Dear founder,
I've been talking a lot about Podscan and the positive developments—the improvements, the good things that have happened to the company and to me over the last year and a half since I started this journey. But building in public is about sharing the ups and the downs, the wild joy ride and roller coaster that is entrepreneurship. And it's time to share the not-so-happy parts of this business.
Recently, I announced that Podscan was profitable. And it was—but only for two months.
That profitability was very quickly eclipsed when one of my major customers churned out for a reason that was completely out of my control. That brought me back down under the profitability line, and with expenses the way they are, I'm still struggling to get back there.
So I feel this is a great opportunity to share what's going on in my entrepreneurial mind right now—what the options are that I have at this moment, what challenges I'm facing, and how I and the people who support and advise me strategize and plan in situations like this.
The Reality of the Numbers
Let me be completely transparent about where Podscan stands today. We're at around $10,000 a month in expenses and somewhere around $6,000 in monthly recurring revenue. So we're $4,000 short of breaking even each month.
Now, first off—Podscan is a really interesting project, and it's something I would never stop or throw away just because things get hard. Entrepreneurship is about building something that has never existed before, and that always comes with the risk of it being anywhere between impossible and extremely hard to do. No new business ever was easy.
So this position I'm in—not being profitable after being profitable for a bit—certainly sucks. But it's also framed in a reality where profitability was already there. It's not impossible to achieve. It just takes some work.
But here's the thing that's been weighing on me: after a year and a half, profitability is still something I'm chasing, not something I can reliably depend upon. And realistically, I also have to look at the fact that what I've been doing until now has not been sufficient to get this business into a self-sustaining state. I need to make a significant change to get there.
Seeking Wisdom from Those Who've Done It Before
As usual, whenever I get into a position where I don't really know exactly what to do myself, I talk to people who've done it before. I share with them as much as I can to see where they would take it.
A lot of the feedback I've gotten from investors, bootstrapped business owners, and peers has been to look at the business realistically—look at the product-market fit, see if it's in range, or if I'm just chasing something that's not possible with what the business currently looks like and what the team is currently capable of. Then make changes accordingly.
The Strategic Pivot: From Product-Led to Sales-Led
So here's the big change I recently made: I had to overcome my expectation that this would be a product-led growth kind of business. I always thought that the product itself, plus my blog and social media presence, would be enough for people to discover the product, use it, subscribe, and get us to profitability that way.
And in a way, I got halfway there, right? I am a significant part of the way there, but I'm not fully there. Even if I had $10,000 in revenue, that would still be a net-neutral kind of business—as much coming in as going out. Something needs to change.
That something is my whole perspective on how this business is monetized and how it finds new customers.
I bit the bullet. If you recall a couple episodes ago, I talked about needing to find people to help me with sales. I found a wonderful person helping me set up a sales pipeline and outreach systems—booking demos, having conversations with people in our ideal customer profile, bringing success stories to the front, having actual sales conversations.
These are things I've never done before, never done well before, never needed to do before. But now they're something I'm focusing on because I have to make this thing profitable.
The Pricing Revolution
I also changed my pricing structure significantly. My most expensive plan now adequately reflects the actual cost of providing the service. Before, my highest plan was $500 a month. That's now the second-highest tier. The highest one is $2,500 a month—pretty much access to any kind of data you need.
It's probably still underpriced in some ways, but it's a price point where if I find customers to pay this, they very quickly make up for a significant part of our financial gap.
With the requirements of API access and the kinds of data people need, plus the fact that we've identified an ideal customer profile where budget isn't as much of a concern—the agencies we're targeting have very high-budget clients themselves—this pricing can work and will work.
I've already found people to purchase the smaller tier, the $500 tier, right from the get-go, because their budget allows for it and the expansion budget is also there.
The High-Touch Approach
In this approach with sales, I'm finding that direct outreach and building relationships with individual agencies and customers—helping them onboard, helping them find the example data they need to convince stakeholders and decision makers in their company to get a subscription going—that's a very targeted approach.
It's a high-touch approach, and it's far from the product-led growth approach I had until now. But it's where I need to be. I have a limited runway, and if that runway cannot sustain this business as it is right now, things need to change.
Confronting the "What If" Question
This brings me to something that, as a founder, I need to think about: what happens when—or what happens if?
Obviously, the ideal path would be setting up this sales outreach approach within a couple months, capturing enough monthly recurring revenue to pay for all expenses, then slowly or quickly increasing revenue enough to sustain a sales team and a couple technical people. Take some time off my plate and build out more secure, more reliable, and more maintainable infrastructure.
