.1x

Reconcilely passed $11k in earnings this month and it had its first $2k day. The yearlies are absolutely flying.

It doesn’t seem like my outbound sales candidate panned out though. I will be looking for another self-starter soon.

We passed 3x+ in total MOIC, which is amazing. I expect to hit 3.5x in 2 years at the current pace, but with the tax credits and any future boost we get from QBO launching, we might potentially hit a total of 4x in 27 months, which would explode my brain instantly.

We’re still earning sub $500 per month in overage fees from existing customers who haven’t yet upgraded to new plans.

Once the work I’m done with this month goes live, we should see more of them taking the leap to the new plans.

It’s clear the yearly approach should have happened way earlier, though I believe it’s working so well today because the value proposition of the product is stronger by many orders of magnitude.

Team Fatigue

I’ve been losing motivation and feel like I’m spending a lot of time projecting myself in the future considering today’s information.

It doesn’t translate much to living in the present and I find myself becoming increasingly itchy to move on to the next ignition stage, so to speak.

This could be a factor of the way things have been going at the fund paired with the fund’s purpose (which was to hold and/or grow, given the context).

It’s like the game has been won, I know where things are realistically headed (or better), and I’m just itching to get there and get going with the next step in this great journey!

This might be a testament to the efficiency of this model, granted it contains a dual-edge for ambitious individuals who can get bored in the absence of equally ambitious bets and challenges.

I take great joy in the time this fund is providing me so I can experiment either with larger ideas, building relationships, or simply changing sceneries once in awhile.

On his end, Eric’s been pulling a considerable weight on the engineering side being pulled on support escalations.

I’ve contributed to some of those, namely by introducing the $999/yr plan and in doing so, dramatically increasing the expectations of our larger merchants upon install.

Though I will say, nothing beats seeing installs come in and convert into $1,000 subscriptions less than a minute later.

We needed to consider some new tooling to more efficiently onboard large merchants who, as an example, might need to backdate hundreds of thousands of orders spread across a year or many more.

To support him, I’m going to take on the escalations moving forward so he can focus exclusively on product rather than being spread so thin.

We mutually decided to part ways with our developer working on postcode shipping. after roughly 3 months, both parties agreed the experiment hadn’t been a success.

I have a pretty natural style as it relates to contractors, often opting for larger, flat-based arrangements devoid of hourly billing.

The platform to succeed is laid bare on the predication that the contractor will deliver more value than they take, while benefiting from the flexibility and stability offered by a flat retainer, allowing full focus on value creation.

This makes it much easier for both parties to quantify whether the gig is working. Otherwise, it’s very difficult to align with contractors as one party wants to minimize billing and the other wants to maximize it.

A flat arrangement, especially in a trial gig, enabled me to reach a binary decision by the end of the trial; either more value was created than was spent, or it wasn’t.

In our case, this wasn’t due to skill, and much more due to happenstance and context. Things are rough in Pakistan.

Moonlighting is much harder to pull off on a consistent basis than you might think. It takes a lot of discipline and sometimes, sacrifice.

For many contractors, the math often doesn’t end up working out.

For now, Eric will shoulder any work required on postcode, and we may end up bringing on some PT help to do that, but for now no change to headcount.

Short & frequent vacations

I ended up going away for a few days on a couples-only trip which helped tremendously.

But it made me realize I took the vacation too late, and I need to do it more frequently.

It’s difficult to balance taking the kids with us vs leaving them with grandparents since much of our joy comes from our children.

But inevitably, you need to recharge your batteries. I admit it’s a balance I’ve yet to strike as a parent of young children and as a lifetime proponent of taking regular time off traveling.

The feeling of inevitability accompanied by parental fatigue is very similar to the feeling I had before launching this fund.

The point of the fund was to secure cashflow and make an entrepreneurial play rather than falling out of touch and burning through funds.

That inevitability of that need came from knowing a second baby was on the way, and that things would again change forever.

I didn’t want to lose either my career or a seed round’s worth to a part of my life that I was meant to be able to fully enjoy.

Eat the cake and have it too, you already know.

Now, I need to solve for a similar inevitability that will last 2 decades…? There’s no way I’m going to make it without regularly recharging.

So the time is now to solve for regular travel with and without kids so everyone can stay sane, energized and motivated!

Holidays have kicked off. Family has flown in, it’s a time for celebration. I haven’t seen my parents in ages.

Which means more time off soon. I’m not complaining.

Shopify app store evolution

There’s a Nov 1 deadline to touch up the app store listings for both Reconcilely and Postcode Shipping since, you know, the app store’s changing again.

We have absolutely no idea what the impact on demand, rankings or installs will be. I’ve already made my opinion known on this style. Speed as a developer is everything at this point.

Forget building a product in stealth for 6 months to then launch it to the App Store. You’ll need to change your strategy by the time you launch because things change so often.

Word to the wise; if you’re planning on building a Shopify app, make sure to skate to where the puck will be:

• Build for growing demand, not existing demand, to account for the lag between your demand discovery and the time it will take to deliver a solution against it — you should be reaching the app store as demand reaches its apogee, which drives your odds of success

• Stay nimble and avoid launching using several systems tightly intertwined into the Shopify APIs — not because they are bad but because they may change as you develop, and having to constantly juggle new development and tech debt is never a fun time, especially if spread across many systems.

In our case, the required changes are marketing related; we’ve got to deliver new app store descriptions, collateral and copy to account for the interface changes the app store is about to undergo.

I’ll take the opportunity to produce some basic videos for the apps too. As with everything, there is no point in rushing into new changes.

The goal is to maintain parity, begin establishing benchmarks, and identifying any drift between previous rankings and new ones, and then create a strategy to adjust and improve if necessary.

Let me tell you; I’m not going to be happy if this change destroys our rankings because that would be completely uncalled for.

I’m not exactly expecting that to happen, but I’m bracing for something to happen. I just hope it’s positive.

I hate hope-based strategies.

Product

Xero SSU is going to release this month which should allow us to secure a Staff Pick opportunity and put some points on the board.

The work for the single signup flow creates a new avenue through which Xero customers can sign up to Reconcilely for the first time.

This allows the app to stand independently from Shopify at least on entry; as a completely new customer inbound from Xero’s app store could install the app and then pair their Shopify store to their Reconcilely account.

This infrastructure is the nascent foundation upon which every future integration will be built upon, from order sources (i.e. pulling Amazon orders) to invoice destinations (accounting systems).

And it’s finally complete.

Separately, the Crisp migration took way longer than we expected as we had to push fixes to different parts of our apps which allows customers to reach out to support, but which would not land in Crisp.

Similarly, we sanitized some of the data making it through to Crisp, and now marketing automation is ready for development for both apps. Oooo baby. Gonna be time to make some flows.

This month, I’m releasing some expansion features to enable users to upgrade more efficiently and I’m focused on the app store listing stuff.

We’re mostly focused on QBO polish now. Nothing but forward, it doesn’t matter what the details are anymore; it’s time to get it across the finish line and launched, and we can feel our energies converging in pursuit of that.

Exciting times for product and a great result of teamwork and R&D.

Speaking of which…

R&D tax credits

The day you plant the seed is not the day you eat the fruit.

And things are no different in the case of this little joker card.

Last year, I incorporated MicroAngel because it started to make very little sense to take on personal income as most of that income would get taxed and disappear in a high tax bracket.

Incorporating allowed me to sell equity to future partners, create a corporate veil shielding us from personal liability, and optimize tax efficiency.

Buuuuut it also did one more, really powerful thing:

MicroAngel is a Canadian-controlled private corporation, who employs only Canadian-based engineers (Eric and myself), who then conduct a large variety of projects to create value, advance technology and commercialize it, while dealing with the uncertainty implied by such activities — aka R&D.

In canada, and in each province, corporations who have qualified R&D spend can claim a (large) percentage of that spend back as part of the Scientific Research & Experimental Development (SRED) federal tax credit.

In its hay day, I recall claiming as much as 82 cents on the dollar, effectively cutting my engineering payroll by more than three quarters.

It’s a chunky piece returning on the balance sheet which I could then reinvest back into my payroll, and in doing so further the growth of our technology, and indirectly, the Canadian economy.

The grants are on a rolling basis once you start claiming regularly every quarter.

But in our case, and due to the small size of the company, we needed to wait a year to have enough payroll to make it worthwhile for our partner firm to engage us.

Now that this process is under way, we have begun going over all of work that has been pushed to our GitHub repositories in 2021 and constructing a six-figure tax credit claim out of it.

I’d be thrilled to get even 30% of our payroll spend back.

Wouldn’t you?

It would give huge weight to product-heavy microacquisition opportunities as most if not all activities post-acquisition could be R&D qualified, and thus claimable.

If this works, it will confirm the last hypothesis I had about this entire fund, which not only would create returns from cashflows and valuation growth, but ultimately also from R&D tax credits which are booked as revenue on a recurring basis, so long as your payroll spend is mostly (Canadian) R&D — which as an app, it ought to be.

Will share news when I get some.

Web3 fun: Triwizzy Tournament

In my pursuit to develop the DAO early community, I’ve continued to embed into a few large/”blue chip” web3 communities

Namely, last month I made a grant proposal to the Doodles community to build a tournament platform.

After a dramatic and exciting on-chain vote having received over 1,500 votes, the proposal passed and the core team I put together received a 60 ETH grant from the Doodles community treasury to build the platform.

Having tons of fun building that, and it’s a great group of really talented people I’m interacting with almost daily now.

I’m excited to see where this goes. Planning on launching the tournament sometime in Q1 2023, assuming everything goes to plan on the product side.

DAO Pivot

A pivot’s probably the wrong word; you pivot when you know what you’re doing is wrong. What we’re doing is not wrong, but it will cost a lot to build.

I held dozens of calls in the past month with different legal firms on the topic of the DAO’s legal framework.

It's been a few months of exploring and the DAO founding team made the call to shelf the microacquisition DAO considering legal is not getting any clearer.1

It looks like we could do this, but a grey area leaves us open to liability and risk downstream should the SEC wake up one day and decide we no longer fill the requirements for securities exemption.

And that’s simply not a risk we’re willing to take, never mind the costs implied in creating a legal framework intended for a decentralized treasury whose initial seed would be severely reduced by the very legal costs intended to bring it into existence.

It’s a bad investment to launch. At least right now.

I don’t want to be trailblazing to that extreme. I have a model that works now, there is no point trying to start something from scratch only to walk. We want to run. We want to fly.

That said, I’ve received a suspiciously large amount of advice to explore the MCA model considering legal is much simpler and it is a model ready to be disrupted.

If you’re unfamiliar with it, merchant cash advances are a pretty old model that allows you to act as a lender without necessarily charging interest as we know it. It’s a simple arrangement to return cost-plus. Much like Pipe.com or Stripe Capital.

Considering marketing leaders like Pipe have large institutional investor requirements and an opaque process from the outside in, we’re exploring a pivot to build a DeFi protocol for Web2 and Web3 products which makes non dilutive capital available on a decentralized and trustless basis.

But that’s a story for another time.

I’ll be releasing a DAO update sometime soon in the Discord going over the learnings and next steps, and I’m happy to say that the new direction is more straightforward, less legally complex, and more conducive to grow very large very fast through institutional partners.

In the hopes this found you in good health and spirits. Always happy to hear from you, so don’t hesitate to get in touch.

Until next time!

Hope you had a great month. I’ve got a meaty one for ya today.

This monthly report finds you about a week late on the heels of my second daughter’s 1st birthday, labour day weekend and school adjustments over this past week.

Time with family is everything!

Month 19 has come and gone for the Fund I experiment, which aims to turn a $573k investment into $1.5m in total value.

So far, so great! The breakdown as of today goes as follows:

• capital invested 19 months ago: $573.5k

• cash returns collected over past 19 months: $356k

• current cash-on-cash rate: 4.9% per month, 59% per year

• minimum valuation: $1.33m

• total value against invested capital: $1.7m

• total multiple on invested capital: 2.89x

While I’ve reached the cashflow goal and am on-pace to reach the exit goal, I recently pushed back the liquidation month from February to April 2023 as I’m likely to fully pay off my original investment by that date.

It’s worth noting that I’ve been reinvesting a bunch of the free cashflows lately on non-renewable expenses that the new buyer wouldn’t need to shoulder. In this case, every dollar spent out of the cashflow aims to produce some additional MRR.

I’m not super happy with our product progress this past month, having sunk most of our time into support tooling migration and bug fixing.

Thankfully, investments from months prior bore fruit.

If your plan is to acquire a product that is default alive and to benefit from its free cashflows, it’s crucial to consider the impact of reinvesting those free cashflows during your investment’s lifetime.

With the new exit timeline extension, we’ve got 8 months to go in the fund. The reason I’m now reinvesting FCF is because we’re in the growth phase, the goal of which is to positively influence MRR in pursuit of the roll-up and exit phase.

It was a decent growth month as we finally bit the bullet and completed large projects we knew would have no bearing on growth.

Specifically, we shipped new listing changes to meet app store requirements and migrated both our products to a consolidated support platform (crisp.im) to the benefit of our support teams.

The n00b pricing mistake I made last month is finally out of sight, though it did artificially increase our churn threefold during last month.

What happened?

In manually cancelling faulty yearly subscriptions, we negatively affected churn and incurred immediate refund costs that we’ll only recover when those customers pay their Shopify bill.

Stupid mistake.

There’s been good progress overall — but not enough of it.

The velocity needs to accelerate and everyone’s on board with the why and how of that situation.

With out-of-scope activities out of the way, we can be more ruthless with respect to each next move so they help move things up and to the right.

I need more out of my teams now that individuals are focused on only one product each. Especially since I’m now spending most of my time in between growth experiments or completely out of scope, working on the DAO itself.

Speaking of the DAO, the Microangel community has been making incredible progress in pursuit of the DAO launch, which seems more clear than ever now that key decisions and individuals have been confirmed.

Current fund lifecycle stage

✅ Buying (02/2021 - 05/2021) 
✅ Fixing (06/2021 - 08/2021)
✅ Improving (09/2021 - 12/2021)
→ Growing (01/2022 - 12/2022)
Roll up (1/2023)
Exit (2/2023 - 4/2023)

Fund Activity

• Funds Deployed: $573.5k

• Products: Reconcile.ly, Postcode Shipping

• Closing MRR: $27.76k

• MRR Growth: 3.48%

• 30-day Revenue: $28.08k

• Rolling cash-on-cash return: $356.31k (+62% / +0.62x)

• 30-day ARR growth: $11.21k (3.48%)

• Cumulative valuation increase: +$759.07k

• Current Total ARR: $333,144

• Minimum valuation (4x): $1,332,312 (+132.36% / +2.32x)

• 19-Month Total Return (MOIC): +194.49% / 2.94x

While the strategic decisions I’ve made are correct, and our products have improved greatly in the past year and a half, I currently feel a new sense of urgency regarding MRR growth, and am finding it progressively harder to justify expenses that don’t have a direct impact on revenue growth.

The impact needs to be more direct and clear moving forward.

Thankfully, expenses of this kind don’t carry over to the eventual buyer of the products, and the P&L will surely reflect that so as not to negatively impact the actual profitability of the products.

Discretionary spending like this will surely produce good results in the short- and mid-term, but I must admit I want to see more focus on growth and less on bug fixing or maintenance.

I’m just feeling more of a rush now since the purpose of the current phase is specifically to increase MRR, and thus far the additional discretionary spend hasn’t yet met my expectations.

With 4 full months left to the year, I’ve got full confidence in the folks who are currently contributing to the team and everyone is aware of the urgency I’m attempting to manufacture so we can become that much more intentional with each dollar spent.

Much of my jittery mood comes from the way the past month has gone.

It started with sickness, as my family and I spent a solid week and a half completely under the weather. Having a one year old coughing and sneezing in your face will do that to you.

Just perfect timing to be starting kindergarten and daycare, respectively. It was multiple kicks in the shin, one after the other.

Things took a turn for the worse: as the humans got better, my dog developed some kind of viral infection which culminated in intensive care for 3 days and a very scary experience for everyone involved.

Thankfully, everyone’s feeling better and the pup is on the mend, but not without the emotional, physical and financial drain implied from dealing with these situations.

With half the month effectively burned, I ended up spending most of my time working on the Microangel DAO now that resources and roadmaps are in place at Reconcilely and Postcode Shipping to produce continuous progress.

I’m not super satisfied with the progress through the month, but am cognizant of the why behind it, be it managing a large support platform migration (on both apps) through to the floods in Pakistan, affecting Zubair and his family.

While we’re in growth mode, I continue to be thankful for the work we get to do at the pace we choose to do it. Long-term moves can suddenly bear fruit on a month during which you’d expect a decrease in momentum.

People first. And one brick every day.

Reconcilely

Support Migration

By and large, my disappointment is unjustified. I’m not thrilled QBO is not live to the public yet, but it’s due to a decision I made at the beginning of the month, which is to prioritize the support tooling migration for both products.

That ended up being a huge project as we attempted (and failed) to accurately migrate previous conversation data from Helpscout and Intercom over to Crisp.

It ended up being a rabbit hole that wasn’t worth jumping into.

Thankfully, we’re done with that as the Crisp implementation is going live this week.

We spent the time to backfill the CRM for each of the apps with existing and past users, including data related to their user experience.

This allows us to power our marketing automation using Crisp moving forward.

This will also enable our support teams across products to live on a single tool and benefit from systems built for one product to deliver 5-star service to another with no additional energy or time spent.

App Store Requirements

We finished new app store listing requirements that were threatening the app’s ability to stay published on the App Store, and thus took precedence over everything else.

I’m just really over having to constantly push back my roadmaps to stay in the game, and in that regard, my appetite to keep working within the Shopify ecosystem is rapidly deteriorating, despite the incredible products we operate today.

Last month, I realized a mistake in the way we executed the pricing upgrade for Reconcilely.

Specifically, the mistake was using the REST API endpoints (as we have always) to create the new annual subscriptions.

Several customers signed up and paid for annual subscriptions, and it took me a solid 2 weeks to realize those new subscriptions were being created on a monthly frequency, instead of annual.

It turns out you can’t create yearly plans with the REST endpoints — only using the GraphQL endpoints. And that contains its own nuances.

I quickly took responsibility for this mistake and manual cancelled half a dozen subscriptions from these new customers, and issued immediate refunds to offset the costs they would incur on their upcoming Shopify bill.

The problem here is the way Shopify billing works means that customers who paid for the year (on a faulty $380/mo plan, for example) had already technically incurred the $380 cost, but it would be paid 30-45 days later along with their next Shopify bill.

However, refunds are immediately pulled from partner payouts and sent to the merchant. Which means we basically financed that refund up-front. Some of those payments haven’t even landed in our payouts yet.

Just a really stupid outcome from a small, but significant mistake.

Revenue Expansion

Following the increase of the pricing plans which grew our run rate from new customers, stage two of the campaign is to try converting some of the existing and past customers to upgrade to new plans and/or to come back to the app.

The general mechanism for converting existing customers to the new pricing is the following:

• By default, all existing customers are grandfathered into their previous plan — nobody is forced into the new prices

  • If desired, the customer can retain the exact same features they’ve have at the exact same price, forever

• If an existing customer wishes to access any of the new functionality we are releasing out of Beta, they’ll need the appropriate pricing plan that includes that feature

• Should existing customers ever upgrade from their grandfathered plan, that plan will no longer be accessible

• To reward customer loyalty for existing customer upgrades, all new pricing plans are offered at a 15% to 25% discount (forever).

  • i.e. $99/mo plan available for $74/mo or $749/yr

• The upgrade discount will last for a limited time, after which it will no longer be redeemable.

This provides a fair platform from which customers who seek more advanced functionality (and whom are happy to pay for it) can access it while benefiting from an exclusive discount rewarding their loyalty.

Importantly, the pricing adjustments brought to Reconcilely were specific to its larger plans, which specifically provide functionality to larger stores whom, until recently, were receiving far more value than they were paying for.

To power the expansion, I’ve been writing an improvement to the front-end which opens an ‘upgrade now to use feature x’ paywall if ever feature x is accessed without the appropriate plan to access it.

The modal will provide as options whatever plans include the feature the customer is trying to access, helping to instantly drive expansion based on a specific value-add, at the right time.

This will drive the revenue expansion we’ve been looking to kickoff so we can pay more attention to the mathematics opposing revenue expansion to revenue churn, and ensuring the former always outpaces the latter to deliver geometric growth.

High Touch Outbound

With renewed pricing that can deliver strong ACV’s, my hunger to drive qualified demos is greater than ever!

I’ve launched an initial experiment to drive conversations with merchants across the UK, New Zealand and Australia, whom are my primary target for the Xero revenue line.

This experiment, when made to succeed, will then be duplicated for the QBO revenue line targeting merchants across North America, hopefully in time for a QBO app store launch soon™️.

For now, my plan is to focus specifically on larger stores for whom my two largest plans are relevant and valuable.

Within demos, I’ll focus on driving yearly subscriptions by highlighting the savings implied by annual payments of a product which is set and forget.

This is additional to my ability to offer our trusty one-time promotional discount using our hidden pricing plans (i.e. $750/yr vs. $990/yr), should the situation ever call for it.

Provided I can fill ~4 hours per day worth of 30 minute demos, I should aim to conduct 6-8 demos per day, or 30-40 demos per week with qualified leads.

Considering 120-160 qualified demos per month…

So far, I’ve got an 87% closing rate on demos, which if slashed by 75% (considering outbound vs. inbound) should produce a customer about 20% of the time, or 1 in 5 demos.

At a 20% close rate, we should expect to earn 24 to 32 new customers per month from our outbound.

If we expect all closed customers to be on the cheaper end of the two annual plans ($490/yr vs. $990/yr) and that all sales are closed using the promotional plan ($390/yr vs. $490/yr), the low end qualified opportunity from this outbound channel at this scale is in the range of $390 * 24/32 customers = $9,360 to $12,480 ARR.

The higher end of the range implies closing all customers at the highest pricing tier, which would represent $990 * 24/32 = $23,760 to $31,680 ARR in mid-funnel opportunity.

I’d be more than happy to trade 4 hours per day to grow the product by an additional $9k-$31k ARR every month.

And it would be a strategy that we can reliably scale to other segments as we release new integrations.

Importantly, I may discover that demos are not necessary to drive conversion, or that similarly healthy numbers can be achieved with a greater top of the funnel (more leads) on a self-serve onboarding mechanism (instead of demos).

If my conversion rate on a message is 8% (instead of 20% on a demo), I could reach out to 3x more leads at the top of the funnel and reasonably expect similar results — without the additional costs implied by a demo or account executive hires.

Only time and data can tell.

Postcode Shipping

Despite the decrease in product momentum, it felt REALLY GOOD to be able to pull the same levers on both products at the same time.

Behavioural analytics

Since we needed to move Postcode away from Helpscout towards Crisp, it made sense to take a quick detour and implement Segment to the app for the first time, and to power Crisp through Segment.

That provides extensibility in case we want to start using other tools, without having to re-integrate the code. Now, the events can simply stream in to whatever part of the stack is needed.

Yearly plan

This feels obvious now, but Postcode only has a $20/mo plan right now. A lot of customers, new and existing, may prefer to save a little on cost by paying for a year (or two) up-front.

For that reason, we’re releasing a yearly and biyearly plan available at $200 every year and $349 every 2 years.

I’ll start with the yearly plan and measure the impact before introducing the second yearly variant.

This will likely drive a similar uptick in cashflow and retention as we have seen on Reconcilely. By experience, I’ve always expected annuals to uplift by about 10-11%, and that’s been the case for Reconcilely as well.

A 10% increase in cashflow at the moment would drive an additional $1,900 to $2,000 per month in collected revenue (from annuals).

Very much worth it!

Automated messaging campaigns via Crisp

With Crisp integrated, we’re going to kickoff a wide variety of messaging campaigns, both automated and otherwise, to drive onboarding installs, trial conversion, revenue expansion, app cross-selling and customer winbacks, among others.

Since we’re moving Reconcilely away from Intercom, I’ll also have to bite the bullet and set up everything there too, which is a good opportunity to start with a clean slate and try to leverage the updated value props of each product to effectively drive messaging and conversion in the right segments.

Growth plan: Add Free & $49 pricing tiers

With Zubair, my main goal is twofold:

1. Model the cost of a free plan and the expected conversion path from free to paid considering we already offer an unlimited trial option

2. Ship high demand features requested from larger stores to be able to introduce a new $49 plan including those game-changing features

Achieving both of those goals will require some upfront research, customer interviews and of course data (which now pipes through to Segment) to better understand how customers will react and are reacting to changes brought to the product.

As with Reconcilely, we’ll release stuff to production in stealth with an allow list of merchants we manually port users to as they request for features.

Once features are good to go, and we have enough of them to justify a new pricing plan, we’ll kickoff that phase.

Microangel DAO

I’m excited to say that momentum has exploded over the past few weeks. From new team members to building in public to sneak peeks of the Microangel NFT, things have really started coming together.

Twitter Spaces

Probably the best way to stay up to date with DAO related stuff is to keep in touch with the @microangeldao Twitter account.

In the past month, DAO hangouts moved out of the Discord and into Twitter as a way of perpetuating this culture of building and investing in public.

To that end, I would recommend you give the two Twitter Spaces a listen, as they contained curious and exciting conversations surrounding the DAO, some of which I will list below for you.

These Twitter Spaces run like a podcast, which is interesting because I considered putting the audio up on the newsletter directly. I think I may do that and see how that goes, so keep an eye on your inbox.

In no specific order, here’s a shortlist of activities and milestones the DAO community managed to achieve past month:

• Bucket Auction Segments & Value Props

• Bucket Auction Unit Economics

• Pro Forma Budget per $MM AUM

• New Team Members

• First Acquisition Parameters

• On-chain Governance Prototype

• Dealflow Kicked Off

• Powering the core team with FTEs vs. contractors vs. agencies

• Legal & Howey Test

• Long term DAO Fund Strategy (MicroAngel/Constellation Software)

• NFT Sneak Peek & Trait Strategy

Let me know if you’d like dedicated updates for the DAO, as the updates above are worth their own post!

It’s been awesome!

It’s clear that the interest and excitement isn’t specifically in the idea of an NFT, but in how a community is coming together to operate this type of organization, and the velocity we can reach when decentralizing decision making and value generation.

Here’s that sneak peek of the MicroAngel NFT concepts.

Which style do you prefer?

Lessons & Learnings

We are past learning, we are focused on doing.

I’m taking whatever mistakes I make in stride so as not to lose momentum with the other things that I do right.

With the focus on growth, nothing else matters in our decision making. There’s a ruthless objectivity to the types of things we ought to be doing, and delicious clarity with respect to how those things come together.

Though I wasn’t thrilled with product progress this month, everything else has been successful with meaningful progress across the board.

What can I improve?

It’s been awhile since I’ve openly asked for feedback to improve the newlsetter. I hope the new format of delivering one report per month hasn’t disappointed you too much.

There is an immense opportunity to communicate progress related to the DAO, but that’s not necessarily what you signed up for when this newsletter caught your eye.

I’d be curious to learn more about your own goals and what matters to you, so I can figure out if there’s a way to meet you halfway through this newsletter.

As always, thank you so much for following along. If you’re looking to get involved in any way, follow @eyaltoledano on Twitter to get in touch or join us in Discord to help us build the first decentralized PE fund.

Till next time!

I’ve just completed month 18 of 24 for Fund I, which means we’ve officially completed 75% of our journey to transform $500k into $1.5m, which we officially managed to accomplish last month.

Micro Angel

MicroAngel State of the Fund: June 2022

Good morning and evening to you, fellow microangels. We did it! Micro Angel is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber. As of today, we’re posting a 2.7x total multiple on invested capital from Fund 1, which was my goal launching this business model more than 17 months ago…

Read more

4 years ago · 6 likes · Eyal Toledano

The breakdown as of today goes something like this:

• capital invested 18 months ago: $573.5k

• cash returns collected over past 18 months: $328k

• current cash-on-cash rate: 4.7% per month, 56% per year

• minimum valuation: $1.277m

• total value against invested capital: $1.6m

• total multiple on invested capital: 2.8x

We’re fortunate to have 6 more months ahead of us to reap additional cash-on-cash and valuation growth before we expect to exit our investments.

Exciting news as the monthly cash-on-cash rate has been increasing as a result of our efforts. Cash on cash represents our monthly cash proceeds returned against our initial invested capital for fund I, which is $573.5k.

This is significant because our return is growing every month as we grow MRR.

That means we can get a general sense of our cashflow over the next 6 months provided the growth rate remains constant:

Based on that trend, we should be billing upwards of $200,000 over the next 6 months.

Were I to sell the whole portfolio today, there would be a $200k premium on top of the valuation to account for the cash-on-cash we’d give up from selling before fund maturity.

