Episode 688 | Growing Boot.dev From $6k to $110k in Monthly Revenue in 15 Months

Rob Walling:
Welcome back to Startups For the Rest of Us. I’m Rob Walling, and this week I talk with Lane Wagner of Boot.dev about how he’s mostly bootstrapped his coding learning platform to the most recent month’s net revenue of 110,000. We cover a bit of his journey, getting it started, how he was able to bootstrap it, why he raised funding, whether or not that wound up being a good idea, as well as diving into what got his growth to dramatically accelerate, where he was growing, not very fast, and then suddenly things ticked up into the right. I asked him about that. 

Before we dive into that, tickets for MicroConf US in Atlanta next April 2024 are on sale. This event will sell out. If you’re thinking about coming to Atlanta, April 21st through the 23rd to see me co-host this event with Leanna Patch, and to see speakers like myself, Rand Fishkin and several others, head to microconf.com/us to grab your ticket before they sell out. 

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Drop us an email at sponsors@microconf.com. Before we dive into our conversation, if you haven’t downloaded the two top secret exclusive episodes of this podcast that have never been in the feed, they’re called Eight Things You Must Know When Launching Your SaaS and 10 Things You Should Know As You Scale Your SaaS, head to startupsfortherestofus.com, enter your email and you’ll get both of those episodes, and each one comes with a PDF guide. With that, let’s dive into my conversation with Lane. Lane Wagner, welcome to the show.  

Lane Wagner:
Hey. Thanks for having me on, Rob.  

Rob Walling:
I’m excited to dig in to Boot.dev today. Your H1 is learn backend development the smart way. Welcome to the most captivating, finger-flying, addictive way to learn to code. That’s good marketing copy. Did you write that?  

Lane Wagner:
Thanks. I wrote a very similar version and then I have a marketing consultant that also helps tweak it.  

Rob Walling:
Nice. That helps. So, to give folks an idea of where you’re at today in terms of the business, you have graciously published your revenue numbers on Indie Hackers. We can link that up in the show notes, but you had some pretty incredible growth recently. Even as of four months ago, five months ago, you were at 24K MRR. No, 24K net revenue, in gross revenue in the month. This previous month, which was October of ’23, you were at $110,000. 

That’s a heck of a growth rate. What has gone on over there? We’ll get into your whole origin story, but what has happened to 4X in four months?  

Lane Wagner:
It’s been absolutely crazy. I was on the Indie Hackers podcast. It was actually back-to-back with your episode, I think. This is before they stopped doing the podcast, or at least took a pause from it. Yeah, that was when we were about 26K, and the last three months have all been over 80 or 90. 

We’ve pulled a few growth levers that seem to have actually had some good returns on them, and we can get into that, but it’s primarily YouTube. YouTube has been good to us.  

Rob Walling:
I do want to dip into it a little bit because I’ve been doing so much on YouTube myself with MicroConf. We’ve tried, probably three different … I’ve tried so many approaches on YouTube, where it’s like, “Well, I already record this podcast and video. Can’t we just put it on YouTube?” It’s like, “You can, and no one will watch it. You’ll get tens of views per day.” It’s totally meaningless. 

Then we tried doing clips because we have, sometimes fun clips, or we do Q&A, listener questions where we can have a question and an answer, and that’s going to be the topic of the video, and we publish those. Crickets, for the most part. I mean, basically our audience would watch it, and it was not growing the audience. 

Then we tried another thing and eventually we figured something out, and I won’t go too deep into it, but we basically went from 10,000 subscribers to almost 70,000 subscribers in about 18 months. So, we figured out our system and what works. 

So, I’d love to hear from you. You don’t have to give up the golden goose and tell everybody what you did, but I’m curious what your strategy has been to get this type of growth out of YouTube.  

Lane Wagner:
Good question. So, this is actually, is probably a good thing. I don’t have the typical, “Well, we grew a lot on YouTube.” Actually, my YouTube channel and my podcast channel has had growth, but it hasn’t been this astronomical thing that’s driven all the revenue. 

