Good morning and evening to you, dear friend, and thanks for checking out this month’s report.

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

Sideways MRR action as we investigate revenue gaps with Shopify

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.

Search impressions for www.reconcile.ly are growing

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.

Reconcilely Bundles.app Integration Setting

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.

Reconcile.ly @Reconcilely

Announcing the @Reconcilely <> @BundlesApp integration 🎉 Inventory adjustments for your Shopify product bundles can now automatically be reported to Xero through Reconcilely. Goodbye manual adjustments! 👋 Full details 👇 reconcile.ly/blog/shopify-p…

reconcile.lyBundles.app Integration: Accurate Inventory Adjustments for Shopify Product BundlesIntroducing the Reconcilely <> Bundles.app integration, enabling you to sell your Shopify Product Bundles while ensuring your SKU and inventory adjustments for products contained in your bundles are accurately reflected in your accounting software such as Xero or Quickbooks.

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

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MicroAngel

MicroAngel State of the Fund: March 2022