Since we’ve collected $328k in cash over the past 18 months, if we sell at the scheduled maturity date of February 2023, our total cash-on-cash proceeds should be somewhere in the $530k range, which is disturbingly close to our initial investment of $573.5k.

Thus, it might make sense to push maturity to April 2023, when we’ll have hit that exact number. From there, the exit proceeds would be pure profit, which is equal parts hysterical & magical.

Interestingly, we’ll bill 38% of our proceeds ($200k) over the last 25% of the experiment (6 months of 24). This represents the compounding force implied by increasing MRR over time.

You’ll make most of your cash-on-cash at the tail-end of your investment, so taking your time finding the right exit partner delivers more than one advantage in that regard.

Most of the energy over the past year and a half has gone towards one of the two products in my portfolio, Reconcilely, because its ceiling is theoretically higher, though the work required to extract it has been considerable so far.

Compared to last month, the share of portfolio revenues coming from Reconcilely has increased from 29% to 33% as a result of a successful experiment involving yearly pricing plans.

So we’re on the right path there, but also overall.

It’s especially special to be reporting solid growth during a month when I took off for a week.

Thanks to the amazing group of people supporting me, things continued to hum along while I was gone, and we’re back to building momentum now that I’m back.

100+ subscribers have already joined the MicroAngel Community. If you’d like, you’re more than welcome to join and participate in the Discord, where we chat microsaas, bootstrapping and web3.

Current fund lifecycle stage

✅ Buying (02/2021 - 05/2021) 
✅ Fixing (06/2021 - 08/2021)
✅ Improving (09/2021 - 12/2021)
→ Growing (01/2022 - 12/2022)
Roll up (1/2023)
Exit (2/2023 - 4/2023)

I’ve adjusted the remaining timeline to exit sometime in April, so we have enough remaining months (8) to fully recuperate our initial investment and give ourselves a pure profit exit.

Fund Activity

• Funds Deployed: $573.5k

• Products: Reconcile.ly, Postcode Shipping

• Closing MRR: $26.6k

• MRR Growth: 2.51%

• 30-day Revenue: $26.67k

• Rolling cash-on-cash return: $328k (+57% / +0.57x)

• 30-day ARR growth: $7.82k (2.51%)

• Cumulative valuation increase: +$703.35k

• Current Total ARR: $319,212

• Minimum valuation (4x): $1,276,848 (+122.64% / +2.22x)

• 18-Month Total Return (MOIC): +179.64% / 2.8x

Started off the month by welcoming Zubair Mohsin to the Microangel core team.

He’s our first dedicated hire for Postcode Shipping, which has languished for the past several months as we committed most of our energy into Reconcilely.

Zubair’s mission is to work with me to produce the new functionality required to introduce new pricing plans to Postcode Shipping which will effect a large increase in customer acquisition, revenue expansion and lifetime value.

On his first month, he’s dealt with a backlog of postcode shipping bugs, and we’re now preparing a roadmap of improvements to meaningfully impact MRR in the short term:

• introduce a limited capacity free plan to boost installs

• release a shipping demand analytics feature

• release a shipping rates multivariate testing feature

• release a shipping estimation widget feature

• wrap new advanced features into a $49 advanced tier

• kickoff cross-selling to and from Reconcilely

If we can manage those changes over the next 6 months, the Postcode Shipping runrate should rapidly accelerate and further increase our returns and/or exit multiple.

Thanks to this hire, Eric is now fully focused on Reconcilely, and I’m going to be jumping in between both products to increase value and runrate.

Our amazing support team still deals with both apps.

App Store Requirements

This month was expected to be mostly a write-off in terms of product momentum.

That’s due to the number of requirements we received from Shopify’ and Xero’s app store teams.

I’m happy that the Shopify requirements are mostly out of the way though.

We’re still waiting on some information from Xero, but things are headed in the right direction so we don’t shoot ourselves in the foot nor waste too many engineering hours in pursuit of keeping things afloat.

Support Platform Migration

For the past few months, our support team has communicated some significant distress as it relates to using the same workflow to manage support requests across different support platforms.

Specifically, weird workflow differences come into play when the customer reaching out for support expects a quick reply (on live chat) versus a useful reply (support ticket).

Furthermore, there is plenty of wasted energy and time implied by having to context-switch between one platform and the other, and work done to automate the support of one product doesn’t benefit the other product, which is kinda dumb.

At the moment, Reconcilely runs on Intercom and Postcode Shipping runs on Helpscout.

The issue I’ve had for some time is that Intercom is stupidly expensive.

Other than Crisp.chat, there isn’t any other product out there that offers Intercom-level functionality without costing several hundred dollars per month to operate.

I don’t love the idea of moving Postcode over to Intercom because that will create two undesirable results:

1. Customers who have become accustomed to support tickets will now receive live chat support when they don’t necessarily pay for it — it’s a mismatch in terms of customer expectations

2. It will result in a net positive increase in support costs since Intercom is far more expensive than Helpscout is.

Postcode Shipping’s helpdesk is actually standalone and powered by us directly, so there won’t be any migration required for that part of the support stack.

Similarly, we can’t quite move Reconcilely over to Helpscout because it doesn’t have a knowledge base feature as we need it and the Reconcilely userbase has become used to live support as a value-added feature.

The only alternative is to move both Reconcilely and Postcode Shipping to a completely different support platform, but that feels like a completely unjustified move that will backfire.

I don’t want to do anything that doesn’t add MRR, so this option is a non-starter that expands the scope of this migration beyond reasonable boundaries.

Thus, the only move that makes sense is to migrate Postcode away from Helpscout over to Intercom.

It’ll create a net increase in support costs for now, but at least it won’t result in wasted time, needless workflow changes or decreased support value for Reconcilely.

Pricing Increase Adventure

This has been such a fun experiment to plan, execute and measure.

Last month, I discovered that annual plans made up 57% of plan selections during my yearly plan experiment.

Based on the experiment, I estimated that cashflow could increase by as much as 40% as a result of the yearly revenues being selected month after month.

We ended the month with a 14% increase in cashflow, but that could have been 30% had we not messed up a small but critical part of yearly pricing for Shopify apps.

You see, Reconcilely has thus far been creating Shopify subscriptions on behalf of its customers using the REST endpoints of Shopify’s Billing API.

Those endpoints are slowly deprecating since the release of the GraphQL API endpoints some time ago, but they still work and to this day, we never saw the point of touching our billing code just because there was a new version of it.

To create a subscription, you basically have to send Shopify an object representing the details of the subscription — the name of it, the price, any extra charges, any trial details, the amount billed and importantly, the interval of the subscription.

Naturally, when we released the yearly plans, we set them up so the interval we sent out to Shopify (when a yearly plan is selected) would use the ANNUAL interval. This way, the amount of the subscription would be billed once a year, as expected.

Midway into the month, I checked into our Shopify dashboard to get a look at the proceeds received from merchants I had seen signing up to annual plans. I wanted to see if they had successfully converted from trial to paid, and whether we had successfully billed them the full yearly amount.

I was elated to find that multiple customers had signed up to the annual plans. But my heart sank when I noticed those customers were being billed on a monthly basis, which means the amount they had just paid was going to get billed again the next month, and every month thereafter.

When I saw per month, I audibly heard myself blurting out “That’s not fucking annual!”

I wasn’t happy.

This made no sense.

I had triple-checked the interval was set to annual. What the hell.

The problem here is that time is of the essence.

You have both customers already having been billed on what is evidently an erroneous plan and others who may be signing up to it right now.

The first reaction was an emergency production push to hide the annual pricing plans from the plan selection page.

That pissed me off because I knew just how powerful they had proven to be, but there was no way I would exacerbate the already annoying task of having to deal with the existing customers on the yearly pricing plans.

After hiding the yearly plans, I got in touch with Shopify to open an investigation.

They confirmed something was weird, but we quickly discovered the culprit, which frankly pissed me off even more.

It turns out the REST endpoints of the Shopify Billing API do not support annual plans. Full stop.

You can pass it an ANNUAL interval, and it will completely ignore it and use the default (every 30 days).

This is exactly what happened.

But wait!

The GraphQL API does seem to read the interval field, meaning you can only offer annual plans using the GraphQL API.

The fix, obviously, was to start using the GraphQL endpoint.

But of course, that had to come with its own set of nuances.

The GraphQL endpoints do indeed support annual plan intervals.

But guess what they don’t support? Overage fees.

Here we are, caught with our pants down, having to decide between yearly plans and overage fees we were planning on increasing and depending on to drive conversion and expansion.

Luckily, the math was very easy.

In the month, we earned upwards of $2,500 in additional cashflow from the yearly plan payments.

That means Reconcilely exceeded $10,000 per month in revenue for the first time, which is really exciting since we haven’t even increase prices yet.

By contrast, we earned $69 in overage fees in July.

Soooooooo…

In the end, we swallowed our pride and manually cancelled the subscription of each customer having signed up to a yearly plan and proceeded to refund their purchase accompanied by an email apologizing for the n00b move.

The hope is to get these folks back once we release annual plans again, but I’m not holding my breath for that to happen.

Lesson learned!

Overage Fees

In the meantime, we had to deal with a completely new and forced scope for the pricing adjustments since overage fees need to go away.

Overage fees have been pretty ineffective since the start because the cost of paying extra is still below the cost of upgrading to the next plan, so many customers don’t bother upgrading.

Of course, part of our pricing strategy was to rectify this by increasing overage fee amounts from $0.02 to $0.25 per order, such that the pain implied by going over plan limits would be significant enough to shepherd customers towards a plan upgrade.

Instead, not only did we lose that expansion dimension, but we also now have to adjust the user experience in the app for customers who run into and beyond plan limits.

Where previously, they’d simply continue getting value (in exchange for overage fees), we now had to decide whether we should even continue sending invoices for customers if they go above their plan.

The answer of course is no.

If there isn’t a way for us to bill customers for value provided beyond plan limits, the only solution is to force a plan upgrade.

What sucks on Shopify, when compared to Stripe, is that the merchant must specifically accept plan changes whereas Stripe enables you to programmatically move customers from one plan to the next.

Thus, when we announce the new pricing changes, we’ll also need to announce overage fees are gone — which should make most customers happy, but also force a few others to upgrade or look elsewhere for their reconciliation needs.

The problem is that we can’t push yearly plans without getting rid of overage fees (as they aren’t available in the GraphQL API), and we can’t get rid of overages without announcing that change to customers (since those over plan limits will cease to receive service until they upgrade).

This defines a catch-22 for us to solve — we need to release the yearly plans ASAP, but we can only do that after we announce the new pricing to customers.

The reason for this is we don’t want to do 2 pricing announcements.

I don’t want to announce ‘hey we are adding yearly plans and are removing overage fees’ to then announce ‘hey we’re increasing the price of plans’ just a few weeks later.

That’s amateur.

We need to limit ourselves to a single, effective pricing announcement that properly aligns customers and provides a way to get promotional pricing if they upgrade. It needs to make sense.

There is a massive amount of new value being held up from being pushed to production until the yearly pricing stuff is solved, so we need to change pricing and announce it soon while we complete the QA for all the pending PRs we want to push to production.

So the plan is to do one last pricing experiment in stealth.

I’ll proceed with the actual amount increases and benchmark plan selections to make sure conversions aren’t going to crater as a result of increasing the prices.

This is the ultimate test.

Provided numbers stay healthy, we’ll throw in the new prices into the large upcoming changes alongside the yearly plans and overage fee removals.

The last thing in the way of that is to make sure the app itself behaves properly in case you run into a plan limit, since right now all that happens is we start billing overage fees.

Since we’re removing overage fees, nothing will happen right now if someone goes over their plan limit.

Which is why I need to design user interface adjustments and paywalls where appropriate to properly call users to upgrade when they run into a limit.

Upon releasing the new pricing, we’ll announce that all customers are grandfathered — they can continue using Reconcilely as it has been before the release of all the new features going out of beta.

If they want access to those, they need to upgrade, and they can upgrade with a 20% lifetime discount if they do so within 3 days of the announcement.

We’ll also mention we got rid of the overage fees and offer all plans on a yearly basis for an additional 20% discount.

I’m looking forward to seeing the results of this change, which can have a dramatic impact on Reconcilely’s runrate which is turning red hot with the pricing changes, QBO release and new Xero collaborations.

Organic Demand

I’ve noticed SEO has been kicking off quick a bit, with lots of demand from crypto related queries.

Though much of the queries are educational, it does makes me wonder what the reality of crypto bookkeeping looks like for Shopify merchants.

It can define an interesting opportunity to simplify the process of reconciling crypto payments with accounting systems that don’t typically interact with the blockchain in any sort of manner.

We’re still quite low in the SERPs and there’s a metric-tonne of value packed away in the organic momentum.

With an average position of 36.6, there’s ways to go before organic leads start pouring into Reconcilely, but we’re headed there.

I have about 10 QBO-focused articles that I’ll be launching at once sometime this month to kickoff the capture of organic demand for Quickbooks related queries.

Quickbooks Launch sOoN

We stealth launched QBO to production and all that remains is to do some live QA and front end polish before submitting to the QBO App Store and doing a big marketing push.

Quickbooks launch is being held up by the pricing update, which we did want to push to production before releasing the QBO branch.

That way all these new installs would also provide the larger ARPUs we are after with the pricing update.

We also have a few pending requests from Shopify and Xero to deal with as well as some front-end logic to be ready for a QBO launch.

Everything’s coming up Millhouse!

Learnings & Adjustments

Mostly just full of gratitude for being able to spend time with family and enjoy an awesome work/life balance right now.

While my hands are certainly busy in the present, they’re looking into the future as I start seriously considering my next great adventure.

I don’t know yet if I’ll do this again full-time or just on the side, especially if that can be figured out.

I’d love to found something from scratch again, without any guilt as it relates to the opportunity cost it represents versus the microangel playbook of 3x’ing in 2 years — especially if I can do it again and again.

Been thinking a lot about how cash-on-cash rate growing opens up the door to compounding returns, which has been an interesting topic of conversation as the Microangel community prepares the Microangel DAO.

I haven’t done much work for the DAO itself this month, but I did spend a bunch of time interacting with web3 communities and building one of my own (for the Wizard Doodles) in the spirit of dogfooding.

I’ve learned an immeasurable amount as it relates to the how and why of different web3 communities and how our vision for a DAO might come together and succeed.

Community is incredibly powerful.

I discovered several market gaps and needs resulting from web3 crossing the chasm.

As technologies reach new levels of adoption, they change the status quo and the average adopter begins to run into the physical ceiling implied by the current generation of available technologies.

It’s a time to be building because folks want to be able to do things they could not do before, and the economic throughput implied by enabling those interactions is considerable and growing.

We’ve not yet solved the question of how to launch the DAO — which will be the main topic for our DAO Community Hangout on August 2nd (you’re welcome to join).

The main challenge is that the DAO should launch with a portfolio that enables the first auctions to offer tangible yield and not some future promise.

This assumes the DAO is making at least one acquisition prior to the public launch of the first auction, which itself implies fundraising and membership prior to launch.

The best idea so far has been to release a select number of tokens prior to launch and to sell them publicly to a KYC’d list of investors who would buy membership and fund the first acquisition.

The question becomes; if we’re going to execute a KYC’d initial token offering, should we just raise a year’s worth of funds right off the bat and do away with the daily auction?

It begs the question of what the MVP should be and how quickly we can get started investing and earning rather than infinitely trying to solve every bit and trying to launch a perfect product.

I’m looking forward to discussing this with you all and any feedback you have about today’s newsletter.

As always, I appreciate your support very much and would appreciate if you could share this newsletter with at least one connection who would be interested in microacquiring their way to financial freedom.

Until next time!

Thanks to MicroAcquire, Arni Westh, John Speed, Ariel Jalali & the many other silent sponsors.

→ Sponsor MicroAngel here ←

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We did it!

As of today, we’re posting a 2.7x total multiple on invested capital from Fund 1, which was my goal launching this business model more than 17 months ago, on this very newsletter.

The breakdown as of today goes something like this:

• capital invested 17 months ago: $573.5k

• cash returns collected over past 17 months: $301k

• current valuation at 4x: $1.245m

• total value against invested capital: $1.546m

• total multiple on invested capital: 2.7x 🎉

And the show goes on.

Because the run rate is currently in excess of $26k MRR, we’re now enjoying a monthly cash-on-cash rate of 4.5%, or approximately 54% per anum at the current run rate.

And… growing!

Provided we don’t sell for the next year, we’ll finish collecting all of our original investment over the next 9-10 months.

Absolutely wild!

Of course, that’s not necessarily the case. We’re starting to think seriously about closing at least one of our positions so we can swing all of our weight into the other before making a choice about the more distant future.

This month was once again replete with progress on all fronts, and I’m excited to share some of the results from last month’s pricing project that kicked off.

All in all, net positive merchant growth, we’re past the success threshold for Fund 1 and above all else, things mostly still feel like play.

Read on!

100+ subscribers have already joined the MicroAngel Community. If you’d like, you’re more than welcome to join and participate in the Discord, where we chat microsaas, bootstrapping and web3.

PS. This post is image-heavy and Substack complains about posts being too large for email. If the content cuts off for you, you may prefer reading directly from the site or Substack app.

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Current fund lifecycle stage

✅ Buying (02/2021 - 05/2021) 
✅ Fixing (06/2021 - 08/2021)
✅ Improving (09/2021 - 12/2021)
→ Growing (01/2022 - 08/2022)
Roll up (09/2022)
Exit (10/2022 - 12/2022)

Fund Activity

• Funds Deployed: $573.5k

• Products: Reconcile.ly, Postcode Shipping

• Closing MRR: $26k

• MRR Growth: 2.5%

• 30-day Revenue: $26.08k

• Rolling cash-on-cash return: $301.33k (+53% / +0.53x)

• 30-day ARR growth: $7.6k (2.5%)

• Cumulative valuation increase: +$672.05k

• Current Total ARR: $311,388

• Minimum valuation (4x): $1,245,552 (+117.18% / +2.17x)

• 17-Month Total Return (MOIC): +170.18% / 2.7x 🎉

Product

Reconcilely had an overall really good month, especially considering the progress made on the pricing front.

There was a moment of tension as some of the huge refactors that were made to accommodate our new QBO integration caused a few merchants to experience unacceptable outcomes with regards to the value the app is meant to deliver.

The high-level overview of why this happened is quite simple.

Reconcilely requires an active Xero connection to send orders over to Xero. Sometimes, the Xero API goes down so orders are delayed until it goes back up.

However, the Xero outage we experienced this month caused access tokens to expire on top of disconnections, which itself cascaded the problem.

If you choose to fully sever the Xero connection (to connect with another organization), Reconcilely deletes all of the mappings and settings associated with the Xero organization fully disconnecting.

Unfortunately, that happened for several of the newly onboarded merchants as their tokens expired, and their (newly configured) settings were completely removed. Big issue. Unacceptable.

We remedied this so it never happens again, but the fact is we needlessly sacrificed about a month’s worth of merchant growth due to this issue we hadn’t foreseen.

Quickbooks Online

On the bright side, lots of great progress on the QBO side.

We’re very close!

Eric completed the QBO integration, which was the result of some awesome work pulling pretty much every piece of functionality in our app up one level so we could create a generic AccountingSystem layer that would house and expose the QBO endpoints in a generic manner.

This approach enables us to offer the exact same app regardless of which accounting system is connected, and is absolutely key to rapidly increase the number of accounting systems we integrate with and support — itself a large contributor to increasing market share and run rate.

While Eric focused on this backend work required, I doubled-down on growth optimization by refactoring the Reconcilely onboarding from top to bottom and finally solving a critical issue that was preventing it from being a zero-friction experience.

Refactored Onboarding

Specifically, I discovered awhile ago that the main drop-off in the app onboarding happened at the most confusing point, where you’re supposed to assign general ledger accounts to different transaction types.

To a non-accountant, this page is literal rocket science.

By removing a few steps, I managed to get a bit more juice out of the onboarding, but that still fell short of solving the main issue in the flow.

Importantly, I found out that most of the drop-off happened with smaller-scale users. Which was logical considering they could be one-person shops with no direct accounting pedigree.

In the end, I swallowed the frog and approached the issue as the consumer I’d be were I to rely on Reconcilely for reconciliation.

Simply, I didn’t want to deal with any of it.

I’d want a button that lets me use recommended accounts and sensible defaults that will just work both on the app and within the scope of Xero’s features.

And I imagine the users dropping out of the flow feel the same way.

I created a short video for to communicate the change to my support team but it’s a good enough overview to share with you here too.

You can check out out the video for that here.

I also implemented a neat change at the top of the onboarding flow. Now you can choose to onboarding with sensible defaults as your settings (and skip all of the configuration), or you can go through advanced onboarding — which would still include sensible defaults — and override any settings to your heart’s content.

Lastly, there’s an assisted onboarding option which opens up a Calendly form to book a demo, where I’ll set things up with the customer on the call and make any upsell offers myself.

With these changes now in, I’m done with the onboarding — it’s in a great place and extensible vis-a-vis any new integrations we release.

I can now focus exclusively on growth experiments and new features as far as product work goes.

Pricing

Oh man. Oooooooh man. Oh man oh man oh man.

This went really well.

After the first two weeks of the experiment, I noticed we were seeing a nice take rate on the annual plans and the revenues they represented was showing we’d collect a 10% increase to cashflow.

Nice! That was my goal, so I got excited.

However, we had observed a small decrease in installs at the start of the month, and the second half of the month tends to be stronger, so I decided to let the experiment run uninterrupted for another 2 weeks to gather more data.

That’s the issue with playing with low volume — but I’m not going to complain. I’ll take a low number of customers with high ARPU and LTV over thousands of tiny customers sucking me and my support team dry.

The results are shocking.

For the better.

I added annual plans that are pre-selected at the plan selection and I expected a 10-11% take rate.

Instead…

Over 57% of plan selections were for annual payments!

That is earth-shatteringly good. This product has insane potential.

For reference, the value of an annual plan is 10 * monthly cost as we give two months free.

For a $9 plan, that means we’d collect $90 up-front rather than $9 twelve times over the year (assuming they stick around that long).

For our $38 plan, that would be $380. Which will soon be increased to $99/mo and $990/year.

The cashflow increase of the past 15 days looks something like this:

• 5 x $90 = $450 collected vs $45

• 9 x $170 = $1,530 collected vs $153

• 2 x $240 = $240 collected vs $24

• 3 x $380 = $1,140 collected vs $114

On a previous 2 week cohort, the 19 plan selections above would have produced $336 of new MRR, and thus of immediate cashflow.

We would then have to wait about a year to collect the annual run rate expected of that MRR, and of course there can be pickles causing customers to leave before the year is over.

In our case, the lifetime of a customer is a little over 18 months, so that doesn’t happen often.

Actually, that lifetime is the reason I chose annual plans because we’d be able to collect an additional 6 months of LTV from customers choosing annual plans as they’d pay for the year forward on their second year of subscription.

Instead, we’re going to book up to $3,360 of revenue next month from the annual payments clearing after the trial period, depending on trial conversion and any uninstalls inbetween.

At the current MRR levels, that represents up to a. 44% increase in monthly cashflows.

Why monthly? Because we get new customers every month.

And moving forward, it looks like 50%+ of customers will be choosing annual plans, which will drive up the subsequent month’s billings. Considerably.

And that will happen every month.

On top of it all, these are annual payments, which means one year from now, not only will we book up to $3,360 of revenues from that month’s annual plan selections, but we’ll also book another $3,360 from the customers having signed up this month.

That’s where things will get mega interesting for whoever is running the portfolio a year from now.

It’s a cashflow bonanza just waiting to happen and you can expect it will happen with great confidence because Reconcilely’s customer lifetime is 18 months, which means customers on the annual plans will pay the annual fee twice — and thus represent a 24 month lifetime, minimum.

It’s also an important illustration of the buying intent of Reconcilely’s customer.

Like me, our customer wants a solution they can set and forget, and they’d be more than happy to collect a 2 month discount on a service they know they’ll need year-round, and for many years ahead.

Hopefully this is as exciting to you as it is to me, because the cashflow increase means a lot of things for different microangels.

I could hire a developer if we wanted to improve product faster.

Or I could take advantage of the fact that my customer payback period will have radically shorted from the current ~6 months down to less than 3, allowing me to be far more aggressive on the customer acquisition front.

Moving forward, the next step is to adjust the overage fees and to increase them to the point where the cost of an additional plan would represent a cost savings against overage fees incurred.

Soon though.

I unfortunately have to deal with a few fires this upcoming month.

Shopify App Store Listing

Man, seriously, this is a bit much.

We’ve once again received a priority notice from Shopify asking us to adjust our app store listing. We’ve receive no less than 7 requirements, including changing our name from Reconcile.ly to Reconcilely.

I’m not quite sure how I feel about Shopify right now.

There isn’t much patience left in the tank for me. I just don’t have any appreciation for the kind of partner activities that go against a good Brand<>Developer relationship.

Between this app listing and Xero’s, we’re going to be spending most of next month dealing with things that don’t add any new value simply to keep us in the game.

Xero’s New App Store Listing

Folks at Xero got in touch with me to discuss the upcoming changes to the Xero Marketplace, the current iteration of their app store.

In fact, they specifically wanted to get in touch because the marketplace is evolving into a fully-fledged App Store, and things are going to be changing around there.

I must admit I was really surprised by the approach, and I gave them scathing feedback in return. Hopefully they can iterate and come back with something stronger really soon.

Since the changes are technically opt-in, it’s worth going through the pros and cons.

I say ‘technically’ because in my view, Xero partners are being strong-armed into signing the new App Store agreement.

The deadline for the change is August 4th, so it’s just a short month away.

We barely found out about this last month, so in total Xero has given approximately 60 days to make a decision and implement changes to stay operational.

Specifically, they’re going to be requesting a 15% revenue share from any leads they send to apps from their app store.

Worse, to enable this commission, it’s now required to bill customers referred by Xero through Xero integrated billing.

Which insinuates we need to implement an entirely new billing system side-by-side with Shopify’s billing.

That’s going to work just wonderfully, right?

Even worse, the consequence for opting out of the new agreement is basically suicide: partners who don’t agree to the new terms by August 4th will get severely API throttled, and no new API connections will be possible.

In other words, if we don’t sign this new agreement, Reconcilely won’t be able to sign on any new customers as of next month.

This was really not the right approach, and I let them have my unfiltered feedback.

I have some really good intentions to build a strong relationship with Xero, since the bulk of our efforts have been towards Shopify for the past long while.

I’ve already seen firsthand in previous projects both the stability and returns that can come to bear from a successful Xero relationship. I’m all for it — we deserve it, too.

Thing is, we barely get any leads from Xero, so this felt like a net-negative for us either way, unless Xero could help us create some traction from their marketplace.

I imagine there’s a direct line of sight to a staff pick and introduction to their sales team, which would be a massive win considering the bulk of our competition’s early traction came from these very channels, still untapped to Reconcilely.

In the end, this is likely going to be worth it in the long-run, and as I said, it’s not like we really have a choice anyway.

The danger of working in closed ecosystems like Shopify and Xero isn’t so much that they could kill you by putting you out of business.

If you are small, keeping up with the insane number of changes they introduce over time becomes a real problem with regards to building momentum and working on revenue generating deliverables.

Support Stack Migration

To better support our support team which we value very much, it’s time to make good on a long-time request of theirs to migrate the support for both products into a single stack, rather than Helpscout + Intercom as it is today.

They’ve expressed some significant operational distress from having to deal with both platforms, and I plan to immediately rectify this so they can run at their most efficient as soon as possible.

I haven’t yet made a decision as it relates to which platform I’ll use, but considering we spend like $500/mo between Helpscout and Intercom, I think I may end up going with something like Crisp, which bills $99/mo flat and offers both live chat and help desk functionality.

I know the support team needs a ticketing solution since Postcode Shipping users have become used to that (much better) workflow.

The only time I’d like to offer live chat is to premium customers who pay for that additional layer of real-time support.

In the end, my goals with the migration are to move both products to a support product that offers:

• Live chat

• Helpdesk

• Ticketing system

• Lifecycle Automation

If you have any recommendations, I’d appreciate them very much!

Quick DAO News

Preparations for the DAO are moving along well.

I now have clarity on legal structure and it's nice and kosher. There are no unknowns and we’ll be using a proven model already used by market leaders like Opensea.

I’ve also been carefully observing other models, such as the recent Doodles Bucket Auction, which allowed the Doodles team to raise nearly 12,000 ETH with just 23 ETH of gas spend.

Contrasting that smart contract with the Otherside Deeds mintwhich saw gas expenditures explode resulting in huge wasted capital to the tune of $180M.

The reason I’m interested by it is because the nature of the bucket auction is to (1) raise an unspecified amount of capital from a fixed supply of NFTs and (2) completely surrender the value of each sold token to market demand, without incurring wastage or loss of funds.