It’s been partnerships, primarily. So, collaborations with other YouTubers. So, a ton of legwork, Twitter DMs, emails, getting to know folks. I have a podcast, and you were a guest on my podcast, right? Getting to know people, writing great stuff that, kind of is adjacent to our product and getting in front of their audiences has, honestly been a huge growth channel for us. 

A lot of those people come in direct. So, they’ll hear about us on someone else’s YouTube channel or on someone else’s podcast and then come direct to our site, which is kind of hard to track, annoyingly enough, but we know that it’s the only thing working, so it has to be that. Right?  

Rob Walling:
Yep. To give folks an idea, obviously if you’ve never done backend development. You teach Python and Go. If you’ve never done it, or you want a refresher, or you want to get better at it … I was actually just clicking right before we hit record, going through your first Python demo course, and I was like, “I’m actually learning something.” 

So, it’s a B2C play, usually. I’d imagine you’re not selling to businesses, you’re selling to end users, who either want to become developers or who want to up their chops in these languages. How is that … I mean, my opinion, or my answer when people write in with questions about, “Hey, B2C. I’m going to do it,” and my answer is, “Don’t.” It’s jokingly, and there’s reasons. 

I mean, it’s not truly, don’t, obviously because you’re an example of a very successful business. Did 100 grand in revenue this last month. So, it’s not don’t, but there are, usually churn is high, and on and on. I’ve talked about all that stuff before. 

As you were building this business, did you know it would have the B2C issues, or really does it have the B2C issues? Is it relatively high churn, and is it little higher support than you’d like, and is it the typical, kind of B2C situation?  

Lane Wagner:
So, it does have some of the B2C issues. When I was early getting into this space, I was speaking with another founder of a company in the same industry who was farther along than we are. We’ve, kind of started to catch up now, which has been great, but they were quite a bit farther along than we were, back when I was talking to him. 

He’s like, “Just so you know, this space, churn is high,” and he’s not wrong. This is not a tool that, if you like it, you’ll just use it for the rest of your life. At the end of the day, whether someone succeeds with the product, goes through the course, learns a ton, gets a job, or fails, they get through the part that initially got them to sign up. 

There’s obviously, exceptions to that. Some people just love taking every new course that comes out. They’re big fans. But as a model, it is fundamentally different than a SaaS company. Then on the consumer side, actually we have not had that second thing you mentioned, which was support issues. I think that’s partially been how our entire team of three are all engineers, and we’ve engineered our way out of some of those problems, but they could have been bigger problems than they’ve been.  

Rob Walling:
You made a comment that I want to dig into. You said, “This is not really SaaS,” but technically it is a subscription for a tool to learn. So, technically we could say, “Oh, it is Software-as-a-Service,” but I think of it, the job to be done of Boot.dev, it could not be software, it could be someone driving to your house. 

The job to be done is teaching you how to uplevel your skills, or frankly just to learn from scratch, Python and Go. But when you say, you thought it was SaaS, but it’s not, what’s your thinking behind that comment?  

Lane Wagner:
Yeah. This really, I think, set me back quite a bit especially in the early days, just being confused about the business. This is my first company. It’s so deceiving for several reasons. 

First of all, Boot.dev is not like some of the other platforms that are essentially, videos where it’s really just a content play. You could put it up on any CMS and have a product. It’s a very interactive, kind of gamified environment. 

In my head I’m telling myself, “This is a different thing. This is not just content creation. This is like we’re building a product.” So, that was mistake number one, because exactly as you pointed out, what matters is the job to be done for the customer. Because the job to be done is training, then you fall into that industry. 

Having a different product is fantastic from a branding, finding a niche perspective, but the business model is fundamentally locked into the industry, or whatever the customer’s trying to get out of it  

Rob Walling:
Training.  

Lane Wagner:
Yeah.  

Rob Walling:
Yeah. That’s a good, solid realization to have because then you realize the pros and cons of a training business versus trying to compare yourself to SaaS benchmarks, for example, which just aren’t going to make that much sense. 