But that's the happy path. And in all my conversations with other founders, one topic that often came up—that until now I hadn't really thought much about—has been: well, what if it doesn't work?
Founders are always very optimistic, very positive. It comes with the nature of the beast. We have to be optimistic about believing in our ideas and wanting the things we build to be things that last, things that work.
Investors, on the other hand, have a different perspective. They look at it as a gamble, as a risk. And while founders perfectly understand that there is risk, they under-contemplate that particular risk and over-analyze the happy path and what's needed to get there.
Finding Peace with Uncertainty
In my conversations with investors, something that often came up was: "How would you feel if the business didn't work out? How would you feel if, no matter what you do, you cannot reach product-market fit or founder-market fit?"
It's something I'm trying to find my peace with—that Podscan, as great of an idea as it is and as useful as it is to my existing customers, might not be of sufficient size or scope (the way I'm running it, at least) to be a hyper-profitable business.
It is almost profitable, and it was profitable. So it's always a somewhat profitable business. But is it going to be profitable enough to sustain a team of 10 or 20 people eventually? Is it going to be sustainable and maintainable enough for me to want to work on it for many years?
That's something I need to think about, and it makes me consider what options I have at this point.
Exploring Alternative Paths
There's always the option of just pulling the plug, which is the least interesting one. But there are other options too.
Can I hand this off to somebody else? Is there somebody who wants to take a business that currently costs $10,000 a month in expenses plus labor and makes $6,000 a month in revenue—but has over 100 customers—and turn it into something else?
Is there a company in the field that I'm either competing with or augmenting with my data that just wants to take this on as part of their own business in a strategic acquisition?
Initially, when I started the business, I was saying, "Yeah, acquisition would be nice at some point, but I want to build something first. I want to get it to a certain point first."
But honestly, as a founder who is very technical in nature, I'm at a point now where I wouldn't mind if somebody who has the experience and insight in how to take a business like this and just sell the hell out of it—or cross-sell it with their own existing product, or just take it on—did exactly that.
I think that's a substantial change in my own perspective about how this business works. Just like it was a change initially when I thought I was going to bootstrap this all the way, but then realized that with 50,000 new podcast episodes coming out every day, if I want to offer a service that transcribes them all, I have a certain baseline of expenses.
I already got those expenses down from $30,000 to just under $10,000. It's extremely efficient compared to what could be spent on transcription and data analysis. But just as much as I said, "Okay, I guess I'm going to get some funding for this," now I feel like, "Yeah, I guess it's fine if this is taken over by somebody who has the capacity to turn this into something bigger."
I would probably still be around. I would probably still want to work on the product. But maybe I should start looking into alternative approaches.
Setting a Timeline for Decision
I'm going to give myself a couple months here. I know that the sales pipeline we're setting up takes a while to heat up and produce results. For profitability, we really only need to reach an additional $4,000 or $5,000 a month in recurring revenue. We already have more than that in total revenue—we just need to find more people who actually want to pay for this.
So what I'm currently looking at is setting a deadline of a couple months for myself and the team, telling everybody involved what the situation is, and then jumping on every single opportunity to make this happen. Find high-value clients that are similar to the ones we already have, reach out to them, show them what the product can do, be specific, be present, be relational, and build those relationships into customer relationships that can sustain the business.
It's kind of a fear-setting exercise that helped me understand that this is a gamble. This is an entrepreneurial adventure. It can end in many different ways—wild success, fatal crash, or anything in between.
Since it's in my power to decide how much of that I want to do and which of these options I can set my aims at, I'm choosing to give it some time to still become the wild success that it can be. And along the way, I'll make opportunities visible to myself and the team for how this business could continue in other ways as well.
A Request for Your Perspective
This is where I really need your feedback, because it's very hard for a solo founder like myself to look at things from all different perspectives. It's hard to look at it from a perspective of gratitude when you're deep in the trenches of fixing yet another bug or helping yet another customer with something that doesn't quite work for them.
And it's hard to look at it with complete neutral detachment when it's something you've built with so much effort and so much joy for over a year and a half.
So this question goes out to you: What do you think of the situation I'm in? A business that was profitable, lost profitability, and is now hovering just a couple thousand dollars underneath break-even.
What should this business be? What does this business deserve? What would help Podscan and its mission to provide conversational data insights into all the podcasts everywhere? Where could this go?
I'm very interested in hearing the perspective of somebody who comes from a different point of view. Let me know what you think.
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