It could be an interesting means of raising, say, a year’s worth of acquisition funds from 365 individuals in a fixed supply situation. And those people would become the DAO members.

Haven’t really changed my mind with regards to the daily auction model since that provides so many advantages, but it’s important to educate and consider the bucket auction as a viable solution.

For now, our next steps are to start documenting how the product and smart contracts should specifically work, and to kickoff the formation of the founding team to begin building the DAO itself.

Learnings & Adjustments

It’s been a good month overall. I’m starting to feel a little tired, especially as I start to get more deliberate about the DAO and laying the foundation there.

It’s a lot of nights and weekends, and frankly I’m due for a vacation that I’m hoping to take sometime in July or August.

We’re reaching a real inflection point with Reconcilely between the launch of the new pricing, the QBO launch, and the prospect of increasing traction from Xero as well — all at once.

I’m really excited to start reaping the benefits of our efforts. It took a lot more to get here than I expected, and that’s likely a factor of having purchased the product rather than having built it from scratch.

There’s a slew of emotions that exist as a buyer than don’t exist as a builder, and that is the case for just about every other variable you interact with as a microangel trying to build value this way.

There is a huge feeling of gratitude for having managed to succeed with the plan so far, and I look forward to writing the final chapters of this first fund so I can really think about the future and all it will bring.

As usual, thank you so much for reading, and I look forward to your counter-thoughts!

Until next time.

Thanks to MicroAcquire, Arni Westh, John Speed, Ariel Jalali & the many other silent sponsors.

→ Sponsor MicroAngel here ←

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Thanks for checking into what is the 16th edition of the MicroAngel State of the Fund. Sixteen. Insane how fast time goes by.

So fast that two-thirds of the experiment is now complete.

And we can all agree the results at this juncture are phenomenal.

This was an interesting month for me personally because I lifted my foot off the accelerator for the first time in over a year to begin laying the groundwork for my next great adventure.

Since the start, the very design of this playbook has been to challenge the idea of committing thousands of dollars of your own savings to buy up a year’s worth of personal runway to then be spent chasing after product-market fit.

The most dangerous part of that plan is that going from 0 to 1 usually takes longer than the time your runway will buy:

• Find a market with a pain

• Build a prototype that solves that pain

• Go to market quick and scrappy

• Earn valuable feedback and turn it into an improved product

• Reach market/product fit, get to revenue

• Grow the run rate enough to cancel out personal burn

All that — in one year or less. However long your runway is, the odds of making it under those parameters are not great.

And the sad part is that this reality has nothing to do with your own talents or your ability to code/market a product.

Instead, the playbook aims to field the would-be runway to acquire cash flowing, high-margin SaaS products that you could feasibly operate mostly on your own.

The result of this plan is three-fold:

1. Provided your investment is strong enough, the cash-on-cash returns provided by your acquisition’s free cash flows could immediately cancel out your personal burn and buy-back time

2. In the time you hold onto your investment, and provided you’ve made good investments, it is likely you will observe stable growth which will result in a capital-gain later when you decide to sell.

3. You buy back most of your time along the way.

Thus, not only would you grow your runway (rather than burn it), but you’d buy-back your time and set yourself up for a liquidation event that will provide you additional proceeds to keep growing.

The time you get back from your free cashflows allows you to grow your own portfolio at your own pace or to reinvest that time elsewhere when it makes sense, provided the portfolio continues to tick along.

I fully benefited from that this month as I dove ever-deeper into the next iteration of the MicroAngel journey, and one which I’m so excited to be working on.

In the meantime, we’ve continued our heads-down product work to make progress towards important integrations that will have a dramatic impact on run-rate in the mid term.

Nearly 100 people have already joined the MicroAngel Community. If you’d like, you’re more than welcome to join and participate in the Discord, where we chat microsaas, bootstrapping and web3.

PS. This post is image-heavy and Substack complained about the post being too large for email. If the content cuts off for you, you may prefer reading directly from the site or Substack app.

Read Micro Angel in the Substack app

Available for iOS and Android

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Current fund lifecycle stage

✅ Buying (02/2021 - 05/2021) 
✅ Fixing (06/2021 - 08/2021)
✅ Improving (09/2021 - 12/2021)
→ Growing (01/2022 - 08/2022)
Roll up (09/2022)
Exit (10/2022 - 12/2022)

Fund Activity

• Funds Deployed: $573.5k

• Products: Reconcile.ly, Postcode Shipping

• Closing MRR: $25.32k

• MRR Growth: 0.74%

• 30-day Revenue: $25.42k

• Rolling cash-on-cash return: $275.32k (+48% / +0.48x)

• 30-day ARR growth: $2.23k (0.74%)

• Cumulative valuation increase: +$641.67k

• Current Total ARR: $303,792

• Fund valuation @ 4x: $1,215,168 (+111.89% / +2.12x)

• 16-Month Total Return (MOIC): +159.89% / 2.6x

Some exciting news here as we cross the 2.6x multiple threshold. At the current monthly yield (4%), we can expect to hit the fund goal of 2.7x by mid-September 2022, a full 6 months ahead of schedule.

Given that pace, I’m looking at a total multiple on invested capital of nearly 3x by February 2023, the target maturation date:

• 2.7x in 19 months with 6 months left (0.04x per month)

• 0.24x from remaining six months

• 2.7x + 0.24x = 2.94x total MOIC by end of month 24

We’re still not in a rush to sell the portfolio, and things are developing in a very interesting manner in that regard. We may not end up selling the portfolio to a PE fund but to ourselves.

If that sounds a little confusing, I understand, but it will all make sense soon.

My plan is to decentralize the fund moving forward and to power both fundraising as well as investing and operational decisions via a decentralized governance structure.

Under this new model, the Microangel DAO (decentralized autonomous organization) would live as a set of constitutional rules embodying the playbook, its intentions and the target parameters surrounding good investments per the playbook.

The sales earned by the DAO would flow through to its treasury, which would in turn be used to acquire cash flowing SaaS products, the free cashflows of which would be redistributed equally among participating DAO members.

Under that scope, MicroAngel could sell its portfolio to the DAO as its very first acquisition, and the funds for this acquisition would be raised through a token sale the participants of which will become the DAO’s founding membership.

It’s an early idea for launching the whole thing while closing the books on the current experiment while benefiting from the very attractive infrastructure and opportunity I’ve laid for future sellers.

In other words, I want to keep working on these products but under a different set of circumstances which in turn open the doors to the future for other microangels to join and co-invest.

Product

With a bunch of small features out of the way and a new UI in the app’s most critical sections, we’ve noticed some good feedback and comments from merchants using the UI and the engagement from new users is on the rise.

The changes I made to the onboarding last month also seem to be having the desired effect as we observed a +20% increase in onboarding completion.

Despite this, there’s a part of the onboarding that still introduces a lot of friction/work for the customer and it’s not ideal - there’s more juice to extract there for sure, and like everything else experiment-related, I’ll hack at it next I’m around that piece of code.

Importantly, growth is definitely back on track. There’s a mix of both increased demand from the app store as well as some success from the marketing channels I’ve built here and there.

A 5% month is definitely a good month. Especially when you can celebrate a milestone like surpassing 500 active merchants. 🎉

Pricing

The main thing that consumed me over the second half of the month has been researching, validating, designing and implementing a multi-step pricing project to accomplish several related goals.

Namely, pricing needed readjusting so it would:

1. Enable better cashflow + retention by selling yearly plans

2. Sell larger plans by communicating the new features they include and gating features from lesser plans

3. Introduce promotional and hidden tiers to be used for one-time offers to customers either in a failed onboarding or close-to churn scenario.
   These tiers would also be used with the existing customer base who would be offered a lifetime discount on the new pricing tiers

4. Execute stealth price increases across the monthly and yearly plans nice and slow while keeping an eye on conversion metrics related to that funnel. Keep increasing the numbers until the funnel conversion buckles.
   This does not impact new customers — only changing the pricing tables and thus newly installed users so the way they onboard can be benchmarked against previous flow

5. Finalize the new prices and make announcement to existing customers that prices will be changing at a certain date, and add a call to action for all existing users to claim a lifetime discount by switching to those new plans now rather than later (when the promotional pricing will be gone).

Research

The first order of business was to research the current customer behaviour and to establish a benchmark as it relates to:

• The number of visitors on the plan selection page

• The typical number of ‘plan selections’ against that number of visitors

• The typical breakdown of selections between all available plans to understand which plans tend to be chosen

By keeping an eye on how the number of plan selections change (from each phase above), I can form a holistic understanding of the high and low level impact of my changes:

First, does the overall selection conversion change? Has the change meaningfully impacted the number of users down-funnel?

Second, has the breakdown of plan selections changed?

Are customers choosing more expensive plans as a result of the changes?

Are they choosing plans with the features that we have released, only available in larger tiers?

Does the increase in more expensive plans more than make up for any losses in plan selection conversion?

In the end, what is the ideal scenario to optimize pricing relative to run rate?

Since I know how likely each install is to select a given plan (based on 12mo+ of data), I can get an idea of what will happen if, say... I double pricing but suffer a 20% decrease in conversion at the plan selection?

In that case I'd still manage to boost MRR run rate by +37% even if customer acquisition slows 20%

Cut customer growth by 20% but increase revenue growth by 37%.

Worth it.

I started playing around with different scenarios, the most important options being options that increase ARPU mostly through increases in prices to the larger plan customers who are currently paying too little for the value they receive.

I assigned conversion decreases ranging from 10% to 20% which I expect to ink in as I discover the thresholds and impact of my changes.

Importantly, having an Unlimited plan altogether is not ideal — you should be charging a concentrically larger amount to each larger customer with no real cap.

The thing is there comes a threshold where spending hundreds or thousands of dollars on this solution would be a non-starter, leading to the hire of developers or using competing solutions.

In that regard, it was clear there is an advantage to having a smaller plan as it represents a strong amount of demand for the product, but not at the cost of hurting the ARPU.

So the price increase would gradually be steeper for each plan. The result of this being a proper price anchoring mechanism.

Your SaaS prices should go up geometrically with each additional plan, not linearly.

This approach makes sense. A large store with thousands of orders per month won’t sneeze at $99/mo while a small ecommerce operation under 100 orders per month is far more price conscious.

Naturally, these changes can have a dramatic impact — hopefully good.

But I wanted to ensure that the roll-out would make sense and would have some natural continuity as it relates to the reason and justification for increasing prices.

I have several changes to make, so I’ll make them sequentially while keeping an eye on my metrics.

Pricing Roll-out

Running growth experiments is a matter of discipline and process.

You need to be conscientious regarding each detail you’re testing for and have both the means of implementing your test, quantifying the results and having a dedicated place to record results.

In the end, the purpose of this multi-stage roll-out is to reduce risk and to be able to extract the maximum amount of value from new installs using the new tools and features at our disposal.

I set up a dedicated page on Notion to govern the new pricing tiers, starting by taking inventory of all the new features we’ve released over the past few months.

In the page, I allocated them intelligently to different pricing plans so that the price anchoring mechanism would work and the new pricing plans would feel justified when compared to other plans.

In other words, I needed to communicate through the plans just how much additional value would be unlocked from upgrading to a bigger plan, additional to the number of monthly transactions and orders Reconcilely would process on a customer’s behalf.

I ended up realizing we had a lot of underused leverage.

It hadn’t clicked just how much value we’d created until I took the time to itemize each new feature and categorize them into their relevant plan.

Green rows are completely new features.

Yellow rows have been modified/adjusted.

White rows remain unchanged.

Purple rows represent hidden features unavailable to the public.

I made sure to stack each next plan with features that are highly relevant to the kind of business we’re targeting with that plan:

• Starter — small stores, starting out

• Standard — stores selling in single currency

• Pro — high SKU stores selling in several currencies

• Unlimited - high volume, high SKU international stores

The features in each plan speak specifically to those target personas who already use the app and told us what kind of features they want out of the platform.

The strongest anchor is on the Unlimited plan for obvious reasons.

To avoid overwhelm and to ensure we get clear data from each change we make, the multi-step roll-out for the pricing is going to go like this:

Phase 1: Introduce Yearly Plans

The first easy change we can make is simply to introduce a yearly plan to the page and to make that pricing plan the default selected option.

The benchmark for yearly plan selections is something like 10-11%, which would have a nice impact on the cashflows every month if 1 out of 10 signups paid up their expected entire LTV in one go.

This would not only positively influence the time it takes to payback the cost of a customer’s acquisition, but it would also set the table for increased retention and LTV moving forward provided customers are satisfied on a yearly basis.

By providing 2 months free to a product that is essentially set-and-forget, the odds we’ll see a net positive outcome out of introducing yearly plans are humongous.

Phase 2: Adjust Plan Overage Fees

For some time I’ve been mulling a shift from overage fees on a per-order basis to charging on a credit-basis.

The fact is that the overage fees in their current form completely fail to shepherd customers towards any plan upgrades because the cost difference the overage fees represent is a smaller delta than the cost of upgrading to another plan.

In other words, it’s cheap to go over plan than it is to upgrade.

If it costs $0.04 per order over limits of the $9 plan, then 100 orders would cost barely cost $4 for a total of $15 (the next plan is $17). If only 50 over, that would barely register $2 extra.

So not only do customers not upgrade, but the revenue generated from overage fees is completely useless.

This issue is easily visualized.

If these numbers were 10x higher, I might not mind since that would represent a meaningful share of our revenue. But they’re not.

The overages should be playing a crucial role in pushing revenue expansion but the impact it brings represents a drop in the bucket for both customers and the app, nullifying its purpose.

To solve this, I’m increasing the cost of overage and simplifying the process of charging those overages rather than billing cents at a time to kill two birds with one stone.

Moving forward, the overages will be billed $3, $4 or $5 at a time rather than $0.02-$0.04 per order. This will have an immediate on the impact of going over on both the customer and Reconcilely’s one-time revenues.

Next, we’re jacking up the cost of going over from $0.02-$0.04 per order to $0.15-$0.25 per order depending on the plan.

That will increase the impact of the total spend implied by going over versus upgrading.

Spitting pennies might not phase you. But quarters add up quickly.

Once we layer on the additional features we’ve released which will be gated behind larger plans, this effect will magnify further.

Phase 3: Populate New Features

Provided we are seeing stable conversion rates after the first two phases, things are looking pretty good and we can set the table for the final phase.

The best way to justify a pricing increase is to constantly create additional value for customers without asking for anything in return.

We release new and innovative functionality in a sort of stealth beta by maintaining a very basic allow list that determines whether an existing customer can access a given new feature.

This bootstrapped feature-flagging allows us to selectively invite merchants who ask for these features to try them in a closed beta.

That allows us to move quickly with respect to those customers’ feature requests (rather than bogging down in process trying to make it completely production ready) while reducing the surface area to the customer only should a beta feature go wrong.

Once we know the features work well and answer the use case properly, we can decide which feature to gate it behind, battle-test it, and then release it publicly.

My original idea was to have a single plan based on the merchant’s revenue size and to serve each of these features as a buffet of a-la-carte plugins you could pick and choose based on your use case.

But the migration from what we have today to that is quite a leap, one I’m not inclined to make at this juncture.

Perhaps once we launch QBO, there might be enough user volume to test the impact of such a change on a small but significant user sample without affecting the rest of the userbase.

Phase 4: Change Pricing Amounts

As long as our plan selection conversion and breakdown stay healthy (or improve) after the 3 phases, we’ll move to the final move which is to increase the plan prices to our prescribed numbers.

This is where stellar execution matters most:

The ideal change would be to change the pricing for all existing users.

Obviously, an 77% increase in MRR would be game-changing.1

We provide far more value today than we did a year ago, and if you want to keep that value, you’ll happily pay a more fair price to keep that value.

This reminds me of a demo I had this week with a new customer who called us a hidden gem and extremely underpriced — this was a Shopify Plus customer who said $99/mo was more than fair for the value offered. Perfect.

We can produce a pretty dramatic impact on the runrate by ensuring the pricing changes only affect new customers. And we can do that by grandfathering all the existing customers and changing our plans, which only new installs would see.

How you grandfather is really important so as not to tie your hands with regards to existing users.

They should eventually have a way to upgrade, especially to access features released after they were grandfathered.

And that’s the approach we’re going to use here.

The 500-some active merchants currently on the different feature plans will get to keep paying the price they currently pay — forever.

If you want to keep your current setup with the same features at the same price, forever, you can.

However, the features they have access to are only the features they’ve had access to until now.

If they want any of the features releasing under the new plans, they’ll need to upgrade to gain access. Otherwise, long-time loyal customers can continue to pay their current price in exchange for the exact same functionality.

To incentivize existing customers to upgrade, a time-limited promotional discount can be offered on all of the new pricing plans, the total price of which would still represent an increase over their current spend.

This is why we have promotional pricing plans.

Those remain hidden outside of the public pricing plans but can be used to populate a one-time offer for either existing customers upgrading away from grandfathered accounts or within the scope of another use case like support or downselling.

Thus, existing customers looking to upgrade will be able to do so while claiming a lifetime discount on the new plans.

The discount they can claim climbs based on the pricing plan, with the largest and most valuable plan offering the steepest discount, the type that can build just enough FOMO to cause an avalanche of revenue expansion.

Since we’ll have introduced yearly plans by then, large customers who already use Reconcilely in the long run might elect to lock in this price ahead of time, leading to a massive increase in both cashflow, run rate, retention and lifetime value.

Learnings & Adjustments

We’re just vibing this month, setting the table for the future while keeping our hands in the present.

I wouldn’t change anything for the world right now.

I’m in my zone of creativity and genius, am learning every day and meet smart and interesting folks every day who are both optimistic and deliberate about contributing to that future.

We are forever grateful that this direction is even possible. This entire thing could have been a bust from day one.

Instead, its potential is starting to become more and more obvious and the activities we complete help us progress ever closer to that.

With six months left to the journey, I’m really excited to see how fast things continue to evolve both here and for the DAO.

And I’m so glad to bring you along for the next ride!

Until next time.

Thanks to MicroAcquire, Arni Westh, John Speed, Henry Armistread, Ariel Jalali & the many other silent sponsors.

→ Sponsor MicroAngel here ←

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But you’ve also bared witness to the challenges that can forced upon unwitting investor-operators.

Despite those challenges, the value far outweighs the risk, and the inconvenience represented by the challenges of a microangel pale in comparison to the tumultuous journey of a bootstrapper.

We describe here the value and effort gap between the options of starting from scratch and buying instead of building.

The gap is greater still when introduced to the idea of simply buying MRR rather than buying products outright and operating them.

The gap sure exists but it would still be a lot of work to find the right products to buy MRR from, not to mention other mechanisms used for sending offers, receiving payments, and so on.

It’s a lot to manage manually so forget doing it at scale.

That’s why I started exploring how to productize MicroAngel in a way that wouldn’t require an investor to generate acquisition leads or operate products.

To introduce a new asset class that would open the MicroAngel model to the masses, eventually benefiting both bootstrappers and investors as they would participate in a new reality made possible by this new paradigm.

Micro Angel

Productizing MicroAngel Returns: Part One

For millions of entrepreneurs, first-timers, or otherwise, the biggest roadblock to playing the game is life, man. For an eighteen-year-old with infinite energy and no commitments, building a startup and eating ramen is an entirely viable option. An option that vanishes with time or repeated tries at success…

Read more

4 years ago · 5 likes · 2 comments · Eyal Toledano

I truly appreciate all of the initial feedback and reactions you’ve submitted. They’re in line with much of my own thinking, but some things did float up much more often than others, and that is the basis upon the continuation of my exploration today.

The Elephant in the Room

First, it’s important to address what happens if the product fails which I think is the elephant in the room given the feedback I got.

Number one: if it dies, it dies.

There's nothing that can realistically be done about that end result, but it's important to explain the context of the marketplace upon which such a result could be possible:

• it's a marketplace, so you discover products to invest in in listings and/or in the wild - think of a indie hacker twitter bio leading to a landing page showing open metrics about their MRR and product + CTA to buy MRR

• it's up to the investor to do their due diligence but the platform tries its best to surface things that help make up a decision

• it's up to the investor to make an offer on the MRR (i.e. i could offer 2x for $1k MRR -> $25k one-shot - they might accept), so they manage their risk relative to their offer

  It's like a cap rate on real estate -- the higher the multiple, the more (presumably) stable the MRR you are buying and the less likely it is to go to zero

• you're buying net revenue not expenses so the risk vs return is quite good

• you will presumably only buy MRR from products you strongly believe in but my vision is to be able to buy MRR from products I use.

  • Notion makes a lot of money. I wouldn't blink twice paying $50k for $1k MRR from them but the multiple might be higher.

Beyond some of those elements, I have learnings of my own from the past year:

• The number one basis from my thesis is to buy instead of start.

  • That means I buy something with PMF from day one.

  • It gets progressively more unlikely to die with PMF and a product that answers a strong pain supported by the right business model.

• I only bought products that fit a certain description and scored each potential lead on a 24-point scale which I then turned into a % score.

  • I only made offers to products with a score of 80% which, considering the things they would have at their disposal by virtue of that score, brings the likelihood of death to near zero

• I could take off for a month and not do anything whatsoever and my products would not only continue to function without my presence but their MRR would actually continue to grow.

  • There is very little i can do to kill the products to zero beyond Shopify kicking us out of the API on a random day. There are no other events that could ever lead to a direct death

• Let's say Shopify releases native functionality that does what one of my apps does. My churn might go up by 10% and I might even slowly start to bleed as I try to figure out what to do.

  • In that time, MRR holders might start to liquidate their positions, while other riskier investors might buy into the MRR at a discount

These are also platform events I have to prepare for:

• if product dies

• if product fails to make a payment

• if product is acquired

I think the game theory should always be set up so that the damage made to bad actors is always many times more to anyone they'd damage as a result of bad action.

So it naturally stops them from doing bad shit, but some natural churn (i.e. products failing) could definitely happen -- and as crazy as it sounds, I think that any investors would share the blame provided they'd invested in something without the legs to continue

Beyond the game theory, I think it's important to think about how to reduce micro risks for sure.

If a startup fails to make a payment, perhaps the platform guarantees the payment to investors but then claws back the product from the original founder as they'd fail a payment (as an example).

Then liquidate on MicroAcquire.

What if a product gets acquired?

So what?

What is actually being acquired?

If I have $10k MRR and I sold $9k MRR through this marketplace, I only really have a business doing $1k MRR so that's all I have to sell.

Buuuut I still have secondary sales rights over the $9k MRR I sold so were I to get acquired, I assume these rights would also get transferred.

So the buyer gets a $1k MRR business + the right to resale % off the $9k MRR in circulation.

A $12k ARR biz could probably sell for $50k right now (4x) but if you take into account the resale rights, the value in total might be higher.

But that's not all!

When a creator sells MRR in this model, they should have a right (as the original seller) to buy back the MRR at any point for a predefined multiple.

So if you buy $1k MRR from me for $50k (4.17x annualized revenue), I would have a perpetual right to buy back that MRR for, say, $60k (a 20% predetermined premium).

So any acquirer could realistically buyback all the MRR and cause another liquidity wave which would pay all existing investors + the original seller on the secondaries.

How does the value of each MRR chunk react relative to new revenue milestones by the product?

Does it even need to?

Would be cool but would carry some consequences.

I really like this MicroRoyalties concept. It has strong legs

But it contains so many dimensions. And that’s going to beget a long 0 to 1 period.

I ought to cut up that long journey into smaller chunks, and execute a simpler approach that will still act as source of insight to help validate/invalidate any of the core assumptions related to the MicroRoyalties concept.

An idea is just a seed — it’s important to let it evolve and change over time to align with implementation and market dynamics.

Where Web3 shines

To make the right decision, every opportunity needs to be given equal weight, as though it were your only option.

That forces you to make the most out of the option and to extract the maximum out of it.

The question of whether to use Web3 was directly tied to the eventual prototype I’d want to field.

If a core hypothesis I was making relied on behavioural or economical machinations present in Web3 communities, then the merit for building using Web3 technology goes up.

This reminds of Brian Balfour’s approach to growth.

A successful product manages to symbiotically merge 4 core concepts, one of which you are likely intimately aware of:

1. Market/Product Fit — the match between the product’s value proposition and a market whose pain is solved by the product

2. Model/Market Fit - the match between the market and the business model used to convert value into money

3. Model/Channel Fit - the match between the LTV enabled by the business model and the CAC required by acquisition channels where the market lives and can be accessed repeatably

4. Channel/Market Fit - the match between the eligible acquisition channels and where the market actually lives

In this case, I’m most concerned about channel/market fit. My market is comprised of early adopters who are looking to invest in financial tech that challenges the status quo they suffer from.

There are many of you on the newsletter who consume the content within it while cultivating aspirational goals as future microangels.

You may have convinced yourself that this model is only possible if you’ve got $500k+ to invest (it’s not btw), and part of why I want to figure out how to buy MRR in little chunks is to reduce the financial threshold from which one could participate.1

That’s OK, we all have demons to conquer and mountains to climb to materialize our dreams.

One of my dreams is to democratize the life MicroAngel has made possible to other likeminded individuals.

A sorts of medivac helicopter that can take you straight across the greatest mountains and to let you start playing the game with however many chips you wish, while having the depth to grow with demand into something greater than yourself.

Last time, I identified the main goals I had going into the challenge of figuring out how to properly productize MicroAngel.

Specifically, I want to maintain the same returns, but scale my investing.

I can’t scale my investing on my own without bringing on more people. When you do that, the thing you are inevitably changes.

I don’t necessarily want to manage a team or even operate products.

I want to buy MRR at a multiple that makes sense, but be able to liquidate my position anytime I want to some other investors.

Importantly, I want others to benefit from the same returns, but I recognize they could never provided what it took to get Fund 1 launched and executed to maturity.

Living in the future

There’s something special about trying to live in the future.

The missing pieces just come together because when things work well, they tend to be quite simple in retrospect.

And you can observe into the future through that lens.

Trying to imagine daily life interacting with something that doesn’t yet exist creates a set of boundaries for how or why or in what way that thing might exist and eventually behave.

For me, the first place my mind went was the MRR chunks.

I want to buy pieces of MRR.

And everything went from there.

The good thing is that the concept I ended up with is a generational leap forward as it relates to indie hacker financial independence, but it’s not something I can realistically materialize on my own.

Speaking with many of you and others in my network, I learned about some of the financial magic, legal boundaries and product nuances that will make this product both difficult and worth building.

Over the last week, I tried to walk back along the path of bread crumbs I had left for myself across this newsletter and personal notes.

And I came across the Web3 question again, except this time I gave it a chance rather than immediately striking it.

Were I to try building an MRR acquisition marketplace, web3 would not be the correct choice.

But if that’s not what I’m building — if that’s not the market I’m serving — then the question is worth revisiting.

And you know what, in giving it that second chance, I realized there is a less treacherous path to a first iteration of this project, the existence of which would lay the foundation for a logical evolution towards the MRR acquisition marketplace thereafter.

Unfortunately for some, the use of blockchain technology might either push or price them out.

I understand and recognize that risk, and I will do my best to mitigate it.

But the fact is that I can achieve all of the high level goals I want out of the second fund above without having to build the entire castle all at once.

Here’s the second possibility, and it’s not that farfetched.

MicroAngel DAO

Since the start of the concept, I've been mostly thinking about a solution that feels a bit like P2P pipe + mainstreet + stripe + baremetrics.

I see a marketplace allowing startups to raise non-dilutive, non-debt financing that allows investors to buy pieces of MRR for a set revenue multiple with many fintech mechanisms inbetween to power a secondary market, itself core to the design.

The challenge of course was trying as much as possible not to use any web3 technologies and to stick to existing infrastructure.

Stripe APIs.

Google Analytics.

ChartMogul.

But the challenge I have has to do with project scope, not technology.

There are a lot of design systems that would eventually have to interact together for the platform value proposition to come together.

Consider the following value dimensions:

1. Monthly MRR distribution vs. Operating a product

2. Indirectly support team vs. Actively managing staff

3. Acquiring chunks of MRR vs. Acquiring products outright

4. Introducing rolling raises for products without equity/debt vs. selling equity/adding debt

5. MRR buyback rights vs. Paying back loans

6. Secondary sales rights vs. Royalty contracts

7. Voting rights vs. Loss of Control

8. Access rights vs. Invest & hope

It's a lot of different things that come together, and I recognize it's too much.

The challenge is that a new asset class has to cover its bases across all of those dimensions, as can be seen in the early exploration above.

That includes protecting products / investors and the platform itself, and I don't want to waste months upon months trying to elucidate all of that when I could make a pretty good move that is concentrically related to the MRR acquisition marketplace.

So, what does that look like?

I'm exploring a MicroAngel decentralized autonhmous organization (DAO) built upon the same platform model as Compound Finance and the investment model or MicroAne.

