In my previous article I stopped just before things got interesting. Gymdesk (then Martial Arts on Rails) had reached $12k in MRR in the middle of 2019, then remained stagnant for the rest of the year.
$12k / month was enough for me to quit my full time job and dedicate my full attention to growing the business. But I had bigger goals. I wanted to see how far I could take this concept that is now a live product with paying users.
Being a developer and a product person, the first thing I focused on was improving the product. I contracted a very talented UX designer, and together we combined all of my learnings over the past 3.5 years to redesign the UI of the product from scratch, to provide a more modern and cohesive experience.
We relaunched with a completely new UI at the beginning of 2020 (literally finishing QA over Christmas while visiting family in LA). The first few months of 2020 were going splendidly – we saw consistent $1k+ MRR growth every month, which we have never experienced before. We had extremely strong trial-to-paid-account conversion rates, at around 40%.
And then COVID started.
COVID started a little earlier than that but really became a thing for most people around mid March 2020, when the NBA announced they’re canceling their season. Other major sports quickly followed suite, and various health guidelines regarding gatherings and indoors events started to come out.
COVID hit the fitness industry hard – almost all gyms were closed for months, and then reopened slowly with very restrictive guidelines for in-person and indoor training.
As a business that services that industry, we were likewise impacted. Users were reaching out to freeze or cancel their accounts. We had significant churn from March to around August. Yet, things were starting to stabilize around June, and it seemed like we would manage through this unexpected turn of events.
We kept adapting to the new environment, and added many features to support our users during those times – from booking functionality with capacity restrictions, COVID vaccination checks, online training features and more. I strongly believe our ability to adapt during this period of uncertainty laid the foundation for future success.
We ended 2020 on a pretty good pace still, having grown our MRR by 60% to around $19.5k, and maintaining strong conversion rates from trials to paying users. Considering everything that happened, I was pretty optimistic about the direction of the business at this point.
Moving past COVID and building a company
COVID was not over by any stretch at the beginning of 2021, however most people were starting to get used to this new reality, and gyms were following suit. We started investing more in marketing, and were looking forward to seeing how much we can scale in this new climate.
After a few failed experiments engaging “growth” and advertising agencies, I came to the conclusion that outside consultants and agencies were never going to understand our audience like I did. I decided to start building an in-house team, that would live and breath our product and vertical.
We made our first full time hire in June 2021 – I hired a person who used to write for us, and had a background in SEO, to be our in house content marketing / editor. The goal was to start producing quality content on a regular basis, and to double down on our strongest acquisition channel – organic traffic.
This was a big decision for me personally – it’s different engaging freelancers for fixed term / cost work, than bringing on someone as a full time employee that you’re now responsible to make sure they are paid every month. It was here that we started to make the transition from a one-man, owner run business to an actual company.
Later in the year, I hired my first full time customer service person as well. We have engaged customer service people through Upwork previously as contractors, and it just wasn’t working out. Our new CS rep was a godsend, removing a large chunk of distractions from my daily routine. I still regret not doing this sooner.
Joining The TinySeed Accelerator
I had previously raised a VC round with a previous startup I co-founded, and was not looking to go that route again. When I came across the TinySeed accelerator website, their tagline caught my eye – “An accelerator for bootstrapped B2B SaaS companies”. I felt it was describing us to a tee – and the more I read, the more I felt I was aligned with their direction.
TinySeed is focused on investing specifically in B2B SaaS companies with actual revenue, that are either completely or mostly bootstrapped. They don’t aim to create unicorns by forcing unnatural massive growth spurts, but rather they try help small companies get to the next level and build sustainable, profitable businesses.
Even after applying, I was still on the fence on whether we should join or not – we were doing pretty well, and I wasn’t sure if TinySeed’s value was worth giving 10% equity for (as we had no real need for the capital). In the end, I made a simple calculation that if TinySeed can help us increase our value by more than 10% then it would be worth it in the end.
Going through the accelerator program has been very interesting. They provide a very actionable playbook that provides direction and clarification for founders. Their partners and mentors are available to provide more personalized advice.
I personally drew upon Rob Walling‘s experience multiple times, when restructuring our pricing plans, when hiring a new CTO and more. Einar, their PE partner would be a massive help if we decide to have a liquidity event down the line.
Scaling And Growing Up
We ended 2021 strongly, having grown our MRR by around x2.5 compared to 2020. COVID vaccines were starting to become available, and we were looking forward to an even stronger 2022, without COVID being an omnipresent threat on our industry.
While COVID did not go away in 2022, it became a part of our daily lives, to an extent. And so gyms started opening again, or scaling up their operations.
In 2022 we continued to grow as a company, ending the year with 8 employees and 4 contractors. I continued to optimize our MRR growth and cashflow, trying to bottle the formula for a profitable, recurring revenue company.
We passed $1M in ARR in mid 2022 – a number like any other, but somehow still significant. I still remember thinking mid-2019, that if I could just grow our revenue to $16K MRR over the next couple of years, I would be very happy. The goalposts keep moving.
At this point it really dawned on me how much of a cheat code B2B SaaS is. If you can keep your churn and acquisition costs low enough, the recurring revenue means that you don’t have to do anything clever to keep growing. While building a successful business is never easy, B2B SaaS has a much more straightforward and direct path to success than most other business models.
Despite all the growth we had, and the people we’ve added, I still have to deal with many small and sometimes large fires on a daily basis. The more people I hire, the more work I need to do every day getting them “unstuck” when they encounter things outside of their comfort zone. The more customers we have, that tiny percent of them that is difficult to deal with becomes larger in absolute terms.
There is significant burnout after running this business for 8+ years. However, I’ve been taking steps to mitigate it, and to reduce the dependency between me and the company. I’ll write more about that in my next article.