In the opinion of many founders, software-as-a-service (SaaS) businesses are by definition focused on automation. The goal is to make a self-running money-making machine. Focusing on clients that don’t fit into a pricing plan delays this process.
I spoke to one founder who worked for some of the biggest names in VC-backed tech. When he started bootstrapping his own business he tried to follow the classic SaaS subscription model – until he found his best tactic for growth was tailoring his business to enterprises.
Ben Dowling created his application, IPinfo, as a side hustle while working at Facebook and as the CTO of the billion-dollar meditation app, Calm. IPinfo started as a small API that helped coders scrape IP address information. When Ben began making more money from his business than his CTO job, he switched to running IPinfo full-time.
Using SEO and forums like Stack Overflow, Ben slowly grew his startup until he hit a wall. Although reluctant to build custom integrations for enterprises, Ben realized enterprises would pay much more than a yearly subscription fee. This would be the key to scaling his business.
Today, IPinfo has created enough cash flow from its API and enterprise clients that instead of just compiling IP data from the web, it creates its own. It is considered one of the best IP data sources in the industry and makes seven figures with just 20 full-time employees.
Switching From VC Startups to Bootstrapping
Ben had been a developer and CTO at startups and VC-backed tech companies for over a decade when he decided to bootstrap his own business.
“My background is very much not Bootstrapped businesses,” says Ben. “I’d see lots of people start these types of businesses, and they’d work out okay, but then they’d quit or sell them and end back at a corporate job. I wanted to create something and not land back at Facebook in two years.”
Ben liked the concept of doing a job that let him be in control of his destiny. Though he had a busy schedule working full-time as a Facebook developer, Ben loved to do side projects in his spare time. One of them eventually became IPinfo.
“Everywhere I worked projects needed information regarding IP addresses. However, there were few APIs available to give them this data. I thought, ‘Why don’t I get a server with all these IP information website APIs?’ I posted my tool onto Stack Overflow and lots of people used it. Eventually, I realized there was a business opportunity here and I had to either get people to start paying me or they would go away.”
Ben’s tool didn’t attract much attention until two years later when he had left Facebook and was working as CTO at growing tech business, Calm, in 2014. “I’d do my IPinfo work on the train into San Francisco from my home. Increasingly, by the time I got to San Francisco I hadn’t made it through all my emails requesting service on my app. It became clear I had to choose one or the other.”
By the time Ben left Calm in 2016, he felt he had made the impact he hoped to make on the company. He also had a healthy financial cushion from his product. “IPinfo was already bringing in more revenue than my salary at Calm,” he says. “It was unclear exactly the scale it could reach, but I decided to quit my job and give it a shot.”
That first year, Ben did almost everything including coding, marketing, and customer service. Contractors did the rest. “I brought in part-time contractors for slow queries and I found a database expert, a designer, and more. After about a year I started hiring part-time people. Some of those roles evolved into full-time ones today.”
Marketing IPinfo Through the Power of Reputation
Because Ben had been so active on Stack Overflow in his previous years as a developer, he used his reputation to push his business.
“The biggest driver of awareness at the time was Stack Overflow,” he says. “It was free and I was already a respected member there. I’d stumble across questions like, ‘Where can I find good IP data?’ and I’d say, ‘You can just use my API for this because it’s much easier.’ Eventually, I started hunting for questions where my product could be the answer.”
The other half of IPinfo’s marketing was a unique SEO strategy that brought in throngs of customers. “I built webpages for every ISP and page address I could think of. We started ranking any time someone searched ‘What’s my IP address?’ on Google.”
Anytime Telegram would get blocked in Iran, we’d get people calling us thinking we were their internet service provider.
While traffic from this SEO strategy brought in many customers, it also brought in lots of unwanted traffic. “I’d say initially only one percent of traffic was from actual customers,” Ben says. “We’d also get a bunch of people mistaking us for their internet service providers. Anytime Telegram would get blocked in Iran, we’d get people calling us thinking we were their internet service provider. People thought we could fix their Playstation.”
Ben and his team realized that if they wanted better quality leads, they needed to make their services clearer on the page and make it harder for people to contact them. “We killed the ‘contact us’ button and added friction to finally reach us. We found a little extra friction wouldn’t deter our real customers.”
With the SEO issue settled, Ben had created two strong pipelines for customers. However, he says growth stagnated for his first year working on IPinfo full-time.
“That first year was almost a bit of a downer,” he says. “When I was working on it part-time I was doing ten hours a week. I was hoping when I switched to full time there would be an inflection point. However, even though I was doing forty to sixty hours it wasn’t growing much faster.”