I was impressed because right before we got on the call, it says, “Try your first course for free,” and I clicked and I expected it to be a video teaching me to do something, like Udemy, and it’s not. It’s fully interactive software that’s in the browser, and there’s a Python interpreter that, and the code appears, and you submit it, and you click on it. 

I was like, “Oh, this is pretty well-done.” This is not something that someone could replicate in a week because there’s code behind this. I say that because I know that there are a lot of courses out there to learn programming, backend, frontend whatever, but you’ve built something here that feels pretty unique, at least well, certainly for Python and Go, I think. Are you the only way to learn these on the internet in this fashion?  

Lane Wagner:
Most learning platforms, not only as we mentioned, are video-based, but another thing, is a lot of online learning in the programming space is based on the frontend. So, we’re going to get you started on the frontend, and if you want to learn backend, you can go watch a video, or maybe you can go get a CS degree. 

For whatever reason, it’s so undercatered to, and this really blew me away. It goes back to the origins of the company in the first place. I was a hiring manager. I managed a team of Go developers. Whenever I opened up a new job position, I’d get 10 applicants. My colleague who ran the frontend side of the stack for the same company, he’d open up a job application and get 150 bootcamp grads, or people who’d been through online learning platforms for the frontend side of the stack. 

I’m like, “What is going on? Only half of the backend developers on my team had CS degrees. It’s not like we required credentials.” I think there’s an argument to be made that learning the backend side of the stack takes a little bit longer, maybe 10 or 20% longer than the frontend side. It’s got a couple of more moving parts, but it’s not significant. Just no one was doing it, so we jumped on it. 

I’m glad we did when we did because I needed a full 18 months of absolute floundering in order to finally start to figure out how to get traction.  

Rob Walling:
Sometimes that’s how it goes. I mean, let’s talk a little bit about that, your origin story. You were writing technical blogs that developers were starting to read, and you were getting traffic. Then, what was the impetus to be like, “Well, devs are reading this. I want to teach them something”?  

Lane Wagner:
Yeah, so I’ve always been really into teaching. I was a tutor in college. Just really enjoy … My wife says I really like mansplaining things, and there’s definitely truth to that. There’s some founder fit in this company already. But no, early on it was blogs. Yeah, I was blogging on Medium, I was blogging on this other domain that we used to have, Qvault.io, and it had nothing to do with courses. It was whatever was interesting to me at the time, whatever I’m learning about in the programming space, which of course was all backend-oriented because I was a backend developer. 

Then it was really when I was this hiring manager, right? Hiring people, realizing how hard it was to find good backend developers. It was particularly tricky back in 2020 when the market was really good for developers. I was like, “We need to be training people on this stuff. I don’t know why we’re only training people on HTML, CSS, and JavaScript.”  

Rob Walling:
That drives me nuts. So, folks here know that I once wrote code, and I consider … Back in my day, you did all of it, right? HTML, and you did some CSS, and you did JavaScript with no … It was before jQuery. I eventually used jQuery, but there weren’t all the frameworks for the frontend, but the bulk of my code was always backend. So, I would consider myself, if anything, a backend developer. So, it’s shocking to me that, I guess this shows my narrow lens of it, that all the sites cater to frontend. 

I mean, I say this with full disclosure through TinySeed, I’m invested in Frontend Mentor, which is a frontend development education, you know? So, I’m not against them at all, or learning frontend dev or whatever, but it just seems so weird to me that there would be this bias towards it. 

Is it seen as a simpler, “Oh, it’s easier to learn,” or, “It’s just easier to get more jobs in it,” or is there just “No …” Because there’s more jobs on backend, right?  

Lane Wagner:
Yeah. According to the last Stack Overflow survey, there’s twice as many self-identified backend developers as frontend developers, which gives you a demand. I mean, there’s a supply and a demand aspect to that, but that’s just that number. 

I think there’s a few things that go into it. I think the online learning world is, it’s hard to build Boot.dev, let me put it that way. It is hard to teach backend development interactively in a browser. It’s not as hard to do with the frontend because JavaScript, CSS and HTML all render in a browser, natively. Right? 