It which would contain the following features:

• Decentralized governance allowing a group of investors (us) to co-invest in micro-acquisition projects together

• The purpose of the investments is identical to MicroAngel fund 1 → buy up MRR and perceive cash-on-cash for a period of time, and then some returned multiple on invested capital through a micro-exit several months later, at some target multiple

• DAO members share the monthly profits generated by the MicroSaaS portfolio held by the DAO

• A central treasury from which funds would be disbursed for acquisitions and any other proposal that passes in the DAO

• Increasing the value of the treasury through the sale of an access token with which to access and participate in the DAO

• The token sale is manifested by MicroAngel minting a single NFT per day (not a massive collection), every day, forever, and putting it up for auction to the public

• 95% of minting sales go to the treasury, 5% to team

• Holding an NFT provides a single vote in the DAO + pro rated MRR distribution

• Create an interface for any DAO member to observe portfolio, manage rewards and participate in proposals for new micro-acquisition + enable other members to vote, with quorum and time locks in the smart contract

• A secondary market will exist for DAO access tokens (NFTs) on OpenSea, allowing anyone to liquidate their position at any time, a feature that will test a core behaviour of the eventual MRR acquisition marketplace

• Enable existing investors to buy in (pretty much) as LPs but also allowing anyone else to participate.

• The vision is to eventually reduce the barrier of entry to the equivalent of 0.1 ETH (for example) via the future marketplace idea, but this model allows for good treasury value without having to involve several thousand investors

It's merging an LP fund into a DAO, and then utilizing the DAO itself to eventually fund proposals like the MRR acquisition marketplace concept, with the learnings established through this one.

What’s nice is that because it solves all of the high-level goals of the second fund, including continuing to perceive cash-on-cash returns every month, not operating products, being liquid, and so on, the bulk of the value this DAO can unlock is in the future.

In other words, what’s really valuable isn’t what it can immediately solve but rather what it can make possible in the future.

As several hundred investors command a treasury that continuously grows, new projects can be born out of proposals which could be executed upon as a community.

It doesn’t have to just be about acquisitions.

Someone could propose a MicroAngel product studio funded by the treasury.

And that proposal would probably pass, get funded and built with the support of hundreds of microangels and other funds.

A working example

The above value proposition is uniquely suited to the concept of a decentralized autonomous organization.

Remember when I said I had no interest in running a fund?

I wouldn’t have to.

I could participate in a fund, but all DAO members would fundamentally be participants without any one individual having to make decisions.

That’s the entire point.

Another critical reason why Web3 is actually the right channel.

I can only eat the cake and have it too through a trustless system that neither relies on me operating products nor decision making at the fund and portfolio level.

While the treasury might reward me for building the DAO (my new job), I would fundamentally be one of us, investing and voting alongside you.

That could raise questions about governance, and there be dragons there too, but far fewer I think.

It’s a more straightforward direction that has existing working examples, my favourite by far being the Nouns project.

Nouns.wtf

It’s a simple project executed to perfection, with micro- and macro-economic game theory that results in a closed-loop ecosystem which both survives and thrives without having to involve thousands of smaller investors, all while back-pocketing the long-term depth to scale to that size.

The core idea of the Noun project is pretty simple.

Pictured above is today’s auction for Noun 309 — implying that 308 Nouns have been minted until today over the past 308 days.

One noun is minted and auctioned per day, forever.

Every tenth noun goes to the team.

The current high bid for Noun 309 os 60 ETH, or approximately $125k.

Mind you, that’s the acquisition budget of many, many MicroAngels — both all-cash and debt-powered.

The auction for Noun 309 will end in 22 hours, 44 minutes and 6 seconds.

Provided there are no more bids by the end of the auction, Noun 309 will be transferred automatically to the current high bidder, poap.eth, who will automatically send 60 ETH to the treasury.

At the time of writing, the Nouns treasury holds 23,992 ETH, or approximately $48,135,415.

That’s a lot of money, you might think.

What in the world are these investors doing with that?

Why the hell would they buy JPEGs for $100k+?

I won’t convince you to buy an image of an ape.

This is not an entertainment concept. It is a utility concept.

Consider Noun 287:

Each NFT is an irrevocable member of the DAO and inherits a single vote that can be used to help pass, stop or abstain from proposals.

In this case, the owner of Noun 287 voted:

• FOR a live proposal intended to launch an apparel partnership between Nouns and Madhappy

• AGAINST a sponsorship proposal for a Rally championship

• FOR a passed and queued proposal to shoot a documentary

• and so on.

Anyone holding that NFT can participate and vote:

Anyone holding an access token can submit a proposal and make a case:

And it doesn’t need to be any more complicated than that.

Proposals could be used to:

• acquire new projects

• sell existing projects

• adjust profit ratios from existing projects

• reinvest a % of profits into marketing projects

• funding and spearheading cross-selling partnerships

• hiring for the projects

• hiring for the DAO

• funding community initiatives and tools

• and so on.

And the secondary market would exist by virtue of the ERC-721 tokens themselves.

The value of the DAO would grow with the number of its participants.

In this scope, I could realistically create a working prototype with a similar model, ensure it aligns with the goals of different potential investors across the MicroAngel newsletter and beyond, and get started from there.

I could fund the development and maintenance of the DAO through the treasury and creator royalties.

Will it be easier to build? Probably.

Is this going to alienate investors who don’t want to jump into Web3? Probably.

An OTC trading desk partnership can solve this. It has in the past. Reputable on- and off-ramps in-and-out of crypto have been solved for awhile now.

Is this an ideal use case for a Web3 platform, the likes of which could shift the perspectives of those investors? Probably.

Would the value of these NFTs be directly derived from the value they return every month and resilient to crypto volatility?

Definitely.

And that’s exciting.

It’s not vaporware.

I haven’t yet found any holes with this approach and as always, I’m open to your feedback.

What excites me about this is the prospect of bringing all of you along for the ride, for real this time.

Will of course share more as it comes together. But you’re now part of the story.

If you made it here, you’ve swallowed the red pill. Wake up!

Looking forward to hearing from you.

Til next time.

Thanks to MicroAcquire, Arni Westh, John Speed, Ariel Jalali & the many other silent sponsors.

→ Sponsor MicroAngel here ←

We’re closing the books on Month 15 of 24 which means we’re already through 60% of the project’s intended timeline.

Things have moved in the right direction this month, with the post-New Year demand slump flipping its head and producing some strong, continued growth for both Reconcilely and Postcode Shipping.

With the holidays in the middle, we gave ourselves a bit more flexibility to live life and welcome the first Summer months we could truly enjoy in at least 2 years.

I actually did some gardening last weekend!

The outdoors have an amazing impact on your body and mind, and that benefit seems to be multiplied when taking care of your own devices.

It helps you enjoy the moment and live it fully, which in the grand scheme of things, helps to realign your emotions and regulate your energies.

You’ve gotta take the time to live life to recognize what you’re fighting for. And the big contrast between working hard to materialize your life and actually living it acts as the fuel you need to maintain your professional momentum.

It’s not so much about taking a step back to take two more forward. It’s about stepping in and out of your zone of value creation so you benefit from the world you help materialize.

In that spirit, we enjoyed the holidays but also continued to lay the foundations for Reconcilely’s next stage of growth.

As the product surpasses $8k MRR, it’s now clear we have a direct line of sight to $10k MRR and over through a revision of our pricing strategy and mechanisms.

Meanwhile, both apps are experiencing positive merchant growth with new all-time highs for active merchants.

The systems I’ve built over the past few months are all starting to yield regular results and all in all, we are observing a continued strong pace vis-a-vis the expected vs. achieved growth rate for the portfolio.

In the midst of the lull in work, I’ve had the opportunity to start thinking through the future of MicroAngel both as a brand but also as a concept.

Micro Angel

Productizing MicroAngel Returns: Part One

For millions of entrepreneurs, first-timers, or otherwise, the biggest roadblock to playing the game is life, man. For an eighteen-year-old with infinite energy and no commitments, building a startup and eating ramen is an entirely viable option. An option that vanishes with time or repeated tries at success…

Read more

4 years ago · 1 like · 1 comment · Eyal Toledano

What this project means to me today is very different than what it represented a year ago, because now I’m interested to scale it beyond myself and to democratize the benefits I’m reaping to other entrepreneurs struggling to get out of the rat race and into full-time entrepreneurship.

On to this month’s progress.

PS. I opened up the MicroAngel discord last week to have a place for us to congregate on a more regular basis. If you’d like, you’re more than welcome to join and participate.

Current fund lifecycle stage

✅ Buying (02/2021 - 05/2021) 
✅ Fixing (06/2021 - 08/2021)
✅ Improving (09/2021 - 12/2021)
→ Growing (01/2022 - 08/2022)
Roll up (09/2022)
Exit (10/2022 - 12/2022)

Fund Activity

• Funds Deployed: $573.5k

• Products: Reconcile.ly, Postcode Shipping

• Closing MRR: $25.13k

• MRR Growth: 5.63%

• 30-day Revenue: $25.25k

• Rolling cash-on-cash return: $250k (+44% / +0.44x)

• 30-day ARR growth: $16.07k (5.63%)

• Cumulative valuation increase: +$632.74k

• Current Total ARR: $301,560

• Fund valuation @ 4x: $1,206,240 (+110.33% / +2.10x)

• 15-Month Total Return (MOIC): +154% / 2.54x

To my surprise, buyer interest in the products has significantly gone up this month, and I took the liberty of having those early conversations with quite a few funds who have varying levels of ambition and vision.

While I didn’t necessarily expect to start rolling up early, I have a financial responsibility to the project to produce my expected returns in as little time as I possibly can.

In other words, I am likely going to reach my goal by February 2023 provided the current run rate and return rates.

We’re headed there.

But if I could reap that return today rather than 8 months from now (by selling at the price I’d sell 8 months from now, today), I get a big advantage as I can reroute the proceeds earlier than planned.

I’m not focused on exiting right now.

I’ve still got so much to build.

I’m on the cusp of extracting the first big diamond that I’ve been digging for. It would be really bittersweet to move on from the projects right now.

But it also makes it an unbelievable opportunity for the next buyer. There are many levers now ready to be pulled from both product and growth perspectives. Things are in a good place.

Content Marketing

Since I’ve moved back to product, the content freelancers have continued to produce at a steady clip.

Organic clicks have grown nearly 40% since last month, despite the vast majority of the pages not ranking very high and having abysmal CTR from the SERPs.

Despite that, it’s deeply encouraging to see things starting to compound, especially within the scope of a limited addressable market vis-a-vis Shopify<>Xero.

It’s why we’re focused so intently on delivering integrations moving forward because they enable us to tap directly into organic traffic the volume of which is magnitudes larger than that of the current market we serve through Shopify and Xero.

I expect to continue doubling down on content and SEO on the Reconcilely side while laying the foundations for a programmatic SEO project on the Postcode Shipping side, notably to answer the repeatable queries for postcodes specific to a given neighbourhood or city.

Product

Big product focus this month as I rebuilt the onboarding and UI for one of the most critical parts of the Reconcilely app.

I pretty much shelved every marketing project so I could push things over the edge here as it deals with features customers have both asked for and which stand as dependencies in the process of introducing new sales channel and accounting destination integrations.

Since the app settings are exposed during onboarding, it was important to redesign and implement them in a way that would be naturally useful, whether in the context of a new customer or if searching for a specific type of functionality without having to reach out to support.

The previous iteration of the Settings page, like most of the UI across the app, was dreadful, lol

By prioritizing function over form, the Settings page ended up growing into an unruly and inconvenient size, causing a previously simple approach to turn into a mess of options that made it confusing to understand how they would fit and interact with each other.

It was a giant wall of on/off switches.

It’s a great idea if there are only a few toggles, but becomes completely overwhelming past a number of available options.

You can only get so far asking yes/no questions and in many ways, it sells short a lot of the functionality you create.

If there’s a feature toggle, it should be descriptive in the way it is implemented and communicative in the way it is designed.

This way, users of the product can better understand how each feature contributes to the overall value proposition while benefiting from a user interface that naturally defines what the features are and what they do for the customer.

To support a PLG approach, which prioritizes self-service and timely information as much as possible, I reorganized settings into sub-sections and created a new layout that would help surface helpful information given the setting being hovered:

For some time, the app’s interface has been locked into a direction that is incompatible with the idea of having multiple input/outputs.

In short, the UI was purpose-built for a Shopify <> Xero use case, and it’s time to refactor it so we can enable more use cases, such as pulling orders from channels other than Shopify or delivering invoices to accounting systems other than Xero.

As I redesign different parts of the app’s interface, I have to do so in such a way that those components can behave the same way regardless of which integration is currently active.

I designed a new settings page for the inventory management and COGS adjustments features we are soon rolling out.

This will be mostly used by merchants in the mid market who don’t want to use Shopify’s inventory management while also not being able to justify a complicated 3rd party tool to get things across.

It’ll help merchants understand how to take more control over the inventory management adjustments currently made by Xero.

The rest of the app still needs a lot of love, but as I did here, I will refactor as I go now that I’ve established a bit of a design language. The goal isn’t redesign so much as clean up + make it possible to handle other integrations.

We made good progress on the QBO side, having made some initial database adjustments, set up the authentication flow and got acquainted with some of the API methods we’ll use to wire everything together.

As we finish up the product’s most critical feature releases, which included actually new functionality, the roadmap is looking a lot more stacked on the partnerships and integrations side moving forward.

In short, we won’t necessarily create functionality to do new things as much as we will implement integrations to increase the addressable market that Reconcilely can serve.

Pricing

With the roadmap shifting towards revenue expansion, it will be time to make our first big pass on the pricing model.

I’ve got several thoughts as it relates to successful pricing increases, and I’ll introduce some of those here today.

For starters, pricing is one of the most fundamentally important things to get right in SaaS.

When I bought Reconcilely, it was clear that its strategy was to undercut the competition and to win a slice of the market through pricing.

Very quickly, we discovered that merchants don’t mind spending (far) more on their ecommerce accounting provided it is done well and without mistakes that would eat more energy and time.

There’s a reason our customers have a high ARPU. Back-office services are a must for every serious store, and the larger you grow, the more complex the job becomes, and the more important it is to get things right.

As I kicked off outreach, I ran into an early wall trying to sell to customers outside of Shopify, either due to not supporting their accounting platforms or sales channels, or simply due to features we lacked which made it a show-stopper for them.

Feature parity became of strategic importance so that critical marketing channels with a high affinity to our market could realistically be used.

It was the proverbial showing up with a knife to a gunfight.

Today, there’s a world of difference. We’ve achieved 99% feature parity, but we underserve the market. And the way to fix that is by increasing the places where the market lives, and that explains our product strategy right now.

Now that feature parity is non-issue and with big things on the way, increasing ARPU becomes possible by instrumenting changes to pricing that better align customers to the value delivered.

At its core, the current model tiers pricing based on a combination of feature locks and capacity limits.

There is no free plan — which is another issue entirely affecting customer acquisition — and small stores spend at least $9 per month to get basic functionality (for a small scale store likely only selling locally).

I don’t particularly love serving the SMB market because then you get feedback whiplash between them and the larger stores you want to ideally optimize for.

And that’s where the improvement juice is.

At the moment, Reconcilely enjoys a healthy ARPU around $18.50 per month, driven by the distribution of customers across the existing pricing plans.

My goals with the pricing updates are:

• Double ARPU from $20 to $40

• Simplify pricing through a sliding pricing scale based on the size of the customer (bespoke vs. catch-all pricing)

• Minimize pricing impact to SMB customers while mostly realigning pricing for larger customers who can afford it and/or who are underpaying relative the value they get

• Improve one-time revenue by refactoring overage charges in such a way that we stop nickel-and-diming

• Introduce yearly pricing options to increase cashflow and reduce payback period

• Lay the foundation for natural revenue expansion

To accomplish these goals, this is my strategy:

• First, the changes should mostly affect large stores. It makes no sense to be billing a store doing $1m/yr the same as another store doing $10m/yr because the order volume (and the amount of work we need to do) is vastly different.

• Similarly, I should make changes for small stores which would amount to a net benefit. Your pricing plan is more expensive but we give you a 1 year discount to bring it to the same amount.

• Since the amount of pain felt by our customers increases linearly with the amount of orders that need reconciling, I’m going to have a single plan to represent each range of orders and make that the only price to consider.

• I’ll increase the value & conversion rate of this lone plan by making it fully featured rather than having different features in different tiers

• Read 90 day sales data upon install and determine the price of the plan based on the average number of monthly orders

• Allow users to buy access to the lone pricing plan on a yearly basis for 2 months free in savings for a tool that is historically set-and-forget

• Stop charging $0.03 - $0.05 per order over plan limits and instead introduce a flat $5 credit top-up (good for 100 credits/orders) that will be automatically billed if the user goes over-plan. This reduces the number of transactions/nickel-and-diming while increases the one-time revenue ceiling slightly

• No grandfathering. Sort of. Everyone’s pricing plan is increasing, so the idea will be to make a large pricing increase while simultaneously applying large lifetime discounts to existing customers such that the end result is that they’ll pay just a bit more while feeling like they’re getting a really great deal. New customers would pay full price.

There’s a lot of baking to do.

I’m liable to shelve one or two of the above elements for fear of introducing too many new moving parts at a time.

However, when something is well designed and built, it often feels indistinguishable from magic, regardless of how complex the backend systems enabling the magic might be.

These changes are intended first and foremost for new customers installing Reconcilely, though they are designed in such a way that MRR will also grow through existing customers.

If done right, there won’t be any angry people, our revenue will immediately lift by 20%-50% and we’ll see ARPU growth moving forward as new MRR from new installs take a growing share of the total collected MRR.

Agency Partnerships

Typically, agency partnerships have a connotation of salesmanship.

A good tech partner will enable an agency to sell a new service (using the software) which will create additional value for clients. They don’t care much about things like revenue share because that’s not their core of business.

The same holds true for more traditional firms which still fit the agency model. In the case of Reconcilely, that’s accounting firms.

I made a change last month that increased my exposure to accounting firms looking to potentially use Reconcilely to service their ecommerce clients.

On an app store listing, Shopify apps can define a demo store which presumably demonstrates how the app works and how it will look in your store.

Since Reconcilely is a backend tool that doesn’t interact with the store, there is no demo per se.

So I decided to populate that button with a Calendly link to a demo and up demos went. To my surprise, 3 of the 5 demo requests I received from the app store were accountants.

This unexpected bizdev opportunity ended up creating some solid leads, one of which is confirmed to be moving 10 clients over to Reconcilely at an average ARPU of $38

That call took me just 20 minutes. I ought to pull on this lever.

One 20 minute call → 10 new customers → +$4,200 ARR

The Danger of Enterprise

During the month, we received an RFP from a really big brand operating several Shopify stores and processing as many as 40,000 orders per day.

We have many large customers at Reconcilely, but I don’t think any of them do 1.2m orders per month.

The DevOps and infrastructural consequences of working with this customer would be pretty devastating, though we could realistically add over $5k in new MRR while creating an entirely new revenue line for Reconcilely focused on serving the mid-market and the enterprise (even in a headless format or through an API).

I love the idea of doing that but it would spell doom for our momentum. It’s something I’m pretty much convinced will work though, and it’s the type of play to focus on after executing against the integration roadmap which will increase the addressable market by a lot.

Either way, we’re collecting some data for now since we know these types of brands move a little slower. Upon first glance, it looks like we won’t need to touch our product — they want the exact thing we deliver, but at a scale we’ve never done before.

So provided we can realistically figure out how to scale our infrastructure to handle that kind of load all day every day on top of our existing load, I don’t see why we wouldn’t do this — and then proceed to immediately build a sales team considering the ACV these types of deals would represent.

I’d appreciate your perspective on this!

Open Subscription Investigation

I’m still mid-investigation with Shopify regarding missing MRR since February.

If you’ll recall, I experienced a dip in MRR across February (which I imagined was due to the way billing worked on Shopify).

I expected the delta of the dip to appear in March, but it didn’t. Active merchant growth is net positive month on month with no changes to churn and our internal dashboard shows we’re touching $8,200 MRR for Reconcilely despite only seeing 30 day subscription earnings of $7,410.

Something is sus.

Learnings & Adjustments

Jumping back and forth between product and growth is currently a pretty good hustle and flow. I’m able to keep pushing product forward while maintaining a pulse on the needs of the customer and how that should translate into the product or our growth systems.

I’m very excited to get close to the carrot we’ve been working for, which is QBO and a supposed doubling of our run rate if all things come together.

And I’m equally excited by a deserved raise from our customers as we introduce new pricing that will represent a win-win-win for all parties involved.

Because I’m ambitious, I often get discouraged by lack or speed of progress on in a given month, but the zoomed out picture quickly reminds me that things are continuing to head in the planned direction.

It’s useless to try making your project into something it’s not. It’s a much easier time making the best out of the project so as to elicit the most possible potential out of whatever iteration you have.

I’m looking forward to the next chapters in front of us, and I’m biding my time, maintaining my speed and staying the course on this awesome journey.

My vision is to make this 2 year journey possible for any entrepreneur without the need to necessarily operate any products. I want access to outsized cash-on-cash returns without having to commit my time to execute.

I may be on to something there, don’t forget to share your thoughts when you have a minute.

Micro Angel

Productizing MicroAngel Returns: Part One

For millions of entrepreneurs, first-timers, or otherwise, the biggest roadblock to playing the game is life, man. For an eighteen-year-old with infinite energy and no commitments, building a startup and eating ramen is an entirely viable option. An option that vanishes with time or repeated tries at success…

Read more

4 years ago · 1 like · 1 comment · Eyal Toledano

Catch you again real soon!

Thanks to MicroAcquire, Arni Westh, John Speed, Henry Armistread, Ariel Jalali & the many other silent sponsors.

→ Sponsor MicroAngel here ←

For an eighteen-year-old with infinite energy and no commitments, building a startup and eating ramen is an entirely viable option.

An option that vanishes with time or repeated tries at success.

For some, the progress of life creates an inescapable need to put points on the board in the short term.

To prioritize survival over freedom.

This often leads to consulting and freelance as a way of making ends meet or, worse, a full-time job and a blood contract involving months, probably years, of nights and weekends to scrape forward toward salvation.

One segment beyond are the individuals choosing to pool whatever leftover resources they have as they endure the painful dread of their realities, to finance an eventual prison break out of the hamster wheel and towards the indie hacker dream of a bootstrapped company.

A fraction of the population jumps that ship every day, typically aiming to use whatever savings they’ve collected over the years to finance the runway needed to make it or die trying.

I could never overstate just how amazing that experience is, just as I can no longer sugarcoat the unfortunate failure rate of such a plan.

How I wish it would work for more people.

But starting something, anything, from zero is kicking off a new game hard-locked on Super Hard Mode.

You can win. And I hope you win.

But the numbers say you probably won’t.

Despite that, the bootstrapper journey continues to gain steam.

Of course, the reasons to choose to bootstrap over venture capital are varied:

• your startup idea might not be venture compatible and/or you may not be seeking venture-compatible returns

• you may not have the storytelling skills or the traction required for a pre-seed or seed investment

• you may not have the ability to connect with angels or VCs who identify with your vision and plan

• you may not be inclined to raise funds before reaching PMF but recognize the catch-22 that lacking resources could lengthen the path to PMF or completely jeopardize it

• you may not want to sell any of your company at all!

• you may not be willing to take shortcuts relative to your vision

• and so on.

Until sometime last year, these two options — that of bootstrapping or raising angel or VC funds — were the only legitimate ways into the game.

You either do it yourself or raise money to build a team on day 1.

M&A has been around for centuries, but the work implied in buying or selling has made this option a non-starter for microSaaS startups and a large number of entrepreneurs trying to materialize their first big win.

Until MicroAcquire.

The two-way liquidity provided by that marketplace and others made way for an experiment I started which proposed a third doorway into entrepreneurship via M&A.

There’s nothing new about M&A as much as there is something fundamentally disruptive in the ability to find, acquire and sell small software products without any middlemen.

If you keep your eyes open, you’ll notice that every new channel creates new startup opportunities. Because new platforms create a shift in the status quo, a gap emerges between the previous status quo and the new reality made possible by the platform.

In our case, my theory was that instead of investing some funds into runway designed to provide the time needed to build a product and reach market/product-fit, I could instead use a shortcut.

By buying products, I’d have revenue on day 1 and I could chart my returns right away. I wouldn’t need to raise funds because the types of products I’d acquire were not compatible with venture capital anyways. These were not moonshots. They were cash cows.

It became a much clearer path to creating value than by hoping.

Today, I know this model works. I know the theory proved true.

There is an incredible amount of value and clarity made possible by this approach because it removes the historical risks and pains implied by the other two entrepreneurship options.

And that is the basis upon which my exploration here begins:

It works.

And just about anyone can do this with a similar degree of success.

So what now?

What’s the best way to develop the potential of this model beyond selfish reasons (i.e. enriching myself)?

How can I make the result available without involving the operational requirement in the middle?

Fork in the road

After my first acquisition, I recognized that the model was working right away, but it was important to see it working for at least a year before I could truly plant my flag and support my claim.

As things moved forward, I didn’t pay much attention to the future, though I did what I could to position myself for it to be clearer.

I’ve learned how to make the most out of the advantage I have on hand, so I thought it silly to chart out a path beyond Fund I while I was working hard to try to figure out how to make the most out of that very fund.

I learned several valuable lessons, including the truth that running a microSaaS, regardless of size, is no simple task for ambitious individuals with passion and vision.

It can be a torturous experience to have the knowledge and skills required to increase the value of a given thing while having the wisdom to recognize the diminishing returns that would ensue from that activity.

Startups are a story of decision making and by and large, you can get away with making mistakes pretty much all the time save for a few critical decisions.

In my experience so far, the mistake gap is larger if you’ve managed to acquire at a reasonable multiple.

You can afford to make more mistakes — and collect more optionality as a consequence — if your success isn’t critically dependent on every subsequent decision you have to make.

I discovered how much more weight each of my punches would carry if I could focus on a single product.

But I also made several good calls.

Segmenting the journey, from buying to learning to fixing to growing, was crucial in maintaining my ability to see the forest for the trees while maintaining focus on the things I was trying to accomplish in any given month.

It would be incredibly easy to get overwhelmed otherwise considering the sheer number of activities that one could do.

I discovered these nuances as Fund I matured, and today I wonder if they’d scare me as an investor had I known about them on day one.

There was certainly some consideration about these likely challenges, but as an operator, these felt like obvious obstacles.

I had to reconcile these risks together.

I wonder if a more purist microangel (standing away from ops as much as possible) would be turned off by the operational requirements I’ve learned exist as it relates to microSaaS microacquisitions.

The reason I ruminate over these thoughts is that I’m faced with the choice of what to do for the second fund.

Realistically, this fork in the road has a few possible destinations:

1. Reinvest proceeds from Fund 1 into Fund 2, stay independent, and aim to double-up again. 

   
   Maintain this pace for the foreseeable future and grow the team responsibly over time. Potentially use some debt.

   
   The point of this is to grow our operating capital and cash flow over time by compounding our proceeds.

2. Pocket the proceeds from Fund 1 while investing a percentage of them into Fund 2, which would be a primarily LP fund. 

   
   Raise $5M to fun the first LP fund over the next two years, to repeat the same model at a slightly larger scale. Potentially bring on a third operating partner.

   
   This is interesting considering the amount of LP interest I’ve had + VC funds waking up to the advantage of having 3-4 investments per fund return 3x+ pretty quickly and with a way higher success rate and a shorter return horizon.

These are the two main directions I’ve been thinking about for the past year. But as I start thinking about the future and our Fund 1 roll-up for an exit, I recognize an important truth:

As an investor, I want to maintain the same rate of return without necessarily having to operate products.

Similarly, as an operator, I’m limited by the number of products I can operate and can realistically only scale through more people. It’s rare to find a product that runs itself post-acquisition because most people acquire products with a clear idea of what to do with the product after it is purchased.

So in reality, I’d like to find a way to maintain the same returns and the resulting quality of life that these returns enable while reducing the need (or requirement) for me to operate anything.

That’d be pretty great of course, and a big improvement on the model. Who wouldn’t want to produce 2x+ in 12 months without having to do much?

That’s certainly straying from the beaten path.

But I’m getting a similar feeling as I did when I started the experiment. This is the way towards true freedom.

What I’ve discovered is fundamentally a huge leap forward for other entrepreneurs like myself.

But I think there’s a version of this that represents the full potential of this new asset class we are giving birth to.

Productizing MicroAngel Returns

If I could wave a magic wand, here’s how I envision MicroAngel evolving:

First, the buying phase would evolve.

I don’t want to spend 6 months to find products to buy. I want to buy into products I use every day, but that’s not possible unless the folks building those products let me buy equity.