Ben says the next inflection point happened suddenly after his efforts to improve the platform accumulated. “I think much of the reason growth seemed to slow down is I now had time to build all the non-revenue generating parts of the platform,” says Ben. “The next big inflection point finally occurred when I hired a full-time sales guy, and the latest one was when we started sourcing our own data.”
You Can Do a Lot With a Little IP Data
IPinfo creates contextual data on IP addresses. That means it finds where individuals are accessing the internet from. In an era of VPNs and regional cybersecurity concerns, it’s a much-needed service for many businesses.
“One of our main data sets is IP geolocation data,” says Ben. “We give the system an IP address and it can say where it’s located whether that’s a house in Seattle or an office in San Francisco. However, since more people use VPNs, geolocation as a data point increasingly isn’t enough context for a bunch of different use cases. We create additional context around IP addresses such as if it’s from a VPN or proxy service and which company it belongs to.”
Ben says the types of customers they receive vary widely. Today IPinfo boasts almost 2,000 subscription customers and roughly 250 enterprise customers. Most are in cybersecurity, retail, and advertising technology.
“Our customers might be doing website personalization to say ‘Good morning’ to everyone who logs in from Seattle. They may show you different content based on your location. They could also show information about where a cybersecurity attack came from.”
However, he says diverse customers make monetization much more tricky. The value of IP data varies depending on what customers plan to do with it.
“If you’re a customer that wants to enrich signups from different regions, it’s not worth as much. That’s very different from using the data to reduce fraud. One saves ten minutes, one saves $10 million. We’ve had to get more sophisticated about pricing to accommodate that.”
Ben says he tries to focus on two main features as the core of his business: making sure the data they collect is great and making sure it’s easy to access for their customers. These goals have led Ben to change the direction of IPinfo.
Money Too Good to Refuse
Initially, IPinfo only sourced IP address data from third-party sources and put them into one place. In the past few years, Ben changed the direction of IPinfo from an IP address API aggregator to a business that collects the data itself.
“At first our value proposition was a low-latency, developer-friendly API. We weren’t in the data business. However, we increasingly got more feedback that the data itself sucked. We thought that it can’t be too hard to do it ourselves so we created our own geolocation data and today we’re industry leaders.”
Once IPinfo shifted to collecting its data, Ben began receiving calls from a new type of customer, one that he had initially hoped not to get: enterprises.
“My impression of enterprise sales was that it is a huge pain in the ass,” he says. “We’d done very little outbound marketing to grow the company, and I wanted to be very hands-off about the product. Even so, I’d get emails from enterprise people saying they wanted to jump on a call. I’d just dodge them by saying they should just use their credit card and pay us 50 bucks like everyone else.”
This one guy called and needed some custom stuff from us. I didn’t want to do it so I quoted him a ‘go away’ price of $1,000 a month. To my surprise, he said, ‘Sure.’
But one call changed Ben’s perspective on accepting enterprise clients. “This one guy called and needed some custom stuff from us. I didn’t want to do it so I quoted him a ‘go away’ price of $1,000 a month. To my surprise, he said, ‘Sure.’”
Suddenly, enterprise clients didn’t seem like such a bad idea for Ben. “I would push the prices on each subsequent call with enterprises and found they were willing to pay even more. What most people miss is enterprises have a lot of money and not a lot of time. They’ll pay to take that time from you.”
Privacy Concerns May Bring in Business
In the future, Ben sees IPinfo offering more contextual data to IP addresses like specific location information and better info on the connection type. “What we’re good at is creating data for other people to use on their products. Some of those additional data points are becoming easier to use.”
Despite increasing scrutiny on data collection from regulators around the world, Ben thinks it is creating more opportunities for IPinfo.
“I think EU regulations around cookies and device IDs that advertising technology businesses use actually create opportunities. Our IP data is not quite as targeted at private individuals. I think that if some of that super-targeted data goes away, many will turn to businesses like us that collect more general data.”
Enterprises are happy to pay for a good solution. They can fund all your research and development and derisk product creation.
Ben’s biggest piece of advice to other founders is to consider enterprise opportunities as a tech founder. “From a development perspective, it can all seem like hard work. But it can be very lucrative as well. Enterprises are happy to pay for a good solution. They can fund all your research and development and derisk product creation.”
Like many Bootstrapped founders, Ben found success with a business model that focuses on cash flow. When businesses can’t rely on investors to pay staff and fund research and development, they need to get creative. Usually, the changes that bring in more profits are those they needed to make anyway.
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