So, to build this interactive experience in a browser for backend developers is, there’s a lot more engineering work that you have to put in upfront, but I’m a big fan of, I don’t know if you’ve read Seth Godin’s Purple Cow book. I think in the long run, that’s actually a really good thing for us, because to replicate it. It’s a moat. Right? It’s something that sets us apart.  

Rob Walling:
Right. Usually, the things that are hard to do, if you grind through them and you slept through them, you get to the other side, A, you’re glad you didn’t know how hard it was going to be when you started because you never would’ve done it. But then you get to the other side and you’re like, “No one’s following me through that shit pile.” 

It’s like, “I’m going to be alone over here for a while,” and that’s a good thing. So, about just over a year ago, it was about 14, 15 months, Boot.dev was doing 6,000 a month, and you quit your day job. Obviously, you’ve had really nice growth since then, but what gave you the confidence to leave? You were an engineering lead, so I’m going to assume you were making pretty good money, or an engineering manager, right? You were actually managing people. What gave you the confidence to leave when you only had 6K of MRR?  

Lane Wagner:
So, let me go back six months before I quit my job. The year before that, Boot.dev had essentially been around for a year. We were under a different domain name at the time, and we’d had no growth. I felt like I’d been grinding just as hard then as I am now, just really trying to get this thing off the ground. 

Getting to $1,000 in revenue for a given month felt impossible, so hard to get traction. That six months leading up to when I eventually, actually quit my job, there were a few things that I feel like, we actually, kind of figured out. One was rebranding, one was niching down. 

Originally, I was just like, “I’m just going to teach Go. I know Go development. I’m just going to teach Go.” That niche was not strong enough. It wasn’t unique enough or distinct enough. There’s Go programming books. So, we started to figure out some things and we started to get traction. 

So, that was really what gave me the confidence even at just $6,000 in revenue to be like, “All right, I’m out of here,” because yeah, I was making almost 200K, or right around 200K in total compensation at the time.  

Rob Walling:
You also raised some funding, which I was really intrigued to hear because when I think about starting a site like this or a tool like this, in my head I’m like, “Oh, this is totally bootstrappable.”  

Lane Wagner:
Yeah.  

Rob Walling:
You know what I mean? This is something that you really could. Now I know there’s a software component to it that, as you’ve said, it took a lot of time to build, and it takes time to continue to expand, but I was a little surprised by the fact that you raised … Is it public, $330,000?  

Lane Wagner:
Yeah.  

Rob Walling:
Is that a public number? Yeah. $330,000 in August of ’22, around the same time you left your job. Why did you decide to do that rather than bootstrap it?  

Lane Wagner:
Yeah. So, I would say I’m 50-50 on the scale of risk-adverse to risk-taker. I’m probably not quite as much of a risk-taker as most entrepreneurs, but I definitely have some of that in me. My wife is extremely conservative, very, very conservative. So, the idea of me quitting right as we’re about to have our second baby and not be able to take paternity leave, paid paternity leave made her quite nervous. 

So, raising some cash and being able to take a salary, even though of course it was a much smaller salary without all the medical benefits and everything, definitely just gave us so much peace of mind. So, hindsight being what it is, there really was no reason to raise money. We’ve been profitable this entire year. We have more money in the bank now than what we raised, but at the time just knowing the information I knew. 

I had projected, I was like, “It would be really great, if by,” what’s the date, “November of 2023, we have it a month where we make $30,000.” That was the goal, and here we are at 110, but that’s what I was planning for.  

Rob Walling:
You never could plan that you were going to grow like this. So, it’s that whole thing of, just because the decision didn’t pan out the way you thought it would, doesn’t mean it was the wrong decision at the time. Right? You made the best decision you could with the information.  

Lane Wagner:
Yeah.  

Rob Walling:
So, when you think about a long-term play here, you have investors. Investors, typically want to return at some point. Usually, that’s an exit. There are some exceptions, like the TinySeed terms and SparkToro, where you can pull out dividends because you’re structured in a way that, that makes sense, and you pay investors dividends over time. 