So the first problem is to help evolve the buying part.

While I recognize the many advantages made possible by acquiring a product outright, the end goal I’m running after (the returns without the work) doesn’t necessarily require acquiring products outright.

What we’re acquiring is MRR, first and foremost.

And that’s the buying journey that’s missing. I want to buy MRR and call it a day. But that’s only going to be possible if folks who work hard to build that MRR have an interest to sell the right to that MRR to me (instead of pocketing it).

The people who are willing to sell that MRR might be inclined to do so on the basis that I might be willing to pay a 4x return on their annualized MRR.

If folks are willing to sell 100% of their products for a 4x multiple on their annual recurring revenue, does it start to reason that they would also accept a 4x multiple for, say, 5% of their MRR?

If you make $20K MRR and I want to buy $1,000 MRR from you, would you be willing to give up that revenue for the foreseeable future for, say, $50k?

I’m not talking about selling equity. I’m effectively talking about selling the rights to revenue. Buying into a revenue share with a few differences:

• The ownership of the MRR you buy is represented by an asset that can be transferred back to the original seller or some other investor (at presumably higher valuations)

• The original seller of the MRR benefits from any secondary sales if it gets sold to someone other than them

• The original seller has a means of clawing back MRR at a set valuation that both the seller and buyer agree to at the beginning

• The value of the MRR grows over time as the product grows in maturity

So imagine I bought $1k MRR for $50k. So a 4.17x annualized multiple. Four beautiful years later, you’ve collected $48k in MRR as a result of holding on to the asset.

You turn around and sell the $1k MRR for 3x-4x annualized revenue to some other investor for a sum ranging from $35k to $50k, bringing your total return range to $83k - $98k, a 1.6x - 2x return over your initial $50k investment.

Now, is 2x in 4 years good? Yeah, not bad actually.

Sure, 2x in 2 years is better.

But if you can get 2x in 4 years without having to do anything, you may be inclined to choose that option instead.

The question then becomes what do you buy?

And my answer to that question is your friends’ stuff.

Following the logic that you want to invest in your smart friends and whatever it is they are doing, be it as an angel or otherwise, I would certainly see myself buying MRR of products I use and/or of products that friends have built.

And the reason I’d do that is because they’ve been building in public for years already. This has exposed me to what amazing businesses they are building and has fed my interest to participate in whatever capacity I can.

Rather than being relegated to a position of indirect (cheerleading) support, both my friends and I could benefit from me buying into their MRR:

• They’d get a solid chunk of change they could use to make a meaningful investment without having to pay back a loan and/or sell any equity

• They’d effectively earn a teammate/supporter/customer in me as we’d have a vested interest to see continued growth

  • investors want more growth to attract new buyers, who will purchase MRR at higher multiples than previous investors, providing liquidity in the right ranges

  • operators want more growth for obvious reasons, but this model also enables several windfalls per year without ever giving control beyond revenue sharing.

• I’d get access to MRR without having to operate the products, while actually being a customer of the products and thus understanding their potential for future growth and stability

• Both of us would benefit from me eventually exiting my position, either in the form of my friend being able to buy back the MRR at an advantaged valuation or in the form of me selling my position to a third party and my friend benefiting from that secondary sale.

Indeed, with something like this, someone could exit over time by selling off chunks of MRR either until none is available to sell. But there’s a lot of baking to do in the game theory implied by such a marketplace.

The way we acquire needs to be rethought, but not by reinventing the wheel.

Folks already openly share their metrics and revenue, but the information is often shared as a token of vanity more so than as a means of quantifying progress or valuing the sale of MRR chunks.

You probably have an idea of where I’m headed with this.

I’ve been a blockchain enthusiast for several years, both as an investor and as a builder, but I continue to resist implicating that technology unless it can be core to the experience.

So far, I haven’t found anything that cannot be done unless it is powered by blockchain. Sure, asset classes like the one I’m describing would benefit hugely from the same societal-economical playground that currently powers the NFT world.

But it would be an inevitable alienation of the type of person whom I think would benefit the most from this. Tech bros would certainly be able to adopt a web3 version of this marketplace, but I’m not convinced it is a requirement more than a nice-to-have.

In this scope, I’m seeing something that makes better use of the ‘build in public’ concept by empowering builders to efficiently quantify the value of their product, and their progress, and to expose tools to acquire portions of MRR in exchange for a healthy upfront multiple.

An NFT is interesting as a mechanism because it would allow the seller to package up MRR within a single NFT, and to limit the total number of NFTs in such a way that their value will continually rise as a consequence of being a limited resource representing a larger and large total amount, very similar to a non-inflationary currency which would see its value grow as money supply grows.

It sure feels like an appropriate use case for web3, especially within the context of a decentralized asset class that can be used to power independent fundraising for bootstrappers at a rhythm that is more compatible with the present and future plans.

I’m interested to hear from you what your thoughts are, both from the perspective of someone building and selling MRR, to the investment opportunity of microangel returns without having to operate any products thru to web3 as the potential delivery channel.

There’s still a lot of baking to do, but I feel I’m onto something special considering the research has been done over the past year and more, as the world continues to shift towards bootstrapping, building in public, web3 and community.

Exciting stuff!

Until next time!

There are no large headlines this month as two-thirds of it was written off due to COVID making it into my household.

I spent the better part of the month wearing PPE to avoid catching it from some family members while simultaneously taking care of other family members.

I’m glad we’re out of that miserable stretch of time.

I’m also glad the type of businesses I’m operating and the systems I’ve put in place worked very well without any direct involvement during difficult times.

The true value of the microangel approach is the luxury of switching between holding and growing based upon the unique circumstances made possible by the realities of your life.

As I look back at the origin of this story, and the frustrations foreshadowing the genesis of the fund, I know I chose to experiment with a new entrepreneurial approach to solve a very clear 0 to 1 problem.

But today I also recognize the context within which my journey started. The deeper Why behind a buy or hold strategy.

With a young child and another on the way, entrepreneurs tend to choose a bridge-job to provide the financial and risk stability needed while raising a family (and enjoy the process).

There’s no doubt in my mind that the primary non-financial advantage I’ve enjoyed, unbeknownst to me at the start of this journey, is the ability to actually focus on family without sacrificing career momentum.

I get to stay close, very close to the game, play at a pace that fits the ever-changing context of a household raising young children, while creating enough upside and compounding momentum to give myself a better set of tools to succeed than I’d have after a cold-start.

There are so many things you can tackle or may need to solve. If your goal is avoid that which is strong and strike that which is weak, then you may be faced with personal challenges that impede your ability to succeed as a microangel.

Just as you should have an initial nest egg to make a first acquisition, your own state of mind should be compatible with the journey upon which you are embarking.

I saw my momentum take a huge hit when my first child was born so I figured the impact would be multiplied with two or three in tow. And it made sense to shift my career into a mode that allows me to go as fast or as slow as life commands it.

Despite a tepid month on the ops side, I did get started strong by doubling own on what has been working and beginning a gradual reintegration into product.

My work was suddenly interrupted by the virus on the second week of the month and we’ve been quarantined ever since.

This is the state of the fund, and not the State of the Mind, so let’s jump into some of the results, discoveries and progress items for the month.

Current fund lifecycle stage

✅ Buying (02/2021 - 05/2021) 
✅ Fixing (06/2021 - 08/2021)
✅ Improving (09/2021 - 12/2021)
→ Growing (01/2022 - 08/2022)
Roll up (09/2022)
Exit (10/2022 - 12/2022)

Fund Activity

• Funds Deployed: $573.5k

• Products: Reconcile.ly, Postcode Shipping

• Closing MRR: $23.8k

• MRR Growth: —0.02%

• 30-day Revenue: $23.85k

• Rolling cash-on-cash return: $224k (+39% / +0.39x)

• 30-day ARR growth: -$0.06k (-0.02%)

• Cumulative valuation increase: +$568.47k (+99%)

• Current Total ARR: $286,200

• Fund valuation @ 4x: $1,141,968 (+113.4% / +2.13x)

• 14-Month Total Return (MOIC): +138% / 2.38x

A weird revenue gap

For the past 30 or so days, I’ve been trying to solve a confusing gap in between our internal MRR dashboard for Reconcilely and billed revenue at the Shopify payout level.

In March, we received the payouts for the app revenue as usual. But I noticed a steep decrease that was unjustified vis-a-vis the churn rate and installation velocity of the month prior.

Couldn’t explain it, and it smelled fishy.

I know that, regrettably, Shopify payouts are paid out on a 30-day rolling basis. That means that, inevitably, when the special month of February comes around, it breaks the alignment of the date ranges and makes reconciliation (pun intended) a nightmare.

So I had initially chalked up the gap in revenue to the weird month of February. I say weird because I was seeing a -10% gap.

Not nothing.

Realistically, each day I should be collecting 3%-5% of the month’s MRR. So to see a -10% gap for 2-3 days of action seemed to make sense, and I forgot about it.

When I looked at the numbers this month, I was surprised MRR had only gone up by about $250, which is about the norm.

Over the month, I noticed a clear acceleration in installs, deceleration of uninstalls and about $250 in new MRR signed across the month (through the internal dashboard).

Our active merchant total increased, and despite some of those installs still being on their trial, there was very little churn.

March has been an up month. So I accounted for that $250 growth.

But where the hell was the revenue from February?

This caused some concern because nothing had actually happened for a solid chunk of the MRR to suddenly evaporate.

I immediately kicked off an internal investigation to quantify what’s going on, and sure enough, something’s amiss.

We know that the list of customers listed as active in our database is clean in that they have not uninstalled and have an active charge on file that hasn’t been cancelled.

I decided to export our payment history from Shopify for the month of March and to export a list of unique merchants we had billed on that month to cross-check against my list of active merchants on the database.

We found a discrepancy of nearly 50 merchants who have an active subscription, have never uninstalled, are still using our product and consuming support and are not being billed.

You can imagine the frustration I experienced when I discovered this. Some merchants on that list even have open support tickets with us right now.

When I check for those merchants on the Shopify merchant dashboard, it’s missing months of activity. Some merchants haven’t been billed in over two years.

At this point, it looks like Reconcilely missed out on several thousand in revenue over the years and we never caught that.

At least that’s my first impression.

Naturally, I have an investigation open with Shopify about this. A critical part of the Shopify/Partner agreement is the trust the partner is placing on Shopify as it relates to properly billing customers.

Here’s hoping Shopify’s investigation will find some answers and help resolve this confusion, and the possible issue attached, so developers don’t have to go through this.

I’m not gonna lie, this is happening just a month after Postcode Shipping getting improperly unlisted by Shopify for more than 24 hours.

The blunders seem to be multiplying lately, but I empathize with the folks on the other end who contend with realities of the own that I don’t have a full picture of.

All I can do is continue to investigate and react as it happens.

Content production

The first numbers came out to help gauge whether the content strategy was going to pay some dividends moving forward.

The channel is showing some promise as it relates to the early efforts we’ve put into building an inbound marketing machine for Reconcilely.

Search impressions are up, though clicks haven’t necessarily followed.

I haven’t been too concerned about clicks or conversions yet. For now my goal has been to quantify the top of the funnel, which is appearing in results for search queries that qualified leads are making.

I can worry later on about properly converting those leads.

Just a week into the month, I started scouting some SEO talents on Upwork to take ownership of the discipline for us moving forward and execute against a clear optimization plan for existing and future pieces to be published.

At this point, there’s a clear path to organic growth for Reconcilely. And we’ve just scratched the surface considering the feature set currently made available by the product.

The SEO opportunity is multiplied by several orders of magnitude for every new integration made available by the product.

Any future buyer will have several triggers to pull and provided consistent investments are made to maintain the velocity of content production, they can expect strong results to continue compounding far into the future.

All in, we added another 8 articles in March, with 13 more in progress and another 10 on the way. Velocity is strong and the process adequate.

There’s now a case study section to act as ungated content upgrades across the blog:

There’s now a repeatable process for turning happy customers into middle and bottom of the funnel content that will surely convert visitors looking for our solution into new installs and customers.

Job mostly done here and across the different top of funnel elements that have a high propensity to work at this stage of the product, based on the resources it has available and the ARPUs it can derive.

The goal is to get as many of these systems to a validated state which can be further amplified with a dedicated resource (i.e. in this case, a head of SEO who could realistically become a head of growth).

App Integrations

We shipped our first app integration with the Shopify Product Bundles app.

Customers of the Bundles app were asking for an easy way to help Xero recognize the Bundles the app helps them create and sell.

Before the integration, customers were noticing that Xero would try to adjust inventory for the bundle’s SKU rather than the SKUs of the products contained within the bundle.

Bundles customers using or choosing Reconcilely for their Shopify accounting can now strike another manual part of the process they never have to think about again.

Both apps now link to each other from inside the respective apps, which has so far resulted in a few more installs for Reconcilely which justifies increasing our energy spend towards additional integrations of this kind.

Outbound Sales

Last month, I kicked off an outbound sales value prop so I could hire VAs to perform high-touch lead generation across social media.

Unfortunately, while this item was on my to-do list this month, I didn’t get to execute against it.

Since I’ve already spent the energy to validate the approach and the playbook, it’s just a question of hiring, training and iterating before I can scale the team a little bit and try to put points up on the board.

Joint Marketing Ventures

On the heel of last month’s decision to explore co-marketing as a primary channel, I met with a few people working in the Shopify ecosystem’s podcast and live event space to better understand what makes a successful event.

Much of what I discovered validated the approach that myself and three other Shopify developers have chosen to take for our first venture.

Though we don’t yet have a timeline for this, the general idea is to create a level of control over customer acquisition that sits outside of Shopify’s perimeter and which could realistically be scaled with more advertising spend.

Originally, the plan was to produce a series of webinars, each focused on a subsequent app developer’s specialty, but after some initial brainstorms among the partners, we decided to come up with something different and fairly unique.

TLDR:

• Theme focused on merchants nearing or having bought Shopify or Shopify Advanced plan (not targeting new merchants or merchants out of Shopify)

• Enabling listeners to transition from startup to growth phase (intentional growth and systems vs. just starting out)

• No nonsense messaging, straight to the point tactics you can use and implement out of the gate after having upgraded to Advanced, or to justify doing so

• Introduce our content by agreeing / being empathetic about the ‘bitterness’ of having to pay more for apps (rather than functionality being baked into Shopify at one total cost), and address this issue up-front by plainly showing what is being forfeited by not using apps

• To save ourselves a lot of production energy, we're not going to do anything visual (i.e. webinar). It will be podcast episodes. This can be expanded to video of hosts + screen sharing rather than visual collateral down the line.

• The initial cohort of app developers will commit to 1 'season' of podcast episodes, which will be 10-12 episodes of about 10-15 minutes of pure gold each.

• One concept/tool per episode which starts at the top of the purchase lifecycle, ie:

  • avoid losing money on shipping (earliest in cycle, shipping rates)

  • efficiently using email (mid funnel, transactional/post purchase)

  • visualizing + understanding profitability (end of cycle, reporting is after the sale)

Distribution is clear:

• We email our customers about each episode

• We split the ad campaign costs 4 ways (or more, based on number of partners)

• We share audience pixels so our ads are targeted at our visitors, make sure to adjust privacy policies first

• We share the leads across all apps but give ourselves a clear timeline of which week in the month we should be emailing those customers so they don't get overwhelmed with emails form partners after each episode

• Posting in Slack communities

Hopefully the playbook’s useful to you — and don’t hesitate to get in touch if you’d like to collaborate on something similar together using this approach.

I’ve a half-mind to productize this process to be honest.

Learnings and adjustments

It was a weird, difficult month to be operating software products, but I’m thankful for their fortitude and for continually providing the leeway I need to deal with the curveballs life throws.

I don’t mind sideways action at all because the model is built to return cashflows every month up to a very respectable crescendo.

Eric and I have been mulling some lessons related to focus — not necessarily on the decisions we’ve made on any one product, but the decision itself of working on multiple products at once.

It’s not that it’s a bad idea as much as it is clear how much more one can accomplish by focusing all of their might into a single target — and what might have happened had we only bought a single product, or worse, more than two.

For that reason, I don’t know if I feel as strongly about operating multiple products as I did prior.

Don’t get me wrong, I don’t regret my moves. But our lives could be even simpler than it is now without that additional risk.

Because if you stumble on execution, or are dealt an unlucky hand on the technical front, there will be very little wiggle wrong to accomplish the plethora of activities you know you want to while maintaining course on a ship you are initially so unfamiliar with.

Not to mention that I have had very little appetite or energy to do any side stuff outside of the portfolio, which is a direct consequence of working on multiple things at once — though I recognize that much of the opportunity is made possible by that very fact.

Bootstrapping is an underdog’s story from the get-go and we’d do ourselves a favor to focus our energies on a single product next time we do this.

It’s an idea that I’m thinking about surprisingly early, and it’s making me wonder — considering the top line success of this fund — if we shouldn’t take our chips off the table, ink in our win, and reassign proceeds towards the single product we know we should be working on.

After all, what’s the point of discoveries and learnings if you don’t take action against them?

Food for thought, and I’m open to yours.

Talk soon!

Eyal

Thanks to MicroAcquire, Arni Westh, John Speed, Henry Armistread & the many other silent sponsors. → Sponsor MicroAngel ←

As I welcomed Eric Eidelberg to the team several months ago, I made the choice to incorporate MicroAngel to create a cap table that would reward my partners and align their goals with mine.

While incorporating was certainly necessary for being able to sell equity to new partners, it did complicate things quite a bit for me as an owner-operator who preferred to keep things stupid simple in the back-office.

One of the main advantages of incorporating a Canadian company is the R&D claims we’ll be able to make to the federal government. As mentioned previously, there are several recycling mechanisms that exist to extend or literally perpetuate your runway.

In more ways than one, it became clear that I could triple-dip between the valuation increases, cash-on-cash returns, and any government funding that we might be able to tack on to the equation, thereby likely extending our ability to recycle nearly every dollar spent on the project, greatly increasing total returns.

In that scope, I’ve been trying to understand how much of the work we do is even eligible for this kind of government funding.

The advantage it represents is so serious that the result of our claims might justify pivoting some of the operations of the company — and betting even more on R&D rather than marketing — as a means of increasing valuation, earning cash-on-cash returns and making the most out of the available government funds at our disposal.

Scientific Research and Experimental Development tax credits can only be claimed if the company has payroll — and the percentage of the payroll that can be claimed is in direct correlation to how much of the work was R&D versus anything else.

This also assumes payroll needs to be running. You lose much of the advantage if you operate using contractors — which I do — so the goal is to maximize payroll within Canada to make the most out of a mechanism that could realistically return 70% of our payroll costs.

With those grants and tax credits on the horizon, I’ve started scouting an additional engineer to add to the team, with the express purpose of adding firepower to the Reconcilely roadmap and graduating Eric out of it and full-time into Postcode Shipping.

Naturally, the bulk of my attention went towards growth as I was excited to follow-up on the creation of new systems that will drive new installs and customer acquisition.

Here’s how I visualized my progress last end of month:

This month, I put most of my efforts towards activating content marketing, search optimization and paid media.

Those efforts were made possible by the launch of a new website built on Webflow, the purpose of which was to modernize the Reconcilely brand, create a more performant website for lead generation, and open the door to content marketing through the launch of an ecommerce accounting blog.

Current fund lifecycle stage

✅ Buying (02/2021 - 05/2021) 
✅ Fixing (06/2021 - 08/2021)
✅ Improving (09/2021 - 12/2021)
→ Growing (01/2022 - 08/2022)
Roll up (09/2022)
Exit (10/2022 - 12/2022)

Fund Activity

• Funds Deployed: $573.5k

• Products: Reconcile.ly, Postcode Shipping

• Closing MRR: $25.5k

• MRR Growth: 0.5%

• 30-day Revenue: $25.66k

• Rolling cash-on-cash return: $202k (+35% / +0.35x)

• 30-day ARR growth: $1.51k (0.5%)

• Cumulative valuation increase: +$650.54k (+102%)

• Current Total ARR: $306,012

• Fund valuation @ 4x: $1,224,048 (+113.4% / +2.13x)

• 12-Month Total Return (MOIC): +148% / 2.48x

Activity overview in no particular order:

• bunch of admin tasks like setting up payroll

• established SR&ED process and relationships

• sourced a new teammate to help with engineering

• created a content production process and released 8 new articles to the new reconcilely blog

• soft launched the new reconcilely website

• built an outbound sales offer, hiring funnel and SOP

• kicked off joint webinar projects with other devs

• scouted a wide variety of podcasts to test with

• preparing an onboarding refactor due to same-day uninstalls

• working on a first technology integrations with a bundling app

• prepared groundwork for Quickbooks integrations

Despite a very busy month on the creative side, lots of energy was spent on infrastructure for big new integrations we’re excited to be working on, as they will have a direct impact on installs and MRR.

As Eric focuses on removing any roadblocks ahead of those new integrations, I made great headway on the marketing side.

Content production

To power our new blog, I created a new content production process and, with the help of contractors, released 8 new articles to the blog targeting a variety of long tail keywords relevant to Reconcilely’s organic strategy.

Within the current arrangement and at our current pace, I estimate we could probably produce as much as 40,000 words per month. The goal for now is to reach customers that would benefit from our existing product value proposition.

As we increase integrations, it will be clear what type of content we should produce and publish to meet customers halfway as they search for our solution.

The content production process can be summed up as follows:

1. Conduct research on keyword strategy

2. Silo themes together and arrange large groups of similar keywords into those silos

3. Determine the initial list of focus keywords and the potential traffic they represent

4. Create content briefs that will product content that will answer the search query for each of the keywords on our initial list

5. Utilize AI-powered content platforms like Frase.io to create initial article outlines relative to search queries

6. Produce first draft

7. Source and add images to text as made relevant

8. Define a title, description and URL slug for the article based on the target keyword

9. Finalize the content and produce a feature image using Canva

10. Put it all together and publish the article via Webflow CMS

To house the new blog, Reconcilely saw a new website and brand go live as part of the campaign.

With an updated centralized location for the top of the funnel and mechanisms to turn new visitors into newsletter subscribers, installs and/or Reconcilely customers, I turned to create an additional acquisition channel that looks and smells a lot like affiliate marketing.

Outbound Sales & Affiliate

This feels like the Achilles heel of so many indie hackers. Outbound is seen as a devilish activity that will return very little for too much input.

In a world where inbound marketing and product-led growth, one might wonder what the purpose of outbound is and what role it could ever play vis-a-vis other more elegant means of acquiring users.

The number one purpose of outbound lead generation is to build a process by which an existing list of prospects can be turned into new customers.

This is very difficult to do on an inbound or PLG basis since you already know who you are going after and want to pitch your solution up-front so you can immediately put points up on the board.

Consider the Australian Shopify market, which is comprised of roughly 100k active stores of all sizes. That’s not a lot, but it’s not small either.

Provided a list of those 100k stores, there’s a clear outreach path whereby the list can produce a decent number of new customers.

The simple reason that’s true is because of those 100k stores, a percentage — never mind how small — will be looking for your solution right now and if you aren’t in front of them at that moment, the opportunity will be lost to a Google search.

In short, it’s important to respect the context in which outbound works, but also what the upper ceiling of performance will be, and the consequence of burning through 100k stores and not having any other means of acquiring customers is of course severe.

One of the main things blocking the use of outbound sales is the cost implied in that process. You need people talking to people in a high-touch format, and that assumes a much higher cost of acquisition than, say, self-service SaaS driven through ads.

The fact is you need individuals that you pay to be talking to other individuals to elicit a conversion rate out of that process which historically has been pretty shit.

For this to even be possible for a product like Reconcilely — which offers ARPUs of ~$20 and LTV of ~$350 — the cost of those individuals needs to be really low.

Finally, a use for those VA outbound messages on LinkedIn.

I decided to come up with an offer that would make hiring those VA types not only possible, but advantageous vis-a-vis the kind of income they’re used to and the kind of offer I could make them.

I created a presentation that I would use to shoot a video sales letter, which in turn would be hosted on a page I could send prospective VAs to.

This would make it possible for me to source new VAs from existing Facebook groups where folks are looking for sales jobs as well as direct anyone from elsewhere to the video so they can better understand the opportunity.

The goal is to circumvent the outbound sales limitations by leveraging an economic reality (low cost workers) which would itself take advantage of my offer.

This is a seriously good offer for individuals in parts of the world who already bet on virtual assistance as a means of making ends meet. And it’s a win-win for both our company and them.

My goal at this point is to validate the manual process I’ll require of the VAs and to use that validation time as a way of training new hires to quickly ramp up and start driving installs.

Of course, I need to be very deliberate about that and be careful not to raise an army of spammers — which of course is the opposite of what I’m after.

Instead of spamming, the goal is to leverage low-cost labor as a means of checking under every rock, and having the ability to chat 1:1 with real merchant prospects who would happily use Reconcilely to solve their ecommerce accounting were they introduced to it at the right place and time.

I’m using a similar value proposition for powering my affiliate offer, which considering an existing audience of merchants could well turn into a valuable source of commissions:

Joint Marketing Ventures

Beyond all that can be done on your own, something else I’ve been meaning to explore is joint marketing collaborations with other app developers.

Sure, marketing collabs are the basis of many partnerships, but what I’m after is some systemic advantage that could be acquired by working with others that I otherwise could never acquire on my own.

Let me explain:

Part of why marketing channels like Facebook Ads are losing value is because acquisition costs are rapidly skyrocketing.

It’s real-time bidding on a very finite number of people whom are interacting less and less with ads. It’s inevitable.

The number of people trying to reach Audience ABC on Facebook is rising, and the likelihood anyone in Audience ABC will interact with ads is rapidly falling. Thus, costs are increasing.

While this may fully disqualify Facebook as a channel for some app developers, it teeters on the edge for others.

It’s not profitable, but it kinda could be. It’s not enough to invest in, but clearly represents some potential if a few things could be figured out — namely cost per click and or cost per lead.

In considering different ways to reduce CPL, I’ve been meaning to use joint ventures as a way to reduce those costs.

Imagine I spend $2,400 on, say, Facebook Ads, to drive webinar attendees for a Shopify-focused program intended to show merchants how they can save money on shipping costs (for example).

The goal is to drive new customer acquisition for Postcode Shipping in this particular example.

The breakdown might look something like this:

• $2,400 spend on a warm list of non customers (ie. retargeting)

• $2 CPC → 1,200 clicks

• 30% convert on webinar squeeze page → 360 signups → $6.67 CPL

• 50% attendance rate on the webinar → 180 attendees

• 40% conversion to install → 72 installs → $33 CPI

• ~40% install to paid conversion → 29 new customers → $82 CAC

• 29 customers * $250 LTV = $7,250 LTV

• 29 * $20 ARPU = +$580 MRR

The results wouldn’t be terrible, but they wouldn’t be good either—and jeopardized by 5 different spots in the funnel that could fail to perform as required to produce the projected acquisition cost.

These numbers are pretty optimistic, but they can often become impossible if the top of the funnel breaks down at the start (i.e. clicks end up turning $4+, then what?)

The risk implied by the funnel performance, and the CAC it enables, could potentially be quelled by working with other app developers and splitting the campaign bill.

If I partnered with 2 other developers and delivered the same funnel, the webinar value would go up (from additional perspectives) and my acquisition cost would be cut by 2/3 as my partners would each pay their share of the campaign cost.

The goal of course is to reach a larger number of customers (as the targeting would now include my partners’ traffic too) while decreasing the total cost per lead — which can be done by sharing leads that sign up for the webinar (as an example) between partners.

In that example, I could then realistically expect the same 72 installs — and 29 eventual customers — but at a cost of $2,400 / 3 = $800.

At that rate, we’d be looking at a CPI of $11 vs. $33 and a CAC of $27.30 vs. $82. It could transform the viability of ad networks the economics of which have started to price out bootstrappers.

With the website up, it makes sense to kickoff paid media experiments to figure out at least one repeatable process to profitably acquire new customers at scale.

Ended the month in a pretty good place as it relates to the top of the funnel.

In March, I hope to kickoff the outbound sales process for direct-to-merchant while designing the first iteration of the same outbound process but which would focus on accountants serving ecommerce clients.

That will open the door for a ‘partner certification’ which will likely require the creation of a basic Reconcilely course that helps turn any accountant into a Reconcilely expert.

Similarly, opening the B2B opportunity which accountants represents will require some product adjustments to make it easy for those accountants to both get rewarded for signing on multiple clients to Reconcilely as well as equipped to manage many Reconcilely accounts from a central location.

Lastly, we’re setting our sights on Quickbooks after having laid the initial groundwork for that integration, which I’m very excited to start working on as it represents a very real opportunity to double our run rate.

Learnings and adjustments

It’s our birthday!

