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🧠 Zero to 140k MRR in 4 years

How Spencer Patterson grew and sold his SaaS for a life-changing exit...

Case Study

Zero to $140k MRR in 4 years

Spencer Patterson recently sold his SaaS on Flippa for $3.5M.

The best part?

He only started it in 2019 and ran it at 95% margins with daily payouts of anywhere from $2,000 to $10,000.

We recently sat down with Spencer and heard first-hand how he quit his high-paying job in finance and built his SaaS from the ground up.

Let’s get into it…

So why did you decide to start a business?

“Well, it all started back when I was a financial advisor, bouncing around different banks and investment firms. I was rubbing shoulders with ultra-high-net-worth folks, and what struck me was that most of them weren't born into wealth or anything.

They were business owners, who started from almost nothing, and that got me thinking. I was making decent money, but here were these people, who started with less than what I had, amassing massive wealth.

So, I started asking them how they did it, and what was their journey like. And you know what? It turned out they were all business owners. That was the common thread. That got me motivated.”

What was your idea and how did you get started?

“Well, I also had this big passion for online trading groups and being in the finance world it made sense.

So whilst still working full-time, I started this educational group with another trader, teaching people about stock charts, opening range breakouts, simple moving averages and other things like that. It gained traction, and soon we had a chat group, an Instagram, Telegram etc.

And so I talked with him, I said you and I would make a good team. I said I'm more of a business person and I don't mind handling the management, operations, marketing, branding etc.

And we had really strong branding. I mean people would recognise our logo on social media because people were retweeting and sharing it and instantly signing up.

We were doing really well but it was getting difficult to manage all these people and information. That's when the idea hit me - there's gotta be a better way to manage all this.

So, I decided to create software to streamline our processes and optimize our flow in managing the community. My partner at the time wasn't too keen, but I saw the potential.

Within a week, others running similar communities were asking to use our system. The problem was that it wasn't set up to take payments but I thought, why not make it multi-tenant and let them in? That decision led to a snowball effect - from two people to five, then ten, and it kept growing.

That's when I knew I had something.”

Were there other products in the market already? Why was yours better?

“Oh of course.

But they didn't have all the features that I needed for my community and they were extremely expensive. They were either enterprise versions, or they just were very bare bones. So you know, we were kind of filling that gap.

With anything you have to enter into a marketplace where there's existing competition because if you're pioneering the way, you need a lot of capital to do that.

But if there's already solutions out there that just don't quite fit what certain people are looking for then there's an opportunity there to strike and if the need is great enough you can get a lot of business that way.”

How can founders notice these gaps for themselves?

“So I think one of the big things is to do a lot of research on exactly what vertical you're in. And looking into that vertical, if you can identify who your customers are, and exactly what that use case is.

And you can find that anywhere really. Even just Google reviews or Capterra reviews, read them, and just try to understand the platform yourself and you might see that yeah, there’s a real issue here.

Because I believe anything you take seriously should be something that resonates with you and that you would want to use daily. If you don't have that passion for it, and that personal need, it's gonna be a lot more difficult to grow your own business.”

Did you have an MVP? How did you build it?

“Yeah, we did. And it was garbage. Like pure garbage! So when I tell you this thing worked, it barely worked!

But that’s all I really needed to start selling it. You know I was coming from a sales background for the most part.

I’ve never written a single line of code and didn’t plan to, so for the initial development, I self-funded and outsourced through a freelance developer I found online.

But once I started selling it the initial MRR easily covered any new developments so it became safe for me to pull that initial investment back out.”

So once you had the MVP, how did you know what to build next?

“For me, it was all about feature sets, and I had a core principle of ‘just say yes, and figure it out later’. So if I felt that the particular feature set was worth it to generate ROI, and it wasn't too ridiculous then it was no problem.

And because our customer base was all content creators, they were very vocal about what they wanted. But if a customer asked for something really out there then I would just say to them you know, it’s not on the roadmap right now.

I designed an algorithm to prioritise the workflow based on time to completion, execution, potential reach and customer ranking in our internal business intelligence, so we would give a bit more leniency to our top 100 customers.

And a lot of the time we knew that the bigger platforms didn’t have the features we were building, and they likely wouldn’t want to build it because it was too niche so we knew we could win the market that way.”

And were there any growth strategies that you stood by more long term?

“So we had a referral program.

I’ve always been a proponent of brand ambassadors and I think if you have a group of people that use your system, that like your system, then they’re going to be telling people about it anyway so why not reward them for doing so?

It gives them a little bit of an incentive to consciously keep it in the front of their mind. Plus we had people reaching out saying ‘This is a great business idea, how can I get involved?’. And so the referral program was a way to channel that and say ‘Look, this is the best way to get involved.’.

Every time we released a new feature or communicated with customers in some way we would remind them that the referral program was there for them to get involved and earn a little bit extra side revenue.

Why did you decide to sell?

“The pandemic put a lot of things on hold in my life, I was at a point where I’d made enough money that I could start looking more at the wealth that money can’t buy.

So I decided to exit but I still have those creative juices. I’m partnering with other talented founders to build new systems but managing my time where I can kind of cap it at 30 or 40 hours a week rather than the 60 to 80 hours a founder usually has to put in.“

What would you tell founders just starting in the startup world?

“The first thing would be to look at the best pricing models and see what is a realistic price to charge. I see a lot of products with just 1 price on the site, or 5 or 10 but do some analysis on what the best pricing model is for your product.

Sometimes free models can bring in some less-than-desirable customers, but you know it gets people on your platform. But on the other side don’t make the barrier to entry so high that you limit yourself, especially early on.

And on distribution, I think this whole ‘build in public’ trend is something people should embrace. I didn’t do that, we were entirely in stealth mode the whole time but knowing what I know now I would have done it for sure.

If you don’t have a large following, then give your product away for free to someone who does and see if they’ll help you out.

And last, you gotta just keep going. You have to know when to hold them and when to fold them but I think people tend to fold them a bit too early in this game.

It was great chatting with Spencer, and he shared so many useful perspectives on what it’s like to run a real software business.

One of his newest projects is his upcoming YouTube channel, so definitely check that out. Plus check out his website for strategy and advisory services.

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See you next week! 👋

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