Again, I have one or two angel investments of my own out of 20 that do that too, as well, that actually pay dividends. Well, I guess at SparkToro, I’m an investor in and then there’s two others, but the usual one is to have an exit, right? I need to sell within five to 10 years or whatever it is. 

Also, founders get bored and decide they want to sell eventually, but you’re still early. I mean, you’re really … I know you’re three years into it, but really you’re full-time free just over a year. So, I don’t expect you to be thinking about what’s going to happen 10 years from now, but does that cross your mind of, “How do I pay investors back? What’s the future hold for me?”  

Lane Wagner:
Yeah, absolutely. When I raised with the investors, first of all, these investors are awesome. I actually knew them from before, which is why I only pitched one investor. I raised from that investor, and that’s all the raising we’ve done. I don’t think we’re going to raise any more. 

The conversation, originally was like, “Hey, I have this platform. We seem to have found the traction thing, and I have different ideas for some growth levers we can pull. I think they’ll work, but I want to quit and go full-time on this. I’ve been doing it 15 hours a week,” or whatever. “I don’t know if we’ll sell this company.” 

That was the conversation I had to have with the investors. “I don’t know if this is a thing that we sell. I don’t know if this is a sellable thing. It’s not a SaaS application. It’s not a recurring revenue tool. It’s an education platform.” It certainly could have an exit. There’s no reason we can’t, but I just had to be super upfront with them. “Maybe we just do distributions.” Right? 

So, we raised a million-dollar valuation, so they bought a third of the business. We could just do distributions at that point.  

Rob Walling:
Right, because at typical valuations you get half a percent, 1%, 2% of a company, and then it’s like, “Great, for every $100,000 you pull out, I get $1,500.” It doesn’t make sense, but if the investors have that much, that does make it a little more palatable.  

Lane Wagner:
It also changes how you compensate employees. So, rather than just doing the standard, “We’re going to give employees options, and then maybe they have this big windfall when we go public,” I’ve had to be a little more conscientious. Right? 

So, we basically have a split program, where we do the options thing just in case we sell, but also, kind of a profit sharing plan on top of that just because we don’t know if we’re going to sell.  

Rob Walling:
Yeah, it’s nice to have that, to provide both options. I’d love to hear if there has ever been a moment in the life of Boot.dev, where you were really not enjoying it, like the worst lows, where you were either up at night or you were, “I want to throw in the towel. This sucks. Why did I become an entrepreneur? I should go back and be a full-time employee.”  

Lane Wagner:
2021 was an awful year. So, I wrote the first course and launched a very, very small MVP of the platform in 2020. I can’t even remember, exactly the month. It was right after COVID, so it was summer, spring of 2020, but it was a new fun project, no customers. I did all the classic things, had zero distribution channels. 

So, I just published this thing no one used and I thought it was, kind of fun. 2021, I was trying to get customers that entire year and we had, effectively no growth. There was a time, I remember it was early in 2021. I was like, “Can I just get rid of this thing? It’s causing me more mental … It’s more taxing on me mentally than it’s worth, and I can’t just put it down. It’s making 500 bucks a month,” or whatever. So, I can’t just kill it, but it’s destroying me mentally. 

So anyways, I went on Reddit and I was like, “Someone want to buy this thing? Does anyone want this?” The result of that conversation was actually that I found someone that was interested in helping me market it, and great person. They were super nice, super smart. They were in a different industry. We tried for all of 2021 to market this thing and we absolutely failed. 

We had no growth in 2021. It was terrible. So, I actually bought my section of the business back from him. He put in a bunch of sweat equity over the course of the year, and at the end of the year I just bought it back from him and I’m like, “I don’t know what to do.” So, we tried a few more things and it started to work. 

Beginning of 2022, we started actually seeing some growth getting up into the two, the three, the 5K monthly revenue numbers.  

Rob Walling:
What were you doing differently, because there are a bunch of people listening to this right now, who have a business doing 500 or 1,000, and it has been. They’re like, “I don’t know what to do.” 

Not that your solution will work for everyone, but I’m just curious if you can touch on … If you even know, because sometimes you don’t, but what did you start doing differently that got you from the plateau to actually a pretty good business?  