A year ago (!!), this experiment started when I got sick of having to choose between bootstrapping through an indeterminate amount of pain and time or having to raise venture funds at unfavourable terms before having market/product-fit just so I could build a team, go fast, and break things (my health).

Micro Angel

The framework I'm using to turn $500k in micro-acquisitions into $1.4m over the next 2 years

One of the most powerful things you can do as the ambitious individual that you are is to invest in yourself, far more than you invest in anything or anyone else in your life. To invest in yourself sounds like a pretty opaque idea, until you take the time to really decide what is putting a hamper on your velocity and progress as a person…

Read more

5 years ago · 6 likes · 13 comments · Eyal Toledano

While I plan to explore some of the learnings I’ve accumulated over the past 12 months, today’s (shorter than usual) post focuses on the work that was done this month to graduate from Improving the products to Growing them nearly full-time.

I managed to tear myself from code and begin building out a variety of growth systems that will play crucial roles as we aim to accelerate the portfolio’s run rate moving forward.

My goal this month was to take inventory of our growth systems, their status, and where I ought to spend my energy first. It was very important to put coding pencils down and to begin investing in what really matters: figuring out how to repeatably and consistently sell what we produce.

As the days go by and we remain laser-focused on what we’re doing, I didn’t realize it had already been a whole year of working on the MicroAngel project.

It took me 6 months to fully field my capital and another 6 months to get the products in a place where I feel comfortable pressing on the gas as it relates to growth.

So far, the entire journey has gone in the general direction I was hoping for.

We’ve just passed $300k in annual recurring revenue, and the $177k we’ve collected over the past year represent a 31% cash-on-cash return against the funds we’ve invested over the year.

To any real-estate folks reading, there’s no typo in the number. I didn’t miss a decimal separator. We returned nearly one-third of our invested capital within 12 months of investing it.

If you think that’s insane, so do I.

But it proves once again that there exists a third entrepreneurship option between bootstrapping and venture funding that skips the painful 0 to 1 process and foregoes the stress implied by starting to burn a bunch of runway to hopefully reach market-product fit.

The entire point of this experiment is to prove there is a better way than to burn your runway down to zero trying to succeed.

Instead of burning your nest egg to reach market-product fit with your project, use it to buy a working project that you can hold/grow while working on your side-project.

The point is to reset the risk of bootstrapping by getting paid by your investment while its value grows and while you search for market-fit with the project you really care about.

Then sell your investment and dump the proceeds into the side project that recently achieved market-product fit.

Then go FT on it without any external pressure or worry as it relates to runway, since PMF shows you a clear path to profitability (as you’ve got a working product serving a market that accepts the product).

In the meantime, this month created some of the best momentum we’ve managed to get since the experiment kicked off.

As Eric took full ownership of the product roadmaps moving forward, I graduated fully to growth & marketing, and set the stage for a variety of initiatives that are sure to raise the tide.

Onwards!

FYI: To lean out the monthly updates, my plan is to pluck away details about execution into their own posts. This way these reports can be more scannable for you while offering a buffet of links to posts that go deeper in detail about a given topic.

Current fund lifecycle stage

✅ Buying (02/2021 - 05/2021) 
✅ Fixing (06/2021 - 08/2021)
✅ Improving (09/2021 - 12/2021)
→ Growing (01/2022 - 08/2022)
Roll up (09/2022)
Exit (10/2022 - 12/2022)

Fund Activity

• Funds Deployed: $573.5k

• Products: Reconcile.ly, Postcode Shipping

• Closing MRR: $25.37k

• MRR Growth: 4.7%

• 30-day Revenue: $25.48k

• Rolling cash-on-cash return: $177k (+31% / +0.31x)

• 30-day ARR growth: $13.67k (4.7%)

• Cumulative valuation increase: +$644.5k (+102%)

• Current Total ARR: $304,500

• Fund valuation @ 4x: $1,218,000 (+112.4% / +2.12x)

• 12-Month Total Return (MOIC): +143% / 2.43x

As we kickoff the second year of the experiment, we’re officially entering the Growth phase. And none too soon!

Glad to be posting a nearly ~5% growth rate this month despite a reasonably slow start to the year.

At this point, most if not all of the activities I’m concerned with have some level of influence on our ability to grow revenue based on new user acquisition or existing customer expansion.

In that regard, I kicked off a variety of new growth systems that have a high affinity to create good movement for the apps, and which raise their value on the basis of the future potential they represent.

While a future buyer will benefit greatly from buying into the incredible products we operate, their return will amplify thanks to the available channels at their disposal from day zero.

This advantage will translate into greater valuation multiples if I can get one or more of our marketing systems to produce a reliable stream of user acquisition, as the future buyer would now have a very clear path to rapidly scaling operations without the need for any additional experimentation.

There are opportunities to expand the number of products we own, but I’m unsure if I want to take on anything that might jeopardize the momentum we’ve worked hard to kickoff and accelerate so far.

For now, my focus is on executing my growth plan for each of the products by layering systems on both the top and bottom of the funnel one atop the other to ultimately accelerate the run rate.

Reconcilely & Postcode Shipping

Installs have started to move a little bit but I’m still pretty unimpressed by the app store in general.

It’s important that I review our keyword strategy and give the app listings and app store ads a refresh to reflect some of the new functionality we’ve released in the last few months.

But before getting too deep into details, I took stock of the ammunition at the disposal of each product to better understand what systems need to be created, and what the status of future tasks are so I can ignore them in the short-term and focus on what I’m concerned with at a given point in time.

Growth strategy

I organized everything on a little canvas divided by the moment in the lifecycle when a visitor becomes a user.

In the end, I ended up kicking off more than a few systems thanks to different partners in the Shopify ecosystem whose tools made it possible to move fast.

If you’ve got a paid membership, take a look at the general approach I’ve chosen to take with Reconcilely growth strategy and how I’ll increase my odds of successfully executing and finding the user acquisition channel that will produce the lion’s share of our future growth.

Subscribe now

Affiliate & Partnerships

We kicked off App Partnerships, Agency Partnerships and Affiliate Programs by using PartnerPage and Shoffi to power our partner directories and affiliate tracking.

The technology and partner directories will be going live shortly on the new Reconcilely website:

That unlocks a whole new layer of interaction with app partners. I’m very excited to be launching with over 10 recommended apps in the directory.

The process of securing partnerships is fairly straightforward if you can clearly communicate the value your can create for the merchants of the apps you intend to partner with.

This is the golden area in my eyes: when apps create value in the workflow for the same kinds of merchants, there’s an opportunity to connect the dots for the merchant to unlock further value through the symbiosis of the two apps.

Affiliate Management

Since it will make sense to compensate our preferred partners with a commission anytime they drive installs, I also took the opportunity to set up another acquisition channel through affiliates.

That opens up dedicated outreach to other affiliates and publications who reach our target market and would be interested in building a recurring commission profile.

We also signed on our first affiliate for Reconcilely, an encouraging result considering the affiliate program isn’t yet live.

Setting up was pretty much a breeze here. Itay and the team behind Shoffi have done an excellent job of creating a two-sided marketplace which reduces the barriers of entry for both sides.

I can set up an entire affiliate system without having to build infrastructure. All I needed to do was set up a POST request in the product whenever a new install comes in (so they know when a conversion takes place).

Affiliates in turn discover new products that are using Shoffi through the platform itself, which leads to affiliates signing up for your program without you having to lift a finger.

These are the kinds of systems that can have a decent impact on the top line without having required a huge up-front energy or money investment.

Content Marketing

With the new website going live shortly, it made sense to revisit my organic research and formalize the keyword groups we’ll be looking to go after through content.

As recently shared on Twitter, I discovered how frighteningly big the Reconcilely opportunity is with respect to sales channels beyond Shopify.

Though my product cannot serve traffic looking for features my product is unqualified to deliver against, I can still create useful resources for that traffic.

The process of doing that crystallizes the needs of that market as the content you create is trying to accurately respond to a search query with the correct content type for the occasion.

That and installing Reconcilely for ecommerce accounting automation is a totally different thing. And I can likely afford to kickoff the process of building that infrastructure as I warm my engines to deliver the product features to support them.

The obvious low hanging fruit of Shopify<>Xero keyword groups will be Step 1, but we now have a clear path to create valuable content that will attract the exact kind of merchant the products need presently and moving forward in the future.

I’m expecting to outsource some of the content creation itself so I can create a large number of pages within a reasonable amount of time.

My goal is to simply show up for every single one of these themes, which in every way you slice it, will be a net positive.

Then I can optimize.

Learnings and adjustments

No changes. Just execution.

I want to get as many of these systems up and running as quickly as possible so I can spend more time optimizing than building.

There’s a familiar feeling involved in any external marketing communications work that you don’t get when you bucker down and start writing code.

Things I do to create positive momentum have a reflective capacity to energize me and further motivate me to double-down and increase throughput.

Things that I had previously put down for fear of losing focus now take up all of my focus. Because of a methodical culture of disciplined action, I get to really appreciate the actual craft at any given stage, rather than constantly trying to find the time to get things done.

In February, the second half of my user acquisition roadmap will complete and usher a new era for the products.

I’m excited to push the pedal to the metal, and as always, it’s my honor to have you join along for the ride.

Until next time!1

Naturally, I’d love to optimize my mid- and bottom of the funnels right off the bat. As mentioned in the January 2022 monthly report, the app store listings really needs help.

Further than that, the first growth marketing experiment I almost always start with is at the last step of the funnel.

Start optimizing closest to the money.

So shouldn’t I start with that? Make more of what I have?

That question led me to zoom out so I could get a lay of the land as it relates to all the things I could do to help accelerate the products run rates.

Should I work to earn more installs or should I optimize the process of turning installs into customers?

It’s evident I need to do both.

This is a common pitfall.

As a boostrapper, there’s a limited energy budget that you can allocate across different projects.

The more complex the project, the more energy and time it requires to execute.

If you have a pedigree of creating high quality products, you may even run into quality assurance obsession as your perfectionist approach feeds your creativity and motivation but inevitably slows you down.

What makes you unique also eventually makes you slow.

Your speed and ability to stay nimble are crucial, so pooling all of your chips into a single initiative is only really worth doing if you don’t have a choice or if you already have observed some evidence that it has a higher potential to succeed.

In other words, you should double down on what works, but you can only do that if you have something that works — bearing in mind that 80% of the growth of a startup at any given moment comes from one channel.

A channel producing a small trickle of installs can easily disqualified as not the main channel because when things take off, then tend to do so quickly and dramatically.

The channel response for 80% of your growth won’t feel like a trickle of rain. It will feel like the thunderous and continuous roar of a waterfall as leads pour in.

In our case, both products have only ever grown through the App Stores, and while they have an inherent affinity to grow from specific types of channels - be it due to the market they serve or as a result of the ARPUs we collect - building those channels requires a serious amount of time and energy.

What we do know is that the App Store currently provides a trickle. So while it does represent the lion’s share of installs, it’s clear there’s potential hidden away in another channel.

Additionally, some channels are dependencies for other channels to be possible to execute. That’s on top of the energy spend.

For example, you can’t offer guest posting quid pro quo’s with other apps if you don’t have a blog, and you might not be willing to have a standalone blog until you ship a new website.

This is oversimplified, but the general order of initiatives can produce return multiplication relative to energy expenditure.

If you can hit many birds with a single stone, do it.

But beware of the difficulty implied in trying to do many things at once, and the subsequent impossibility of delivering the level of quality you might produce were you to focus on a single thing.

On perfection

Importantly, perfection is too expensive at this stage.

Perfection is the absence of fault, and fault is a natural byproduct of speed.

Done is better than perfect. Especially if you’re searching for market/product fit. Done lets you see if you get a trickle or a waterfall.

Forcing yourself to allocate less time for each activity allows you enter a state of flow that can get you pretty close to a finished product, albeit still imperfect.

If anything, you should beware of the pitfall of perfection and all it entails, both financially and time-wise as you struggle to complete the roadmap you’ve set for yourself.

A good rule of thumb is to only start working on something if you intend to finish it.

And it’s only possible to finish something in a small sprint if the allocated time for that task is short.

That forces you into a creative zone in which you focus on only delivering the most possible value in the leanest way.

That won’t create a perfect result.

But it’ll get you 70% of the way there.

At that point, you can go ahead and improve/polish it so you can get to a point where you’re 90% happy with it.

Then stay happy with 90% and move on.

The last 10% improvement represents a diminishing return as compared to the improvement you could produce elsewhere (from 0 to 70 or 70 to 90) from the point where you stand.

Turn to Occam’s Razor to remind yourself that the best solution is often the simplest, too.

Embrace the fact it’s impossible to do everything at once and be perfect, and produce a workflow to create the highest possible quality with the least amount of time and effort.

And with that culture in mind, I started by taking stock of the ammunition at the disposal of each product to better understand what systems need to be created.

I don’t want to recreate the wheel.

In the past, I’ve resisted launching partnership programs as the workflows they required consumed too much energy for me to be able to fulfill other obligations at once.

Today, new tools are available to reduce that barrier to entry. Since my approach so far has been fractional services (support, design), utilizing SaaS products to bootstrap those systems is a probably an ideal example of good enough.

Worth considering is the status of future tasks so I can safely ignore them in the short-term while I focus on what I’m concerned with at a given point in time.

There’s a mountain front of me, but I don’t need to figure out how to climb it all at once.

Instead, I created some checkpoints that I know I need to walk through, and give myself just enough time and energy to get myself there, while staying happy with 90%.

Everything is organized on a little canvas divided by the moment in the lifecycle when a visitor becomes a user.

This canvas visualizes my progress constructing different systems that have a good fit with the market Reconcilely serves as well as the ARPUs enabled by our business model.

Green is done or good enough.

Yellow is work in progress.

Pale yellow means it’s a to-do. But not a focus right now.

Naturally, I’d love to optimize my funnel right off the bat. As mentioned, the app store listing really needs help.

But I need to zoom out.

Prioritizing growth efforts

Part of my criteria for acquiring products is that these products be very stable while doing one thing really simply and consistently.

This quality generally results in the products having very healthy install-to—paid conversion rates.

Since both Reconcilely and Postcode Shipping share this quality, I’m much more interested in accelerating the rate at which new customers enter the funnel since that funnel is already producing at a good clip.

The good news is that — like many Shopify apps — the products would benefit from implementing best practices from top-tier SaaS products and bringing those lessons over to the Shopify ecosystem.

There’s so much to do to further increase the conversion rates.

But it might not be the right first step.

Consider this:

Say the value we currently generate is x.

The problem is that the total potential locked behind better conversion rates, let’s call that x+y1, is smaller than the total potential that can be unlocked from creating a repeatable customer acquisition engine (x * budget).

While conversion optimization helps you make more with what you have, it’s still limited to a ceiling of what you have.

If I get 20 people with a 20% conversion rate and 100 people with 100% conversion rate, 100 people is the max I’ll be able to optimize up to.

Another reason why distribution matters more than product is because it represents x * budget.

As you discover a profitable means of acquiring customers from a repeatable process, multiplying the results from that process is as simple as increasing your inputs, which is something you can very much be in control of.

Despite there being a lot of potential hidden away behind optimization efforts, the energy it will take to find them is greater than the energy it will take to create new growth systems.

I have a vested interest to keep launching new systems so I can get myself closer to that repeatable acquisition process so I can use it to rapidly scale and make the most of the Growth phase.

With that preamble out of the way, there are two main levers I’m usually concerned with in this Growth phase:

1. Establishing 1+ repeatable processes to acquire new customers

   1. Discovering our number 1 customer acquisition channel

   2. Respecting our customer acquisition costs

   3. Volume & longevity

2. Optimize how efficient we are with existing customers

   1. Optimize post-install activation + decrease time-to-value

   2. Optimize trial conversion

   3. Increase customer retention + champions

These main objectives are completely different beasts.

It would take a team to attack them all at once.

Alas, such is the bootstrapper’s life. You’ve got to prioritize.

Now that we understand why acquisition (and not activation or conversion) is our first growth focus, let’s review some of the channels I’ve selected for each part of the funnel.

In no particular order, my goal is to create good enough results for each of these channels across different stages of the lifecycle so they can each have a chance to stand out as the channel we should then swing all of our weight into.

It would probably make sense to focus on Activation, Conversion and Retention tasks (making more of what we have) after I’ve taken the time to at least establish the following Acquisition systems:

Acquisition

• Shopify App Store

• App Partnerships

• App Integrations

• Agency Partnerships

• Partner Certification

• Content Marketing

• Search Optimization

• Paid Media

• Social & Community

Activation

• App Store Listing

• Post-Install Email Campaign

• App Onboarding & In/Out-App Guides

• Time to Product Value

Conversion

• Free/Trial to Paid Conversion

• Expansion Path

• Optimizing App Pricing

• Behavioural Analytics & Cohorts

Retention

• Same-day/1/3/7/30-day+ retention

• Experiments to increase retention KPIs

On the execution front, we’re progressing well.

As of February 1st, several new acquisition systems have been created, some of which are already producing returns, with many more on the way in the coming weeks.

The goal is not to set-and-forget these but rather to build a toolkit that can be used to react to new opportunities as they arise, and to make it possible to collect result samples from those channels to better understand what to double down on.

Some of the most fundamental ways to grow on the App Store is by going where the cameras are; proverbially being featured in section of the App Store itself, or even better, within specific apps that your target market already uses.

As opportunities to interact with those apps come up, new connections can be made for merchants from both sides to discover new apps that can help simplify their store operations.

The first batch of channels can be started off without many resources and with zero code, so I started there.

Agency and app partnerships, affiliate program and app integrations will likely play a crucial role moving forward, so I’m very excited for the three of those systems to be going live.

As they continue to warm up, I’m refocusing my attention towards the new websites so we can launch the blogs, content production and search optimization to begin attracting customers by providing resources that accurately respond to their search queries.

Before I can do anything direct-response, I needed to start with Segment on the front-end, since I didn’t do that yet.

I had to do this so I could effectively quantify the number of users at each stage of the installation funnel as entered and exited through.

It’s important to know how many installs you get but it’s just as important to know what happens between the moment an ad is clicked and the moment the app is installed (or not) so you can optimize that process and remove any friction from it.

This is also true of the front-end interactions after the user has installed, so as to elucidate reasons behind day-1 uninstalls and/or where and why install-to-paid conversion might be failing.

Another benefit of the front-end Segment implementation is that I can now set up pixels for different ad networks so I can measure my acquisition funnel end-to-end regardless of ad network.

It also makes it possible to start retargeting customers intelligently depending on which stage of the lifecycle they’re in.

I set up Hotjar to start getting some qualitative data about the way customers are using the products so we can start asking different questions that our data stack is now in a good place to answer.

While making sure that our customer’s data stays private, we now have access to recorded interactions so we can relive our customer experiences from their perspective and derive hypotheses from there.

This will come in handy later when trying to optimize activation and conversion. But it also comes in handy now to explain user behaviour across the top of the funnel.

Between the qualitative data we get from HotJar and the quantitative data we get from Segment, we have end-to-end visibility and can extend our data platform for any new properties anytime without disruption.

We can now make data-driven decisions at the acquisition layer too, which until now had been a show-stopper for all of these systems we’ve been meaning to start building.

That unlocks a variety of new channels for us, like paid acquisition outside of the Shopify App Store.

These systems are now up and running and can be used:

• tech integrations (with other shopify apps or product-led)

• technology partners + co-marketing with other apps (blog, newsletter, partner directory, recommended apps section in the apps)

• service partnerships (certified agency list, accountants)

• affiliate program

In February, most of my focus is on building the infrastructure for

• producing search-optimized content and pages that rank

• cross-selling between reconcilely and postcode shipping

• collecting case studies for reconcilely + postcode

• engaging influencers on youtube, instagram and tiktok

• kicking off audience building + retargeting campaigns

Once those systems are up and running, I’ll swing my weight back towards the product and what happens when customers install:

• App Store optimization

• Review pricing plan selection

• Redesign onboarding from the ground up

• Accelerating time to value + showing it

• Trial email campaign

• Trial retargeting

The purpose of these systems is to set them up in a way that they can operate mostly on an automated basis, so I can relegate to check into them once in awhile and adjust my strategy.

And the reason I’d be adjusting the strategy is so I can inch myself closer to profitable spend relative to my product lifetime value. If any of those channels produce that, I can increase my budget until the returns from that channel can justify a new hire.

It’s once something clearly works that I can refocus most of my energy into it in pursuit of expanding and hiring myself out of that process.

And by then I’ll have a clear picture of the metrics a future hire would work with.

And they’d be primed to succeed by doing more of what has worked, and taking advantage of building all of the optimizations left available via a good enough mentality.

My job at this stage is to discover the thing we should be doing pretty much with 100% of our time. But the search for channel/market fit can be methodical if you make it so.

It’s easy to get overwhelmed! But you’re gonna make it.

Keep showing up and lay bricks every day.

Until next time!

A healthy and happy new year to you!

Had a lot of fun this month working on some new features for portfolio products which are going to have a large impact on their ability to acquire and retain customers in the new year.

Namely, our goal for December was to make the most out of the lull in user acquisition resulting from end-of-year store closures and new app installs being at their slowest.

Since we’d have less new interactions with merchants, we could afford to really put our heads down and create as much new value as possible during the meatiest Improvement month yet.

And boy am I glad we did that!

In the meantime, this was our first down month since the fund kickoff, and I’m attributing that slowdown to both the end of year as well as recent changes made by the Shopify App Store team.

Typically, things start to kick back up by mid- to end of January. But I’m a little concerned by the redesign of app listings on the app store.

If you’re not aware, they’ve added recommended apps at the bottom of the page, and typically, those recommended apps are direct competitors of the app itself. That means you could be spending (expensive) Shopify ads to drive traffic to your listing only for that traffic to head over to your competition.

I’m not super excited about reporting a down month, but it certainly illustrates the variable reality of maintaining a revenue growth rate off acquisition channels I cannot control.

There’s more than one reason to own user acquisition, but just as many reasons not to do that. In our case, observing consistent linear revenue growth is a luxury that enables us to focus almost exclusively on product.

Focusing on growth would certainly get us some more juice in the short-term, but at the cost of feature improvements and deliveries that customers are waiting for, which would create pressure against new revenue (in the form of churn).

But it also delivers the truth that if acquisition velocity changes, so too will our operational comfort and prioritizing.

And that’s why I’m glad to be closing up some of the most intense engineering work I’ve produced for the products to date.

I had a whole lot of fun doing it, but I also recognize some inefficiencies in my technology stack that I’ll carry with me moving forward.

Ad nauseum boilerplating can kill your vibe!

Current fund lifecycle stage

✅ Buying (02/2021 - 05/2021) 
✅ Fixing (06/2021 - 08/2021)
→ Improving (09/2021 - 12/2021)
Growing (01/2022 - 08/2022)
Roll up (09/2022)
Exit (10/2022 - 12/2022)

Fund Activity

• Funds Deployed: $573.5k

• Products: Reconcile.ly, Postcode Shipping

• Closing MRR: $24.11k

• MRR Growth: -2.35%

• 30-day Revenue: $24.2k

• Rolling cash-on-cash return: $151.4k (+26% / +0.26x)

• 30-day ARR growth: -$6.97k (-2.35%)

• Cumulative valuation increase: +$584.20k (+102%)

• Current Total ARR: $289,380

• Fund valuation @ 4x: $1,185,408 (+102% / +2.02x)

• 10-Month Total Return (MOIC): +128% / 2.28x

I finished the year convinced about what kind of activities are most likely to produce positive momentum in the new year, and amplifying the value proposition of the products made the most sense relative to that.

I started and completed two large features which are about to open the door for pricing refactors, from introducing free plans to cutting the number of paid plans and introducing mechanisms for additional revenue expansion moving forward.

On the fund side, we’ve surpassed $150k in cash-on-cash returns in approximately 10 full months of operations. The gravy in this milestone is that I’ve recovered all of the funds I deployed to acquire Reconcilely. In just 10 months!

We’re standing at 26% cash-on-cash and adding about 4% per month, which means I’m expecting to pass 33% for the full year two months from now.

Despite having planned and executed a playbook specifically designed to produce 33% in cash on cash in the fund’s first year, I still can’t believe just how well this experiment has worked so far.

I’m planning on producing 70% in cash-on-cash returns by the end of the second year, and at this point, we’re nearly guaranteed to hit that goal.

Producing a 33% cash-on-cash return in 12 months was made possible through the actions I took over the past 12 months.

Though that may sound obvious, the main insight is derived from the fact that it took me 6+ months to acquire my second product after Reconcilely, which had a material impact on cash-on-cash volume during those 6 months — an impact I won’t suffer as I kickoff the new year with both products.

Thus, we should be adding (4% * 12) another 48% in cash-on-cash returns from February 2022 to February 2023.

This is even more spectacular than I had expected, considering it will allow us to surpass our fund maturity cash-on-cash goal of 70% with a two-year performance at approximately 33% + 48% = 81% cash-on-cash.

If we can accelerate revenue, all the better.

Otherwise, we’re still on-pace and continuing to stay focused on our goals.

We’re closing up the improvement phase for Reconcilely over the next month or two, and I’m starting to shift fully to growth on both sides. I’m giddy about it!

Reconcilely

Last month we kicked off some huge and hairy new features for Reconcilely that have been requested for well over a year by now.

We’ve lost customers due to not having those features, and don’t have as much leverage versus the competition, especially as it relates to features used by larger (and thus more profitable) merchants.

In other words, features useful to mid-market merchants like Costs of Goods Sold reporting and tracking category support for Xero meant we had to crack open an R&D process and deliver tangible business value.

It’s funny. The initial line between Product-led growth and ‘Build it and they will come’ is pretty blurry.

If the product is the main method of attracting new customers, then it makes a lot of sense to place it front and center, but I can’t imagine how I’d feel if I were to build these huge new features in a vacuum.

Forget selling the feature after you’ve built it, how will you even know what to build?

It’s fine to be your product’s user and to have an intrinsic understanding of the customer experience and what might improve it. But you’re just one data point. And your experience would only be worth one vote.

You may find that 50% of the customers who would use the feature would use it differently than you would, and that can have a very real impact on the end-result in the product, as you’d have built something you’d find intuitive, but which would feel complicated to other people, whose opinion matters more than yours in this context.

In my case, I’ve been collecting feedback and insights about both COGS and line-item splitting for a few months. At first I couldn’t even understand what customers were looking for because I haven’t run into these problems myself.

Either way, we’ve saved ourselves a lot of anxiety by keeping our sights on what our customer is really trying to accomplish.

In that regard, I’ve spent pretty much 90% of the month writing new functionality. It’s been amazing. Can’t remember the last time I got to do that. I shut out all distractions and worked on the hardest possible problems I could find.

Here’s some of the stuff I worked on.

Custom Mappings for Countries

For the past several months, Reconcilely has made it easy to regroup line items on invoices it creates by product types.

This is great if you want your invoices to have a deeper layer of detail about where sales are coming from.

We’ve been receiving feature requests from European merchants especially to extend this functionality and to let them split their line items by country, which would make it much simpler to report taxes (or sales) collected across different regions, making VAT remittance much more time and energy efficient.

Basically, if a customer from Germany buys something on the store, and that store has German VAT requirements, the merchant might elect to create a country group for Germany and define specific ledger accounts to use when processing orders and creating invoices, rather than using the general mappings.

The reason I like this direction is because it lends itself really well to a further product extension called Tracking Categories/Codes which basically help trickle this region-specific data down through the rest of Xero’s reports.

That means I could create a Tracking Category called ‘Regions,’ which might include Germany in there.

From there, when an invoice is created and a line item is attached to the ‘Germany’ option in the ‘Region’ tracking category, the value of that line item will propagate across all other reports on Xero so those reports can contain details specific to the german region, rather than one large number encompassing all sales from everywhere.

Tracking categories is pretty advanced functionality, typically only required from larger merchants which incidentally would find value in paying a little more to access such a useful feature.

That means country groups is the first step towards bolstering the Unlimited plan, which would then lend itself well to increasing the price of that plan in the near future when introducing the free plan.

The result from that will be positive pressure from the bottom (free plan increases installs) as well as from the top (better features for the Unlimited plan justify increasing its price).

This top/bottom approach is pretty much how I’ve been thinking about product for the past little while. There are a few moves that have dual advantages despite requiring much more effort.

Testing country groups has been a little challenging because custom mappings is a feature we didn’t need to refactor since acquiring the product. But it locks the app’s logic into doing things a certain way that makes handling additional custom mappings of another type quite complicated.

We’re approaching a release here, which is a top priority because VAT requirements are putting pressure on our merchants and they’re going to need to get those declarations out as soon as possible.

While I did have to work on the full stack to produce a working front-end for the settings, I’ve left the process of adjusting the app’s core logic to use the new mappings to Eric. I find that we move quickly when I can quickly materialize front-ends and Eric can use the new options to update our logic infrastructure and update our unit tests.

