Hello Eyal , Interesting process. I had an observation regarding the 8.8K difference in MRR that you would be ultimately looking to bridge over the next 2 years. From a financial sponsor perspective, your assumption of growing the MRR at $366 MRR sans any reinvestment back into the business tells me that you will be leveraging your operating skills to reduce churn /increase cash flow rather than chasing clients and growing the MRR via a reinvestment back into the business. Did I understand that correctly ?Have you modeled for a margin of safety here ? What if you cant get the MRR growth ? What would be Plan B ? Could you hardball your entry price and still remain a relevant buyer?
Oh man, awesome questions Amitabh, thanks so much for asking!
I have so many thoughts on this and ways to answer, that you've inspired me to throw together a post on the topic. I'm going to withhold most of the ideas I've written to reply here so others can also benefit from it. Look out for it in your inbox today or so.
So I don't leave you high and dry, here's the TLDR of my response:
- Yep, not gonna reinvest MRR the classic way, though I will still experiment with ads. They may be profitable enough to just do it if the hit on my profit margin isn't too hardcore
- Using my skills as a growth engineer to increase MRR, bootstrap approach
- Will grow by focusing on acquisition, retention and expansion
- Acquisition is reviews, mostly, but I'm also going to be doing outreach, manual and automated, which has proven effective for me in the past
- Expansion: Increase prices til conversion start to drop
- Margin of safety: I'm expecting to buy +$420/mo of MRR growth while only needing +$366/mo. The work I do in acquisition, retention and expansion is likely to further push the revenue growth, not the other way around, so this 13% margin (366/420-1) should be enough for now, and will expand as MRR growth expands from my efforts
- There is no plan B. This is Plan A through Z. Cognitive dissonance is a real thing. I'd prefer to stay laser focused on the goal. If things go off course, I will adjust to the best of my ability. An indie hacker never gives up. I don't plan on ever giving up. I did this stuff even when I didn't make money from it. If it comes down to it, I'll simply take the hit on the IRR side.
- If push comes to shove, I can definitely hardball my entry price because I create instant arbitrage via my my entry price (2.5x), whereas there are hungry buyers right NOW who would likely buy it for 3.5x. I could always get out, divest, call an audible, and reroute either into existing positions or buy something else. Have to stay like water
Thank you , that's comprehensive. I look forward to your public post on this . With your Reconcile.ly acquisition you are 1/3 of the way there ! Best of luck .
I thought I'd be kind and let you know your submissions since the last 7 days on HN are flagged as [dead] - whether your comments are too, I'm not sure; people will only see your posts if they have "showdead" in settings toggled on.
It could be related to self-promotion rules? Or maybe a moderator (dang) really didn't like a reply of yours somewhere - so I'd recommend looking through your post/comment history to see if any mod (dang) let you know you're breaking their rules somewhere.
Maybe it's just that you need a certain amount of karma before posting your own links so frequently.
Hello Eyal , Interesting process. I had an observation regarding the 8.8K difference in MRR that you would be ultimately looking to bridge over the next 2 years. From a financial sponsor perspective, your assumption of growing the MRR at $366 MRR sans any reinvestment back into the business tells me that you will be leveraging your operating skills to reduce churn /increase cash flow rather than chasing clients and growing the MRR via a reinvestment back into the business. Did I understand that correctly ?Have you modeled for a margin of safety here ? What if you cant get the MRR growth ? What would be Plan B ? Could you hardball your entry price and still remain a relevant buyer?
Oh man, awesome questions Amitabh, thanks so much for asking!
I have so many thoughts on this and ways to answer, that you've inspired me to throw together a post on the topic. I'm going to withhold most of the ideas I've written to reply here so others can also benefit from it. Look out for it in your inbox today or so.
So I don't leave you high and dry, here's the TLDR of my response:
- Yep, not gonna reinvest MRR the classic way, though I will still experiment with ads. They may be profitable enough to just do it if the hit on my profit margin isn't too hardcore
- Using my skills as a growth engineer to increase MRR, bootstrap approach
- Will grow by focusing on acquisition, retention and expansion
- Acquisition is reviews, mostly, but I'm also going to be doing outreach, manual and automated, which has proven effective for me in the past
- Retention: Add requested features, improve onboarding, improve lifecycle messaging
- Expansion: Increase prices til conversion start to drop
- Margin of safety: I'm expecting to buy +$420/mo of MRR growth while only needing +$366/mo. The work I do in acquisition, retention and expansion is likely to further push the revenue growth, not the other way around, so this 13% margin (366/420-1) should be enough for now, and will expand as MRR growth expands from my efforts
- There is no plan B. This is Plan A through Z. Cognitive dissonance is a real thing. I'd prefer to stay laser focused on the goal. If things go off course, I will adjust to the best of my ability. An indie hacker never gives up. I don't plan on ever giving up. I did this stuff even when I didn't make money from it. If it comes down to it, I'll simply take the hit on the IRR side.
- If push comes to shove, I can definitely hardball my entry price because I create instant arbitrage via my my entry price (2.5x), whereas there are hungry buyers right NOW who would likely buy it for 3.5x. I could always get out, divest, call an audible, and reroute either into existing positions or buy something else. Have to stay like water
Thank you , that's comprehensive. I look forward to your public post on this . With your Reconcile.ly acquisition you are 1/3 of the way there ! Best of luck .
Great stuff Eyal! Sharing to my newsletter this week :)
You rock Ian!
You continue to share gold! I'm paying attn. when your emails hit the inbox...Keep it rolling, Eyal!
Really appreciate that Brian!
Only way I know this stuff is valuable is when people like you take a second to let me know, so thanks :)
I thought I'd be kind and let you know your submissions since the last 7 days on HN are flagged as [dead] - whether your comments are too, I'm not sure; people will only see your posts if they have "showdead" in settings toggled on.
Super useful — not sure why that’s happening. I’ll likely create a nee account. Thanks for the heads up!!
It could be related to self-promotion rules? Or maybe a moderator (dang) really didn't like a reply of yours somewhere - so I'd recommend looking through your post/comment history to see if any mod (dang) let you know you're breaking their rules somewhere.
Maybe it's just that you need a certain amount of karma before posting your own links so frequently.
Makes sense. Haven’t used my HN account in ages!