Lane Wagner:
There were three things that we all did in fairly rapid succession, so I actually can’t be sure exactly which one was the most impactful, but I will list all three that I’ve had time to reflect on. 

The first is that this guy that I was doing marketing with in 2021 was not an engineer, was not a developer. It is really hard to write good copy, to come up with good messaging for an audience that you don’t know very much about. 

So, one thing I’ve definitely learned over the last couple of years is thinking about hiring a marketer or thinking about using a contractor. Marketing, almost is not a specialty in and of itself. It’s like, you need to be good at marketing to this audience, or you need to be extremely familiar with what they want, what they need, what the content they consume online. You need to hang out where they hang out. Right? 

So, I just found that, that wasn’t working. That actually, at least in that moment, I could do a much better job just because I knew how to talk to these people. That was a big turning point. 

Rebranding the site was a big one. I read this book. I’ll probably reference it a couple of times because I really do think this was probably the biggest turning point for the company, was just reading this book called The Purple Cow by Seth Godin. 

It’s all about finding a unique niche, because this is a crowded market. There’s a lot of people teaching courses online in lots of industries, but especially programming. Programmers love to share their knowledge. So, you really have to figure out how to stand out. 

We did a bunch of stuff, visually, with the name, with focusing on the backend side of the stack that really allowed us to start getting more word of mouth marketing, because nobody wants to talk about another learn to code platform. No matter how good you think your courses are, you need something else that’s remarkable. Something else that someone will talk about. That was another big one.  

Rob Walling:
What’s the purple cow for Boot.dev? What is it, the thing that people talk about?  

Lane Wagner:
We have two, which might be antithetical to the thesis of the book, but I still think it’s correct for us. The first is the focus on the backend. Just no one else is doing this, which is frankly, kind of lucky. We, kind of stumbled into that. I just happened to be a backend developer, and everyone else is teaching HTML, CSS and JavaScript. So, that’s the big one. 

You could even sub-niche it and say, “Go is not the most popular backend programming language, but it’s the one that we focus on, primarily.” So again, we get a lot of attention in Go communities for that reason. It’s much, much easier to get traction in a small community than in a large one. It’s not even close, which is another thing that I really made a mistake of in the beginning. 

Qvault.io, back in the day was a very generic. I was just branding it as this, “Come, learn to code. We happen to have this course on Go and this course on Python,” or whatever, but the messaging was all extremely generic, because you like to tell yourself that this thing could be big, right? Anyone could use this thing. I think that’s such a huge trap.  

Rob Walling:
Was that both purple cows? You named the one of niching.  

Lane Wagner:
Oh, yeah. The other one is the gamification. This one’s more recent. I’ve always enjoyed e-learning that leans heavily into the admission that we are human, and that we like hits of dopamine, and that we have all these things, these very human things. We’re not mechanical when we learn, and there’s not a lot of learn to code websites that lean into that. 

So, just every month it feels like we’re leaning harder and harder into that messaging. I don’t know if you saw on the site, it feels like this fantasy game. Our mascot is this wizard bear, and everything we do is around unlocking achievements, and earning XP, and getting on the leaderboard. 

That’s all really good and is based in pretty well-known psychological principles about getting yourself to keep coming back and keep learning, but it’s also just super unique. Nobody else is doing it.  

Rob Walling:
Very nice. Yeah, I do. Of course, I’m a fantasy nerd myself, and so I like the visuals on the site. It seems like you’re catering pretty well. 

Before we wrap up, you had commented earlier about how you originally thought of Boot.dev as SaaS. It’s not really SaaS, it’s training. Also, before we hit record, I was asking you for MRR and you mentioned your gross revenue of 110, and I said, “Oh, what’s MRR?” You said, “Well, MRR’s 50K, but that’s not the right metric to look at for this business.” What did you mean by that?  

Lane Wagner:
Yeah, so Stripe shows us our monthly recurring revenue. Out of the box, Stripe defaults to SaaS metrics. For a long time, I really worried about that one. There’s a couple of reasons I don’t think it’s important, or as important for us. 