It certainly takes more time than working alone, but it makes it more possible to expand the scope of the work through division and conquest.

Cost of Goods Sold

This is another exciting feature because it’s easily one of the most requested ever since launching Reconcilely.

It’s also the main feature that competitors have been using to sell higher-priced product plans, which we can disrupt by making this functionality universally available to any and all paying customers.

The general idea here is quite simple:

Reconcilely makes it easy to send sales data to Xero in the form of invoices, that way you can reconcile the deposits in your bank with a matching invoice in a few seconds, removing the manual labour implied by bookkeeping and reconciliation.

The thing is that accounting for sales only represents one half of the reconciliation process.

After all, you only get a clear picture if you know how much you have leftover after your costs. It’s one thing to know how much you’ve collected in gross sales, it’s another to determine your gross profit from that.

And the only way to do that is to keep track of the costs you incur per good sold.

If a customer buys 2 items for $100 in gross sales, Reconcilely will create a sales invoice in Xero to account for the $100 bank deposit, and the invoice will contain line items to describe which items have been purchased, and what their unit price is.

COGS will accomplish a similar goal to account for the costs incurred to make that $100 sale. If the 2 purchased items cost you $12 and $15 respectively, you’re incurring $27 in cost of goods sold to make that $100 sale.

And your Xero account should reflect this $27 both from the perspective of the unit cost to add to your inventory, as well as change in inventory caused by the purchase.

In other words, when a sale comes in, you need to account for the cost of each SKU that was sold, and then credit your inventory and debit your COGS relative to the change made by the sale.

And that information has to propagate across the rest of Xero so you can get an accurate picture of your profitability at any point in time, which reconciling movements in and out of your bank accounts to account for buying inventory and eventually selling product.

We’ll be automating that entire process for our customers by first exposing all of the SKUs the merchants sells to them so they can ensure the accuracy of their costs.

Experience has taught me that a vast majority of merchants on Shopify don’t actually fill in the native ‘cost’ property of their product variants as they either manage that externally or (gasp) not at all.

With the costs, we can start debiting and crediting the inventory and COGS ledger accounts for each transaction that happens while using the cost values assigned to each SKU.

I expect to make this feature available to all customers freely. Besides gaining an upper-hand on the competition relative to their pricing plans and feature gating, we’ll also create a new dimension by which the volume of invoices we create for merchants will double.

Revenue expansion can happen for Reconcilely provided merchants send an increasing number of invoices as the pricing tiers are earmarked based on the volume of invoices that can be sent, on top of feature gating.

It’s in our best interest to increase the number of invoices we send for our merchants so they can start to rub shoulders with account upgrades that would either unlock new functionality or enable more invoices to be sent.

This engineering work has been pretty painful. I’ve come to hate Redux due to the amount of boilerplating I have to endure to get data from point A to point B.

But it gets the job done, and I’m not about to upend a product convention just out of convenience. Things do take longer as a net impact though.

As these two features release, I’m starting to move out of Product and towards growth. Namely, I’m releasing a new website for Reconcilely, which I expect to invest a lot into.

I’ve discovered how to properly render React apps inside of Webflow sites and will be using that knowledge to create a unique set of user experiences and tools on the marketing site to kickoff organic, paid and outreach-based growth.

With the new website and brand launching, we’ll release a major update to the app store listing, start some A/B tests with the app icon, and make a deliberate attempt at securing higher rankings within specific app store categories.

Postcode Shipping

As I start to kickoff marketing activities for Reconcilely, I’m going to be implementing front-end analytics for both it and Postcode Shipping as a means of keeping track and then optimizing funnel performance.

I’m likely going to touch up the website too and then jump right into an experiment per week. I’m iterating on some messaging and value props right now to make sure I have the appropriate message for the audiences I will try to reach.

By and large, there is no major change here besides some bug fixing. I’ve had the opportunity to dive into the churn incurred by the app over the last 6 months and identified the reasons why customers are leaving.

It turns out there are several features that customers would like to have access to, which have made it possible to furnish the product roadmap for Postcode moving forward, while also understanding the general feeling of the market today vis-a-vis the value proposition of the app and the shipping rates it enables.

I don’t want to open Pandora’s box here especially with Eric still being so focused on Reconcilely, but I can get some data on the customer acquisition side to better understand what it will take to be profitable on spend.

The most important growth channels for both apps still feel a little bit out of reach:

• Tech partnerships represent feature integrations we would create and expose to other leading apps on the app store. These features would need to be delivered ahead of things like COGS, the absence of which causes churn every month — and the risk of perpetually pushing COGS off is too great

• Agency partnerships represent relationships with companies that serve DTC businesses who would benefit from the technology our apps make available. Making these win-win requires a serious commitment to create content that help agencies understand and sell our app while making the economics work for the agency partners. Not something you can half-ass.

• Influencer partnerships feel like a low-hanging fruit that shares a lot of similarities with straight ad spend and I’m liable to try one of these soon. There’s a direct before/after changing that these content creators can reference when talking about the apps and how they might optimize their processes using them

• Co-marketing with other apps feels so obvious, but again requires serious energy and time commitments to make it work. Doing blog swaps, newsletters and webinars is a fabulous idea, but I can’t do those if I’m writing code all day.

All in all, I’ve been itching to take off my product hat and put on my marketing hat to start building systems across these four main dimensions. It’s alright if I write code provided I’m materializing progress on either of these fronts.

And as I’ve learned in previous months, true progress is only possible if you focus fire on a single thing at a time - especially in a bootstrapped context like this one.

That defines the next few months quite well from the perspective that elbow-grease will be needed to create all of these new systems on pretty much a full-time basis.

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Learnings and adjustments

No adjustments this month. Just cold hard executing on product.

I’m ripping myself from the process of creating (despite still having things to release) because the energy I’d spend upon the product, at this point, is better served going into creating growth systems.

I need to start taking home learnings on that side so I can corner the best channel for each app and start rapidly scaling revenues there. As those systems start to create a positive return, it might then make sense to bring on a growth partner to own it.

For the past few months, the search for a third partner has been open, and I’ve met many amazing individuals who’d do great in the role. But I haven’t pulled the trigger because I’d be setting them up for failure.

In the next months, I’ll be able to qualify just how difficult that job would be considering the current state of the products and value propositions.

The difference of course is that I’ll be incurring the pain first as I benchmark the metrics any growth leader would inherit as they embark on the journey with us.

It’s entirely possible that the need for a growth partner will dissipate as I create growth systems, but in the meantime, that’s the area where I’m most needed, and I trust my partner to hold the Product torch and continue delivering additional value to customers so I can make use of those efforts to create constant, reliable product-led growth.

Onwards!1

Where the start of this journey required extreme discipline, grit and determination, the Improvement phase is proving to be the one I feel most comfortable with so far.

I’m in the zone!

It has so far provided the opportunity to touch and feel the product as it improves, while having a direct line of communication with the customer who uses it.

There is a hustle and flow in the way we work as we’ve graduated from bugs towards new and uncharted territories, and we’ve got much to show for it.

Every month, I zoom out of the challenge to understand if we’re going in the right direction.

Since I spend most days extremely focused on the product right now, I don’t necessarily check into the revenue metrics of the products on the daily, unless something weird pops up.

But it’s been a good, dare I say, great month despite some interesting events and discoveries, though we personally felt like we didn’t quite get rewarded for our efforts.

Read on!

Current fund lifecycle stage

✅ Buying (02/2021 - 05/2021) 
✅ Fixing (06/2021 - 08/2021)
→ Improving (09/2021 - 12/2021)
Growing (01/2022 - 08/2022)
Roll up (09/2022)
Exit (10/2022 - 12/2022)

Fund Activity

• Funds Deployed: $573.5k

• Products: Reconcile.ly, Postcode Shipping

• Closing MRR: $24.7k

• MRR Growth: +4.53%

• 30-day Revenue: $24.94k

• Rolling cash-on-cash return: $127.2k (+22% / +0.22x)

• 30-day ARR growth: +$12.85k (+4.53%)

• Cumulative valuation increase: +$611.91k (+107%)

• Current Total ARR: $296,353

• Fund valuation @ 4x: $1,185,408 (+107% / +2.07x)

• 10-Month Total Return (MOIC): +129% / 2.29x1

In the beginning of the month, as we wrapped up a bunch of cleaning for Reconcilely, we discovered a part of the code that made us wonder if certain customers who were marked as paying were in fact paying.

To our dismay, we discovered more than a dozen zombie accounts that were uninstalled, but had not been marked as such.

The result is that the revenue we reported on our internal dashboard went down by a few hundred bucks, which initially made us feel pretty crappy.

But we later realized that we hadn’t been actually billing these customers (as they were uninstalled, and we thus could not) over the past several months anyway. They were very old zombies 🧟‍♂️

Which means this crappy discovery ended up being a dud — it didn’t affect our actual revenues at all. 😅

What it did do is increase the accuracy between our internal dashboard (which counts customers marked as active in the database * the amount in their plan) and what we observed in the Shopify payouts and dashboard, even though the latter is a lagging indicator.

As I zoomed out for the first time of the month today, I discovered that things have been continuing to go in the right direction. I’m late on sending this report, and that’s completely due to prioritizing product as I wrapped up some sexy new stuff.

In major part, I have my support team to thank for our strong month as we’ve again spent most of our energy on Reconcilely as opposed to dividing and conquering. They’ve been our rock.

With Eric transitioning mostly back towards Postcode Shipping over the month of December, I expect he’ll probably do a review of the UX and get a strong understanding of any open issues or bugs that might be affecting it.

I’ll continue to work on the new Reconcilely features and kick off the GTM for it as we release the brand refresh, new marketing site and blog launch.

There’s not a whole lot to improve on the product side for Postcode Shipping, which is why we’ve been allocating most of the phase to Reconcilely so both products in the portfolio can be in a good place to spend 80% of our energy on growth.

In the meantime, we delivered the goods this month, releasing more new features in the last 30 days than we have in the past year combined.

This resulted in solid product-led growth for Reconcilely as it scored a new record for new 5-star reviews in 30 days.

It’s full steam ahead as we continue improving the products.

I’ve a half-mind to continue doing that for the next month or two because every new feature we’ll be releasing moving forward has a strong affinity to MRR growth.

You could say it’s good tactics to focus on product to increase ARPU and conversion prior to focusing all of your energy on marketing and growth systems, but I recognize the truth that I could very much be doing that now.

As you’ll see below, real progress is only possible if you focus most of your energy getting one thing to the finish line at a time.

If you’re bootstrapped, staying in your lane is one the most fundamental things you can do to multiply your results.

Reconcilely

Our main OKR for the past little while has been positive reviews on the Shopify App Store.

It’s the purest demonstration of progress vis-a-vis the organic channel most responsible for our new install growth.

While we observed a sharp decline in installs in what could only be described as a seasonal dip, our own work within our active customer base continued to accelerate as we released requested features and earned more great reviews that further increased our current velocity.

While I plan on spending a bunch of energy on refreshing our app store listing as well as doing some optimization of our rankings, the impact provided by more reviews can only be positive.

Cool fact: For the first time, positive reviews came in about new functionality rather than great support.

The great support is a true constant, which means combining it with completed feature requests has a near 100% conversion rate as it relates to new 5-star reviews.

Which makes sense, that’s the entire point of an app, and it is the type of workflow that rewards all parties involved between Reconcilely, merchants and of course, Shopify.

The first batch of improvements aimed at delivering new reviews, and they did.

However, they didn’t have much impact on MRR, which on a macro scale, could probably be considered a bad decision.

Fortunately, I understand the direct relationship between organic ranking and reviews (as well as new review velocity) and I recognize the opportunity implied by going up rankings which is no small feat to achieve beyond listing optimizations.

The other OKRs we obviously care about is new installs and new MRR, which are tightly interconnected.

Because we have a great conversion rate to paying customer from install, we can get new MRR by simply getting more app installs.

Another way to increase MRR is by improving the revenue per customer, which can be achieved by helping customers spend more with you i.e. by upgrading their plan.

You can get them to upgrade a plan by locking new features behind higher-end plans.

That’s the circumstance in which new features can contribute to new MRR and you know you’re doing it right if upgrades start to come in shortly after your email announcing the feature.

Before working on new features, we delivered functionality to satisfy 6 feature requests and quickly cashed in on the good faith that produced with customers.

In fact, we delivered more new code this month than we ever have in the past, as our engineering velocity skyrocketed:

Importantly, I also pushed v1 of the Segment CDP implementation.

Having a customer data platform is crucial as it relates to piping information from your application to the rest of your stack.

I originally planned on implementing only Rudderstack, but ended up sending the information to both Segment and Rudderstack. My plan is to make the most out of the free plans there by intelligently allocating which CDP which data goes to.

It’s a bit of penny-pinching that ends up having a big impact on the bottom-line. A penny saved is indeed earned in this case.

For me, the first order of business was to establish a baseline of events and properties that I could start passing to analytics products and get an idea of customer behaviour at a micro and macro scale.

Thanks to this implementation, I can now pass key events to ad platforms for ROAS calculations. For starters, I can now accurately tell if a click ends up in an install, rather than having to estimate.

And of course, I can pipe that data across to most tools I use.

Next, we’re kicking off pricing adjustments soon too.

I’m looking forward to releasing a credit-based approach for overages rather than nickel-and-diming customers.

This will result in greater convenience while doubling the revenue potential of the overages.

We’re also going to be introducing a free plan that will provide a generous lifetime number of orders rather than on a per month setting.

That should help us stand out from the rest of the competition.

Also, it will give customers the time to build trust in Reconcilely over time before upgrading to continue receiving service OR get better features.

Things are looking up on this side. I’m excited to keep working on the product now that it is so much more stable.

Postcode Shipping

While the work for Postcode Shipping is mostly on the marketing side, and that work is pending a product catch-up from Reconcilely so we can benefit from killing two birds with one stone, I did kick off a few conversations to help orient our roadmap.

Since it’s growing well, and has a healthy conversion rate from install, exposure is what we want, and that can be achieved through technology partnerships that make the app functionality available in other products our target market might be using.

One such example is a reporting product that asks the customer to manually enter their shipping rates to enable other functionality.

Postcode Shipping could easily provide this (complex) information without involving any manual intervention from the merchant.

I’m discovering that Postcode Shipping has a fairly interesting API opportunity by making the data it has or crunches available to those apps, which would then earn us a link-back to the app, and a likely install from customers happy with the integration.

In the meantime, we’re entering our last month in the agreed upon hand-off period and we seem poised to continue maintaining and growing the product as we move forward.

I’ve been pleasantly surprised by the grace with which the product handled Black Friday and Cyber Monday (BFCM) weekend. Support requests didn’t necessarily pop, and nothing in our customer checkout process broke. Which is a big win.

Every few days, I read through the support tickets handled by our team to better understand if and where the customer gets stuck. The roadmap is slowly coming together in that regard, but like Reconcilely, deep progress is only possible if we make it the only thing we focus on.

I’m now a regular in the Australian and NZ social media groups focused on Ecommerce with Shopify. The direct line of sight helps me understand what the customer cares about while maintaining a legitimate means of recommending our apps if and when appropriate.

All things green here, but we look forward to stabilizing the allocation of our attention between our portfolio so we can start releasing features for Postcode with a strong affinity for pricing upgrades.

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Learnings and adjustments

Keep on trucking is the #1 relearning.

We’re doing it right, we’re not skipping any steps, we’re doing the hard thing first, and the seeds are starting to show promise.

Next month we’re going to reach 25% in cash-on-cash returns, which is a huge milestone to reach before the first year end. Products are in a good place, nothing is on fire, but we could be growing faster.

That’s on-pace with our goals for the year, which were to acquire, fix and improve a portfolio of products that could then really take off the following year.

I strongly believe the work we are doing today to improve Reconcilely will liberate our creative energies so we can reroute them towards the mission of rapidly increasing MRR before starting to think about rolling up.

Considering the incredible impact Eric has had on our velocity, I’ve been mulling bringing on a third partner at MicroAngel to effect a similar change on the growth and marketing side.

Despite it being my go-to role, I’m likely going to reap more returns from continuing to do what has worked well for us this year, which can be summed up as creatively and intelligently acquiring fantastic products from the onset.

From there, everything has been going along in the right general direction, and provided you can roll with the punches and stay flexible, you’ll find you have the ability to wrap yourself around just about any problem, solve it, and then double-down on your solution as a means of increasing total output.

Stay like water, my friends.2

You’ve heard it many times before, and you might even be intentional about what you want to track.

But I’ve noticed that most technical marketers — and even developers — don’t have the ability to plan a strategy to track that data, never mind implement it.

Let’s go through that process together from A to Z, so you can both understand and be exposed to what a starter iteration might look like for your own product or one you’ll work on in the future.

For what it’s worth, I’ve made great money as a consultant implementing customer data platforms for clients because the work is technical but also highly valuable vis-a-vis the kind of activities it unlocks.

There are a variety of tools for doing this.

My historical favorite is Segment by I’ve recently picked up Rudderstack which is younger, less polished but with an open source offering.

I’m going to use Rudderstack for Reconcilely because I’m wary of new costs, and have in the past been burned by vendor lock-in when my Segment events (and MTUs) started to grow out of proportion.

In one project, the problem became so severe (as a result of producing a ton of data from customers using the product) that we had to stop sending some of the more volume-heavy events to our analytics tools, which coincidentally reduced their utility from containing incomplete data.

Instead of running into that inevitable compromise, I’ll try the open source alternative. If push comes to shove, migrating to Segment is a matter of commenting out 2 lines of code.

First, let’s go through the process to deliver this task:

1. Define event dictionary for tracking

2. Define the traits to be tracked for individual users

3. Create a Rudderstack account or host the FOSS version yourself

4. Create Node.js & JavaScript sources to send from

5. Implement identify and event tracking for Node.js source

6. Sanitize + verify data accuracy and integrity

In the end, what we want is the ability to understand how customers are using the product, and send enough data to our analytics tools so those tools can tell us which combination of events and traits produce the highest likelihood of customer success.

Specifically, the goals for the analytics strategy are to:

• Get visibility on the top of the funnel through to conversion

• Discover and keep track of customer retention KPIs

• Quantify the impact of changes brought upon the product/funnel

Let’s get to it!

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1. Define event dictionary for tracking

Garbage in, garbage out — a hard lesson to learn by anyone not careful and intentional about what events are sent to your tooling, from the way you’ve named them to the exact locations in your code where the events are sent (for debugging).

You don’t want to send events for everything happening within your product. Only for the events within your funnel that have direct influence over that funnel. Those are the key performance indicators of that funnel, which is why you ought to track them.

Vanity metrics pollute your data stack and make it more difficult to make use of machine learning because the models will take into account data that won’t have any impact on your optimization efforts.

The best way to define the events is to start from the technical foundation of the product, which is the database tables.

Your database describes the core models of your application and the things that can be interacted with which interact with other things in your app.

The vast majority of applications out there have a User model. For Shopify apps, that is a shop.

Whenever a Shopify merchant installs our app, we create a new entry in the shopify database, which is filled with merchants. Each row in that database contains a variety of columns/properties that are attached to that merchant, such as their store URL, whether they are active, the last time we sent a payout for them, and so on.

Each model in your application likely plays a large role within it, so take the time to clearly define which of those are at play and then consider what type of actions are available to that model.

For example, most RESTful apps will offer models the ability to be created, read, updated and eventually deleted. A user can be created/read/updated/deleted. A payout can be created/read/updated/deleted. And so on.

Once you understand what is naturally part of the user experience, you can keep note of which models (and actions) the user interacts with during their user of the product, which should become things you track so you can chart out the user’s experience and quantify it.

2. Define the traits to be tracked for individual users

While it’s important to keep track of events that happen within the product, that only represents one dimension where we are concerned with tracking user behaviour and experience.

A second and equally important dimension is the traits that describe the user at any given point in time.

Generally speaking, we want to enable marketing automation software by sending it data about users that can be used as the personalization elements of that marketing automation.

Where the events describe what is happening, the trait data explains for who and how that event has affected the general composition of the customer.

For example, I want to keep track of whether a user has a valid Xero connection, otherwise they won’t be getting any value from the product.

I can only trigger automation to remedy this if I know which users have an invalid Xero connection (where the Shopify model’s xero_connection_ok column is false). And I can know that by identifying the user in my app and passing to the CDP any and all traits that describe the merchant in time.

For now this is how I’ve described the traits for merchants using Reconcilely:

const userTraits = {
    name: shopify.shop_info.shop_owner,
    username: shopify.shop,
    active: shopify.active,
    email: shopify.email,
    company: {
        name: shopify.shop_info.name,
        shop: shopify.shop,
        plan: shopify.plan_name,
    },
    phone: shopify.shop_info.phone,
    currentMonthlyTotal: shopify.current_monthly_total,
    canBackdate: shopify.can_backdate,
    onboardingCompleted: shopify.onboarding_completed
    lastPayoutFetch: shopify.last_payout_fetch,
    currency: shopify.currency,
    xero_connection_ok: shopify.xero_connection_ok,
}

Effectively, I’m simply passing the data from my database columns directly, since I’m already tracking them internally and just want to make them available.

Now, if I pipe data from Rudderstack to, say, Intercom, and a live chat gets created with a customer, that customer’s profile will contain all of these traits, giving me and my support team all of the context required to understand how the merchants stands.

These traits get passed to Rudderstack anytime I want to identify the user, and I want to identify a user anytime something changes in the app (or if they log in, so calculating daily active users can be possible).

3. Create a Rudderstack account or host the FOSS version

At this point, you can go ahead and create yourself an account on Segment or Rudderstack. If you’ve got some devops skills, you can also host it yourself with Kubernetes.

I doubt I’ll need more than the 500,000 events per month that are offered within Rudderstack’s free account. If I ever do go over, I’ll opt for the open source implementation.

Since I run on a Node.js stack with a React front-end, I’m going to use the Node.js and JavaScript SDKs to rapidly integrate Rudderstack’s library into the product and start sending data.

4. Create sources for backend/frontend tracking

Historically, most of the logic will be stored in your backend (hopefully) and your server operations are typically where it’ll make the most sense to drop in identify and track calls as those are the lines of code responsible for mutating data, which is the type of stuff you want to be tracking.

When you create a source, Rudderstack (and Segment) will give you a special write key specific to that source.

When you send events using that key, Rudderstack will understand it’s for this source, while also making sure only you (or anyone with the key) can send events.

5. Implement identify and event tracking for Node.js source

Time to dig in.

Instead of rewriting event calling each time we need it, we’ll avoid that by creating and exporting a few reusable functions that can standardize the process of sending data to Rudderstack for us.

For starters, start by grabbing the SDK with npm

npm install --save @rudderstack/rudder-sdk-node 

Then, in your lib folder, create a new file called rudderstack.js or similar. To use the library, you’ll need to require and instantiate it at the top of your file:

const Analytics = require("@rudderstack/rudder-sdk-node")
const analytics = new Analytics(env.rudderstackWriteKey, `${env.rudderstackDataPlaneUrl}/v1/batch`)

Almost there!

Now, the analytics variable contains a few methods that correspond to the type of data you want to send.

For this example, we’ll stick to just identify and track, which are the two most common ones.

First the identify call.

I start off by defining the traits I’m going to be reusing across the different calls in a userTraits variable.

Then, we define a identify() function that takes in a shopify ID or domain in this case. You don’t have to do it this way, but I did that for flexibility since I’m unsure which of the two I’ll have access to down the line.

In the function, I use the ID or domain to find the Shopify merchant in my database and assign it to the shopify variable, which now holds all of the traits that userTraits includes.

Lastly, we store the actual identify call in a try/catch call in case something goes wrong. This is useful at first when trying to figure out what the object you send should look like.

In the case of identify, you need to pass it an object containing at minimum a userId. The traits are optional for the API call, but I think they’re the pretty much a must-have otherwise the user you identify will be missing all of the contextual data you’ll want.

Now, when you export the identify function and import it elsewhere in your stack, you can simply call it by passing in an ID or domain to identify the store.

Tracking events is really similar.

The only difference is that since we’re tracking a specific event, I want to also pass it an eventName describing the event as well as any additional traits that can contextualize the event.

For example, consider the “customer charged” event which I might fire when a subscription payment is captured.

An additional trait in such an event might be the “amount” captured within the scope of the customer charge. These additional properties give meaning to the event, and in the framework of marketing automation, provide critical personalization for your eventual messaging.

Then you just call them as usual:

Technically, this is all it takes to implement. You’ll want to ensure you cover all of your dictionary’s events across your stack so you’re tracking everything you need to.

6. Sanitize + verify data accuracy and integrity

Before sending off the data to different tools and destinations, it’s important to validate it’s accurately being received (as that’s what will be sent to your tools).

You can do this on Rudderstack by accessing Live Events of a given source.

This will give you access to a debug log that shows the events and identify calls received by the source.

I’ll go ahead and save some new mappings on my test Reconcilely account.

What should happen is that as soon as I load the settings page, the customer will be identified. Once the settings are updated, the tracking call will be executed.

First, let’s head to the mappings page to test the identify call:

Yay! And now if I save any of my settings…

There it is!

These two calls are the foundation of implementing a data tracking strategy. Provided you are really deliberate about what you track, you can now start to pipe these events to a variety of different tools without ever having to reimplement the same information.

The main purpose of a CDP platform like Segment or Rudderstack is that you only need to do the implementation once, and you can then pipe the same standardized data across all of the tools your use, from Facebook pixels and audiences to Google Analytics to Mailchimp to Intercom and so on.

From this point on, you can democratize this data across as many tools as you need by creating Destinations on Rudderstack and defining within them the traits you wish to assign to profiles.

Hopefully this guide shortens your implementation journey next time it’s needed in a project. Don’t hesitate to get in touch if you have any thoughts or questions on the matter. Happy to help.

Till next time!

We’ve just closed month 10 of 24 for Fund I, which means we’re just two months away from this experiment’s halfway mark.

Already…!

This month was one of the more rough months on record so far, though it was easily one of the most active and productive.

At the beginning of the month, Eric and I swallowed the frog and kicked off a large, painful refactor of Reconcilely’s most critical systems which were now pushing up against the platform’s vital organs in ways that made it less reliable to customers and much more painful to improve for us developers.

Unfortunately, the large refactor didn’t initially go as smoothly as we’d hoped. As we deleted swathes of old and deprecated code from Reconcilely, we grew our exposure to the very real risk of something falling through the cracks and causing a system-wide issue.

As we deployed our upgrade to production, the server logs began to run red with errors.

It was fucking terrifying, not gonna lie.

Can you imagine seeing this? It’s probably every SaaS owner’s worst nightmare.

Thankfully we had just redone all of the server logging so to us, it just felt like another Tuesday. Like… It’s OK. Shit happens. Let’s just take care of it right now.

Support queries exploded with customers puzzled as to why their payouts were stuck and quite a few customers who joined in the month decided to pack their bags and uninstall the app amidst the very bad first impression we’d made upon them.

The first half of the month saw Reconcilely reaching $7.9k in MRR only to lose several hundred of those to customers unhappy with the way the upgrade had gone.

During the crisis, we were faced with a few options ranging from curling up in a fetal position to rolling back our changes to tightening up our positions and marching straight to the problem’s source.

In the scope of two painful weeks of hardcore engineering and firefighting, the platform upgrade was finally completed, and alongside it, a massive increase in performance, reliability and flexibility.

It was a wild, wild ride, but I’m glad we both (a) actually got through it and (b) used it as a growing experience between partners, as it was our first opportunity to really test our mettle and grow our relationship.

It was tough, but necessary. We had to run through the fire regardless of the risks because the risk implied by not doing anything grew by the day as we continue to acquire new users.

Amidst these challenges, I spent most of my time this month empowering the support team for Reconcilely by upgrading our admin panel with a variety of new tools to reduce the time it takes to service a customer support query while growing the use cases that the support team can handle without escalation.

Despite most of our attention going to Reconcilely, things have gone mostly swimmingly on the Postcode Shipping side, with a few small fixes required to close up support requests that have been repeating over the last few weeks.

We’re coming up on the middle-section of the Improvement phase, the purpose of which is to grease the wheels of an already working system and to enable a paid acquisition model granted strong user economics relative to the market.

We’ve also been working on a new marketing website with Youssef and that’s heading in the right direction. The expectation is to launch it by year’s end sometime with the intention of creating hundreds of page in a short amount of time.

All in all, it was a rough but necessary month. In the end, we came out of it with a stronger product and processes, but some of the worst churn we’ve experienced so far in the portfolio.

As if you needed more proof that improperly managing customer expectations will make it very difficult to grow a subscription business like a MicroSaaS.

I’m looking forward to the coming month as we start to deliver customer-centric features. With most of our code going into the Admin CP this month, it felt like we were starting to over-optimize an area that didn’t directly contribute to new MRR.

This month’s main goal is to implement and deploy a customer data strategy so we can keep track of the KPIs responsible for unlocking paid user acquisition moving forward.

Current fund lifecycle stage

✅ Buying (02/2021 - 05/2021) 
✅ Fixing (06/2021 - 08/2021)
→ Improving (09/2021 - 12/2021)
Growing (01/2022 - 08/2022)
Roll up (09/2022)
Exit (10/2022 - 12/2022)

Fund Activity

• Funds Deployed: $573.5k

• Products: Reconcile.ly, Postcode Shipping

• Closing MRR: $24.19k (165% to goal)

• MRR Growth: +0.7%

• 30-day Revenue: $24.2k

• Rolling cash-on-cash return: $102.65k (+18% / +0.18x)

• 30-day ARR growth: +$2.16k (+0.7%)

• Cumulative valuation increase: +$579.4k (+101%)

• Current Total ARR: $288,228

• Fund valuation @ 4x: $1,152,912 (+101% / +2.01x)

• 10-Month Return (MOIC): +119% / 2.19x

This was one of the main engineering months so far.

We’ve been trying to clean up some critical bugs and low hanging fruits to make space for an analytics implementation.

The reason analytics needs to come first is so we can quantify how much closer to our goals we are as a result of the changes we bring to the product and/or its systems.

Specifically, I’m concerning myself with the types of customers who are using our products at any time, and what metric is most indicative of the success for each section of the lifecycle.

I can cohort users of our apps based on their lifecycle stage, which then scopes the KPIs of that stage relative to the things most likely to graduate the customer to the next cohort.

First, we have folks evaluating the product. Those turn into product beginners, who then turn into product regulars, who then turn into product champions.

Evaluators

• New installs

• Listing view to install %

• Install to activate %

Beginners

• Onboarding success rate %

• Accelerate Time to value

• Trial conversion rate

Regulars

• ARPU, Lifetime value (retention * monthly price)

• Expansion rate, net churn

Champions

• Referral rate %

• Review rate %

Generally speaking, new customers/installs are barely evaluating your app amidst a sea of other options.

We have many competitors, which means it isn’t impossible for a customer to install our app alongside many others and to make a decision about which to stick with.

Similarly, customers who have made it into the app and successfully activated become beginners of the product whose primary mission is to get successfully onboarded and experience value from the product as quickly as possible.

A quick time to value is a critical requirement to maintain a strong conversion rate, especially within the framework of a trial. Reconcilely has a trial from install, whereas Postcode Shipping has an unlimited trial option.

I have to adjust the beginner’s experience relative to those business models and remove any friction from the first experience so they can reach a positive decision about continuing to use the product moving forward.

By the time I’ve earned a new user’s trust, I can become more concerned with the ARPU I manage to collect (through various features enabling various pricing plans) and focus my expansion work on the cohort of regular users, which make up the bulk of the apps’ recurring revenues.

Finally, it’s important to have a way to quantify and identify product champions, those customers who would happily leave a review or participate in a case study. This is the cohort of customers who already recommend us.

GOAL: To improve the above KPIs and present the appropriate unit economics to support a paid user acquisition model across a variety of channels.

Reconcilely

MRR growth slowed this week as a result of the churn caused by our engineering mishaps. Despite this, we ended the month at +$100 thanks to ARPU growth.

As we kicked off some work in the admin panel, I took the opportunity to review my MRR dashboard for the first time and compile additional information, from a dynamic ARR/ARPU calculation to getting an idea of what share each pricing plan occupies within the total MRR.

As of today, more than a third of the revenue comes from customers signed up to the Unlimited plan, which is something I like to see.

In the next month or two, I expect to release a really cheap and/or free plan to rapidly scale the installs for Reconcilely.

Considering it’s install-to-paid conversion rate is in excess of 60%, we can expect free customers to scale up to better plans provided a need for advanced functionality.

Between the free plan growing installs and future plans increasing ARPU and expansion revenue moving forward, we should be seeing the correct pressure being applied from both top and bottom.

Most of our energy this month went into upgrading Reconcilely’s core engine and ripping out or reorganizing code in just about every part of the stack.

Before, Reconcilely’s code displayed symptoms of a project that had been hastily put together as processes and the database began to break down under the load of the current number of customers.

Today, the code is infinitely more readable and accessible, more DRY (don’t repeat yourself) and recyclable for other use cases in the future.

We haven’t laid the foundation for new features as much as rebuilt the one upon which the existing product has been working.

We worked diligently on optimizing our API and webhook handling, while reducing complexity of code critical to the main functions of the product.

Our webhook response time was halved from from 0.30s to 0.15s.

Unfortunately, every additional thing we rewrote or ripped out created a new dimension by which things could go wrong.

The reason we were refactoring the code was because it was really hard to understand how certain processes worked, or it was outright impossible to work around the hacks used in the earlier versions of the app.

The upgrade was painful, but not catastrophic per se.

I say that because the severity of the issues should have produced a catastrophic response from the customers, but the nature of the product is that customers don’t need real-time data as that data is used within the framework of a monthly or weekly bank reconciliation.

For example, our webhook responses were pretty much all 404’s because of something we had changed in our webhook handling.

While inherently really, really bad, this would be catastrophic if it were something end users interact with.

As an example, Postcode Shipping provides shipping rates that end users end up selecting while checking out.

That app doesn’t use webhooks, but if it did, this kind of error would affect both a merchant and many of their customers, thereby amplifying the issue by several orders of magnitude.

Instead, our exposure to the issue was limited to the number of Reconcilely customers who had either joined on that week and/or any existing customers checking into the product at that time.

The problem was that our upgrade was live on production, was broken, and remained broken while we did everything we could to get it back to parity. In that week and a half, a bunch of customers did their bank reconciliations and ran into issues.

Though we simplified several functions, the orders or payouts of some customers found themselves in a weird state that we hadn’t accounted for.

These tickets were handled very gracefully by the support team, but they showed us the exact ceiling for what they could do for us before having to escalate, which made it important to develop new internal tools while fixing the production environment.

Eventually, we solved both of those challenges and cleared our server logs from errors and ended up with a stronger and faster platform, but with a proverbial chipped tooth considering the trust some customers place in the product had been shaken.

Today, things are back to normal on the engineering side and we’ve since collected two huge advantages:

1) We release code to production nearly every day now, whereas this was simply not something we could do in the past considering the code was amok with complexities and a growing number of bugs.

It wasn’t clear what could potentially break as a result of changing something until we rewrote how that thing works.

This is an important lesson for me as a microangel.

When purchasing, I placed a heavy emphasis on the existing code because of its potential for buy/hold, but this breaks down if you choose to grow instead of hold (as we do for Reconcilely) and are unable to do so because of the way something is written.

It might make sense to expect a rewrite, and in a way, I’ve assigned a few months to that end vis-a-vis the fixing stage of this experiment. I’m just surprised to have used up all of that time when I had originally planned it as a buffer.

2) We empowered the support team to do more without having to involve us.

As an example, amidst the issues we’d discovered during our upgrade, a few customers noticed that we had sent orders to their accounting systems despite their settings indicating us not to (oops!).

In the past, this mistake would be incredible painful to the customer who would have to manually void dozens or even hundreds of transactions.

Now we can just drop the invoice names for a shop and void them programmatically on their behalf. That saves literal hours especially if handling hundreds of invoices.

Customer support can use this tool to both process the request, apologize to the customer, and return a clear list of results from the bulk invoicing process.

This tool has already produced a 5-star review for us considering the emotional reversal created from initially having to manually void hundreds of invoices to being completely free of ever having to do that ever again.

In fact, it’s so useful that I think I’ll expose it to the merchant inside of the app. The app would do well to offer additional tools that save customers time, even outside of the scope of the internal processes of the app.

Speaking of reviews, the harshest result of the month is the 2-star review we (rightfully) earned.

In fact, this review prompted me to write the bulk voiding tool, as the customer lamented their first experience and indicated how the app had produced several invoices for them that they now had to manually remove.

It is what it is, you just have to keep rolling with the punches.

I’m following up every so often with the customer to both ask for forgiveness as well as to plead them to reconsider their review as it has a big impact on our ability to grow on the app store.

Fortunately, we reached 30 total reviews this month, which is a symbolic milestone of course and nothing more.

From my experience, 50-60 reviews is the threshold from which rankings begin to really escalate considering how few apps even have that many reviews.

On the marketing side, we’ve kicked off the spec and first design for Reconcilely’s new brand and website.

It’s just a sneak peek that is likely to change, but this is the direction we’re heading towards.

Still playing with different options for the mark but the branding is mostly on-point. It’ll be day-and-night with our current website, and I’m excited to be able to drive traffic to a destination we fully control.

Postcode Shipping

I’ve been immersing myself into different Shopify merchant communities across social media to try and better understand the type of customer for whom Postcode Shipping is the ideal solution.

Specifically, I discovered that smaller stores don’t typically run into the problem that the app solves.

A lot of customers opt for a free shipping strategy enabled by increasing the base price of the product and including postage fees within it.

I think that has a lot of merit on the consumer side, as it can very be a point of friction for customers to shop up to a cart total only to discover that total inflated by shipping fees when checking out.

Despite this, the realities of global ecommerce is that the larger you get, the less control you have over what kind of customers can find you.

This creates issue when customers outside of your usual sphere of conversions start buying product, especially if you’ve previously planned your profit margin around the postage fees you’ll incur for customers around you.

Someone can really dig into your profits by buying your products from a place that will cost quite a bit to ship to.

That’s a core pain that causes the customer to start searching for postcode-based solutions, but I’m trying to qualify where the lines between useful and not useful are for merchants across the lifecycle.

In the meantime, I’ve begun populating some Triage items for the product, mostly in the scope of collecting data from customers entering/exiting the app while defining which areas of the onboarding/first-UX should change to create a positive impact on the conversion rate.

The main play for Postcode Shipping is to increase the ARPU of customers by introducing new features. That means a lot of energy needs to be spent speaking to those customers to make sure what we release isn’t tone-deaf, and, quite the contrary, truly responds to their use case.

We’ve got 2 months left of support from the sellers which is why it’s important we start to immerse ourselves into the product — which, to the credit of the sellers, is in amazing condition.

Unlike Reconcilely, this product doesn’t need any fixing. It is incredibly well built and maintained.All we want to do is increase the run rate by optimizing the different stages of the lifecycle.

I would really love to be doing the same type of activities for both products at the same time (i.e. copy/paste), which is why we’ve been putting much more emphasis on getting Reconcilely up-to-snuff so it can benefit from the same activities that Postcode Shipping needs moving forward.

That probably starts now though, with the focus on analytics starting in November.

The plan is to implement Segment directly, but I may end up going the open source route with RudderStack, which seems to offer just about the same functionality.

Didn’t make use of the warehousing features on Segment so that’s not something I’m going to miss at all.

My interest is to implement a cost-effective CDP for both Reconcilely and Postcode Shipping that can be easily transferred to another buyer in the future while giving me the tools to quantify my changes in the present.

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Learnings and adjustments

It’s been a very interesting and eventful month, complete with learnings and adjustments.

More of a confirmation than a learning, I saw again how refactors never go the way we expect them to.

The difference this time is that we expected things to break (though perhaps not so violently) and were prepared to roll with the punches. It became part of the process and we were able to rapidly reposition the product.

We just kept running into new errors, but kept at it and released a clean build relatively quickly after it went completely red. It took about a week to reverse the damage our app had done for a few of the customers that had been impacted.

In the end, the refactor of Reconcilely was a necessary step to let the product grow out of its limitations and to enable us to develop it to its full potential moving forward.

I might be making this sound much more severe than it really was. I just know that someone with less experience and more debt (or investors) would have completely freaked out over what is a qualifiedly fucked up and scary situation.

Admittedly, I’d love to focus only on growth and marketing but am continuing to stay patient with Reconcilely specifically as my contributions into the product are still quite valuable at a time when that’s the most important missing piece.

As Eric gets into a good flow of releasing some of the new features (now that we feel so much more comfortable with the code) that we have on the roadmap, I’ll graduate naturally over to growth by taking the stuff we are building and turning that into materials to communicate with and acquire new customers.

In the hopes of this update finding you well, I’ll catch you next time!1

Between the Jewish high holidays and a two-ish week paternity, I didn’t allocate much time for focused work in September. Yet the machine continued to hum and cash on cash returns have continued to grow.

All things performance are green this month with continued growth from both Reconcilely and Postcode Shipping as Fund 1 crossed the $24k MRR mark, up 7% since last month to a combined $24.8k MRR.

Eric has been fitting in really nicely with my workflows and has taken ownership of his role with great pride.

So much so that he’s jumped head-first into the hairiest challenge he could find, and in doing so has set us up for rapid acceleration and cost reductions on the engineering front.

We’re also onboarding the Postcode Shipping support team to Reconcilely, producing an economies of scale effect between the two products for the first time as they now share support costs.

Spending on support certainly can affect cash on cash returns, but that’s still better than paying corporate tax, which is now a factor considering I’ve rolled up the products I bought personally into a holding corporation to enable the sale of equity to present and future MicroAngel partners.

I’m also excited to be working with Youssef from DesignDash to work on the portfolio’s product and marketing design.

We’re kicking off a first project within the scope of a greater design and user experience strategy that’s sure to take things to the next level for both Reconcilely and Postcode Shipping.

Lastly, I collected some data from my customer acquisition tests on the Shopify app store and found some results suggesting even more profitable returns aren’t too far away.

Current fund lifecycle stage

✅ Buying (02/2021 - 05/2021) 
✅ Fixing (06/2021 - 08/2021)
→ Improving (09/2021 - 12/2021)
Growing (01/2022 - 08/2022)
Roll up (09/2022)
Exit (10/2022 - 12/2022)

We’re in a nice hybrid of fixing and improving between Reconcilely and Postcode Shipping right now. I like the pace of things. We meet every morning, run a lean scrum, and get on with our days.

While producing the roadmap proved to be a valuable strategic exercise, we didn’t do a great job of kicking it off on-time as we made a high-level decision early-on to deal with technical debt and any technology hiccups we weren’t super comfortable with.

Simply, we found that delivering the roadmap on-time was not possible given the existing debt and lack of flexibility with the code.

Early on with Reconcilely, I made a few small changes to the way the product behaves, but left the large deliverables to later because they felt like expansionary activities that could wait while I fixed more pressing issues.

Part of why I wanted to bring on a dedicated engineering partner at MicroAngel was to take the time needed to thoroughly investigate technical challenges so as to approach them from the most efficient angle.

As we finalized the roadmap, it became evident that certain things needed to be adjusted and/or re-piped for our own sanity, lest we would begin to fight with code we were too unfamiliar with and where developing that familiarity would mean spending an unfathomable amount of time and energy we didn’t want to waste.

I was prepared for some refactoring on my own, but the exercise felt a lot like working on Rube Goldberg machine due to the state of the code and how rushed it felt.

Considering the value encapsulated in the deliverables we want to deploy over the next 6 months, it made a ton of sense to take a step back and burn a month or two if necessary, but come out of it with much more flexibility and confidence as it relates to the code base and our ability to manipulate and extend it with new features.

On the fund side, I’ve been busy pushing papers in preparation for the next phase of MicroAngel I, which is to acquire a third product by leveraging the free cashflows it will represent as well as the combined revenue of the two initial products.

If done well, this third product could effectively be acquired for very little out of pocket provided some creative financing.

In that spirit, on my to-do list is to produce historical activity for both Reconcilely and Postcode charted over the past 18-24 months, so it can be possible to make the case for a cashflow-based loan about 4-6 months from now.

I spent a solid chunk of the month interfacing with my lawyer to re-capitalize the company I’m using for the fund while producing a new partnership agreement intended for Eric and future partners.

My newest daughter was born on September 3rd, which kicked off a wonderful two-week paternity during which my wife and I took the time to rest and welcome our child into the world.

This gave Eric plenty of time to dive into the Reconcilely refactor, which benefited him greatly considering he now understands the code as well if not better than I do.

As of today, our focus, in order of priority is the following:

1. Finalize onboarding the support team to Reconcilely

2. Hire & train selves out of daily support triage

3. Work through all open bugs/issues collected through support

4. Begin delivery of roadmap-specific features

That means the roadmap is effectively blocked until 1/2/3 are completed, which is not ideal but represents the correct tactic as it relates to the compounding returns those tasks will represent in the not-so-distant future.

Another way I’m reinvesting some of the excess cashflow into the portfolio is by onboarding a fractional design partner who can deploy UI, UX and marketing design activities on an ad hoc basis for me.

This is a much more affordable option than hiring full-time as I don’t have enough work nor the budget to justify that option, while collecting at least some of the benefit such an asset would bring to the portfolio.

The support team is about to kickoff with Reconcilely for the first time, which means I won’t be running front-line support anymore and will focus all of my time on product and growth.

In a way, building the team so far has helped to validate the kind of internal team that would be appropriate in the scope of second and/or third funds that introduce squad-based micro-entrepreneurship within higher-tier products.

Now that engineering, support and design resources are in places, I would love to figure out what kind of marketing resource would be most appropriate to onboard to fully enable the squad model vs DIY.

I’m toying with the idea of hiring a contract writer or two versus hiring a director of marketing who can spend all of their time further developing our lead generation systems. I don’t want to overbloat the costs needlessly, though any up-fron t investment that accelerates the run rate downstream is likely worthwhile.

While the cash on cash returns go down due to the additional costs, potential and speed both go way up.

You get to go further vs. faster.

Fund Activity

• Funds Deployed: $573.5k

• Products: Reconcile.ly, Postcode Shipping

• Closing MRR: $23.83k (165% to goal)

• MRR Growth: +7%

• 30-day Revenue: $25.07k

• Rolling cash-on-cash return: $79.39k (+14% / +0.14x)

• 30-day ARR growth: +$19.32k (+7%)

• Cumulative valuation increase: +$616.37k (+107%)

• Current Total ARR: $297,468

• Fund valuation @ 4x: $1,189,872 (+107% / +2.07x)

• 9-Month Return (MOIC): +121% / 2.21x

Headlines

• New baby + short paternity break

• Portfolio passed $24k MRR combined revenue

• Reconcile.ly passed $7.5k MRR

• Postcode Shipping passed $17k MRR

• Signed on @YS as a fractional design partner

• Reached Fund 1 Valuation goal ($1m / 2.00x)

• Reached 82% of Fund 1 total return goal (2.21x of 2.7x)

• Sourced lending options for Acquisition #3

• Re-capped old corporation as a holdco, rolled Reconcilely and Postcode into it and emitted new class of shares for present and future MicroAngel partners

• Postcode Shipping focused on workflow assimilation & training

• Reconcilely focused on some code refactor & technical debt

• Posting 100%+ ROAS from Shopify Ads over last 6 months

Reconcilely

Things have continued to progress in the right direction for Reconcilely as it reached the $7.5k MRR mark

I really should adjust that -20% column by now. I’ll get to that when I start working on the admin section improvements. Gotta stay focused on what actually creates progress and results.

Merchant growth has been pretty constant. We’ve added 21 new customers across the month, which goes to show how strong the conversion rate is from customers installing the app.

Which is a good omen for ad spend — the mild success implied by a 100%+ ROAS means I’ve been increasing budget to the ad campaign for Reconcilely.

It doesn’t look like there’s a ton of volume for me to capture, but it’s qualified lead generation I’m happy to compete for and build on top of.

Back in February, I kicked off a small paid acquisition experiment to see whether I could reliably buy MRR in the place most likely to produce qualified leads (the app store itself).

On about $3.2k of spend, here are the general notes:

CTR of 3.2% for 531 clicks and a CPC of $6.06
Install rate of 20.5% for 109 installs and a CPI of $29.55
Conversion rate of 56% for 61 customers and a CAC of $52.80

Current return: $3,286 (102.1% ROAS)
Current LTV: $261
Expected captured return: 61 * $261 = $15,921 (494% ROAS)

Verdit: Pump it!

The reason I let this experiment run for a few months is because I know Shopify’s reporting is off by a little while, and the ROAS grows over time as your partner account collects payments from customers having signed up through an ad campaign.

The app currently posts a LTV of $261 and an ARPU of $18, for a lifetime of about 14.5 months. I can expect each cohort of customers to stick around for that long, which will further grow the ROAS.

Specifically, these 61 customers should collectively produce $15,921 in lifetime value, which would represent a ~500% ROAS, which is fantastic.

At this point, I’ll leave the campaigns to run and begin developing additional channels to hopefully achieve similar or better results.

Of course, once I reach a certain volume of users, I can start recycling activity from one channel to another.

For example, all the impressions I pay for via Shopify ads should be recycled within Facebook, Youtube, Reddit, Twitter and LinkedIn audience pixels, enabling me to reach the same customers with greater accuracy and frequency without having to needlessly wade (and spend) through unqualified traffic to retarget them.

On the product side, I’ve been working on refreshing some of the transactional emails we send to customers, both from a functional and design perspective.

I’m liable to refresh these again once Youssef and I are done touching up the Reconcilely brand, but for now, the improvement is pretty obvious to me.

We’ve developed a brief outline and purpose for the new marketing website, which should be a net improvement over what is currently available at reconcile.ly.

Importantly, the new website’s purpose will be to rank higher for search terms that the app already ranks for naturally, and to do so by rapidly increasing the number of pages on the domain within the scope of a logical website sitemap that accurately answers search demand.

SEO isn’t exactly my strong suit and a skill I’ve been meaning to develop into a primary asset for growing micro-SaaS products. I’m excited to start investing into it and look forward to seeing whether my hunches are correct.

Finally, Eric is putting the finishing touches on some major repiping in Reconcilely’s highest level documents with the singular goal to significantly reducing the app’s overall database load, in and out of core processes.

The original seller wrote Reconcilely’s code in a huge rush and it shows, as that rush made way to paranoia about things breaking (due to the speed) which itself led to the implementation of incessant checks and re-checks and re-re-checks.

The result is a bloated, difficult to navigate landscape that I initially justified considering the critical nature of the data being transmitted on behalf of hundreds of merchants.

My hunch was that the solution was a little over-engineered but I didn’t have enough experience to definitely say so. Eric’s approach was not a full rewrite because those rarely work out the way we think they do.

Instead, his approach has been to refactor some of the app’s highest level calls and the way those calls are made and to lean out the number of times (and workers) involved in the overall process.

That would produce a leaner product with less redundancies and circular dependencies and a more linear process we could both understand and eventually extend per our roadmap.

It’s certainly not a simple process because its purpose is to simplify code that inherently was difficult to wrap one’s head around.

I initially thought that was due to the complexity of the app, but today I understand how that’s not the case, and we’re working to give ourselves enough flexibility to create a development environment that is more predictable and straightforward.

Overall, the product work is slightly behind due to these moves, but when I zoom out I recognize that the timeline itself is arbitrary, whereas the activities we’re undertaking are strategic.

I’m confident we’ll rapidly gain momentum following this small change. I’m still making some improvements but trying to limit myself to side stuff so they can easily be merged into the large PR Eric will push to simplify the app.

It can be pretty scary to make a big change to the code base and to some extent, we’re expecting something somewhere to break — knowing we have the two options of (1) quickly identifying and fixing the problem within the scope of the new deployment and (2) being able to roll-back to our previous deployment at any time and re-assess.

Since the majority of the customers are in the APAC region, we can adjust the timing of our push to production so it happens when most of them are asleep, giving us some additional breathing room were things to go wrong.

No stress. We’re making the product our own, and that’s a great thing to see my new partner both lead and implement so early in his tenure!

Postcode Shipping

Additional props should go to Eric who’s become the de facto escalation option for our support team working on Postcode Shipping.

The hand-off has been progressing diligently and we’re at the stage where daily meetings are spent going over any open tickets and/or bugs and/or in-development features that we’re going to take to the finish lines.

Eric’s already pushed a few changes to production to satisfy some customer requests, and things in general are in very good, stable condition as we begin to position our thoughts for the overall strategy.

Last month, I took a meeting that could have produced a large enterprise customer but decided not to push the trigger due to the obvious ramifications this would have on MicroAngel’s global momentum — it would even affect how much time Reconcilely got, which was a non-starter.

For now, the playbook is to continue absorbing workflows and processes that have powered the value prop for a little while and keep compiling ideas and feature requests as we go, so we can become opinionated about what kind of features our customers would most appreciate.

I’m likely going to link customers to a feedback survey across the app and within customer support replies, like I do for Reconcilely.

The survey in question has a simple purpose: to collect information from existing customers about the how and why of them installing and paying for Reconcilely:

Will use a similar survey for Postcode Shipping so I can better understand what drives the value proposition and what specific language customers use to describe the pain that our app solves.

The area we are most going to work on is the retention of new installs. Last month was a great example of the main improvement required to really unlock the growth for Postcode Shipping.

Despite being much younger, Reconcilely has a much stronger natural affinity to retain the installs it works hard to get.

That means that despite only registering 49 installs in the month, Reconcilely ended up with more net installs than Postcode Shipping did.

This is likely due to the general complexity of an app like Postcode Shipping — as it relies on actual effort to decide what rates should be used relative to user’s postcodes and the products they have in their carts.

That in itself can create some friction for new customers, but there’s also the general requirement of the app for merchants installing to have access to Shopify’s carrier rates, which is usually an Advanced Shopify plan feature or better.

That said, merchants who have smaller Shopify plans can still access the feature by prepaying their plan for the year ahead and getting in touch with Shopify support to unlock the feature.

The reality is that any merchant can install the app, and we know the vast majority of merchants using the Shopify platform aren’t big. The app is made for a niche, and that niche leads to fantastic retention, but not amazing conversion up-front.

The goal will be to introduce new features that decrease the general friction in the onboarding process so a greater proportion of installs can feel they can be successful quickly without having to invest a ton of time.

That is a clear area of improvement where innovation can make a huge impact across the board. In our case it’s improving net installs.

Win a Business via The MicroAngel Awards

Guess what!

The MicroAngel Awards pot is up to $2,300 👀

I think we’ll try the first edition when we reach a $5,000 pot.

The idea is that most of the revenue generated from this very newsletter is going to feed a MicroAngel Award pot up to the point that it is worth something like $5k.

When that happens, all is fair to market yourself as the person most worthy to win the business.

The MicroAngel Awards will see one lucky person be awarded a MicroSaaS business to grow and market.

The deal:

• you’ll become CEO and own 100% of decisions

• you’ll own 100% of the cashflows generated by the business

• you’ll own a 30% equity stake in the business

• you’ll choose what to build and how, pay yourself or reinvest

• you’ll get 2 years to make the most out of the MicroSaaS before it gets sold

To qualify:

• you need to be a MicroAngel paid subscriber (which means you’re effectively contributing to the pot)

• you must commit to building in public, mostly via Twitter and co-writing on this very newsletter

• mention @microangel_ with your pitch explaining why you should win — this is build in public from the start

• you should have the skillset needed to succeed in the game, which generally means you can code and/or market and are very resourceful about what you cannot personally do

If you want to be a sponsor, please get in touch with me over Twitter. Otherwise, be sure to subscribe to both contribute to the pot and gain a chance to win.

Subscribe now

My goal with this project is to help more people become microangels while testing a theory in decentralized microinvesting, the likes of which has the potential to completely revolutionize how angels deploy capital in the future.

Learnings and adjustments

Another month heading due North, with mostly good news across the board.

I’m satisfied with the general direction of the portfolio, but want to start giving more attention to marketing systems, especially within the scope of Postcode Shipping whose customer acquisition has stalled somewhat.

Most of the growth for Postcode Shipping this month came from ARPU growth, itself a factor of a pricing update that is slowly propagating across new customers signing up.

The main learning is not to wait too long before building customer acquisition systems and/or at least deploying early experiments that can yield intelligence in the future and guide the kind of actions most likely to produce strong MRR growth.

The arrival of Youssef is going to produce a profound impact on my ability to rapidly design and deploy marketing collateral across a variety of ad campaign experiments.

While the original purpose of the engagement is meant to be temporary, I’d love to develop a long-term partnership the unit economics of which are compatible and justifiable vis-a-vis the free cashflows of the portfolio.

It’s time I start developing the mechanisms to support a squad-based model as that represents the next iteration of this project and the one most likely to enable the scale I’m dreaming of.

They say “if you wish to go fast, go alone; if you wish to go far, go together.” I’m a big believer in this approach.

Fractional services can be a huge lever to pull on so I can mechanically increase MRR without having to manage a large payroll and while retaining the awesome ability to shed costs and post a high profit margin for future acquirers.

In the meantime, we’ll continue to show up, execute the plan, and hopefully maintain the great momentum we’ve built for ourselves so far.

Please accept my apologies for the lack of content on the newsletter lately. Neither the motivation nor the energy have been abundant until only recently, and my reaction to write as a means of therapy has suffered for it. I’m working on it. Promise.

Until next time!