Again, this threw us off. We’ve been a subscription revenue company, and that really, to a new founder that doesn’t understand all these different business models, really confused me. I was comparing myself and my metrics to other SaaS companies, and that’s not the right way to think about it. 

So for example, our net revenue in, what was it? October of 2023, $110,000. Our recurring revenue, about $50,000. Our revenue that came in that, was recurring was $30,000. There’s a distinction, right? The actual money that came in the door, that rolled over from yearlies last year, and monthlies of the month before. This is not a tool, where people stick around forever if they like it. People drop out for all sorts of reasons. 

So, our churn is much higher than the traditional, what is it? One to 4% of a SaaS company.  

Rob Walling:
A healthy SaaS company. Yeah.  

Lane Wagner:
Of a healthy SaaS company, exactly. Yeah, what we are actually optimizing for is just lifetime value of a customer. Is our lifetime value of a customer in a healthy spot, and can we acquire customers at a price that’s lower than that? Ideally, much lower than that, and then you get better margins. Right? 

But every year, this is another interesting thing because you actually do have some advantages. This all sounds worse. This is just worse. This is worse than SaaS, but there are some nice things. Word of mouth is much higher in this industry than in other industries. 

So, if people really like your thing, they’re much more likely to share it than, I think is the baseline in, maybe SaaS tooling, B2B SaaS tooling specifically.  

Rob Walling:
For someone listening who’s trying to get their head around why you have $110,000 in revenue, but MRR is 50K and actual recurring revenue is 30K. We won’t go through all the math because on a podcast it would be terrible, but the idea is that when you sell annual plans, you can’t recognize, you shouldn’t recognize all that revenue in that month. 

Usually, let’s say for easy math, your annual plan, you have an annual plan for $348 a year and then you have a monthly membership for $49 a month. So, you sell a lot of annual plans because it’s almost half the price to just pay annually. Right?  

Lane Wagner:
It’s about a 50-50 split of about half our customers do annuals, half do monthlies, but of course there’s more revenue, immediately from the yearlies. Yeah.  

Rob Walling:
Right. So, you get a bunch of that cash upfront, which is great. It means you have money to market. It means just getting cash upfront is always good, but for someone who’s never thought about how … I’m going to do a simple math example of, if I sell an annual plan for $1,200, what I should do if I’m doing my accounting right, is divide 1,200 by 12 and recognize $100 of MRR per month for the next 12 months. 

So, that’s what you’re doing with your 348. That’s why the numbers are all different. It can be deceptive in either direction. If you do all annual plans, you get a ton of cash upfront, but your MRR seems really low.  

Lane Wagner:
Yeah, we think about it as, essentially we’re selling a product that’s being financed over an amount of time. Right? Because these dollar amounts are so low, we don’t actually have a contract for you to sign, and we’re doing loan terms, and interest. 

It’s more just like, you want to get access to this thing for six months. You’re financing the total cost of the course over the six months that you’re accessing it, which makes us think about it, again in terms of lifetime value of the customer, which is somewhere between $100 and $300. There’s averages in there. 

That third point about the revenue that I made way back when that, I’m sure everyone’s forgot about, was we do care about this number that is the actual dollar amount coming in every month.  

Rob Walling:
The cash coming?  

Lane Wagner:
Yeah, and it’s even lower at present because of our really fast growth that we’ve had recently, than the actual MRR. So, our SaaS MRR is for 50K. The actual cash coming in from recurring revenue every month is down into the 30K range. But that’s an important metric to just keep in mind because it’s like, if we do no marketing, if we bring in no new people this month, how much cash is coming in the door? So, keeping a tab on that is actually really important.  

Rob Walling:
Lane Wagner, thanks so much for joining me today. Folks want to keep up with you on Twitter. You are wagslane, that’s W-A-G-S L-A-N-E. Of course, Boot.dev if they want to see what you’re working on. Thanks, again for joining me.  

Lane Wagner:
Thanks for having me, Rob.  

Rob Walling:
Thanks, again to Lane for joining me on Startups For the Rest of Us. Thank you for listening this week and every week. This is Rob Walling signing off from Episode 688.