Offering your product for free can be a great way to gather customer feedback and build brand awareness. But what if it never turns into a profitable business? There comes a time when you need to start charging customers to ensure your startup’s survival. Stephen Whitfield, Lisa Angel, and Jamie Hanratty, the founders of Metro Retro, learned that first-hand.
Metro Retro offers software and product teams a fun and interactive way to collaborate instead of a sterile whiteboard tool. The platform has amassed over 800,000 signups since its launch in 2019, but it wasn’t profitable until April of this year. How did these founders turn their free tool into a sustainable SaaS business?
The Future Value of Old Ideas
Stephen, Lisa, and Jamie have worked together for nearly ten years. The trio met at an app agency where they collaborated on various projects, with Stephen as programmer, Lisa as project manager, and Jamie as product manager. The agency followed the Agile methodology, breaking each software project into specific phases called sprints.
The company used various tools like Jira, Confluence, and Git to plan and execute the work but didn’t have anything to evaluate it. As lead developer, Stephen found himself frustrated with the tedium of using tools unfit for this purpose.
He says, “For the retrospective (the phase where a team discusses what went well and what didn’t in the past sprint), our whole team would write their feedback on sticky notes, stick them to a whiteboard, and discuss them in turn. Our project manager would write them up manually into Confluence. This would take 30 minutes, and eventually, the paper would be thrown in the trash. To top it off, involving remote participants was too hard to bother with.”
Stephen believed Agile teams deserved a better way to collaborate, so he started building the foundation of a productivity tool with interactive whiteboards. But he lost steam along the way due to a lack of discipline and focus and shelved the project.
A year later, in 2016, the agency held a hackathon for its employees. Stephen joined two of his colleagues to resurrect his prototype. They coded for 24 hours and completed a simple version of a retrospective whiteboard tool that had real-time updates, private sticky notes, and an export option. This was the birth of Metro Retro – and it won the hackathon.
Other priorities took over, however, and the project was abandoned again. Almost a year later, Stephen discovered his friends using Metro Retro at their companies to run retrospectives – even though it was buggy and unfinished. That’s when he realized the tool’s potential.
Stephen worked on Metro Retro’s MVP (minimum viable product) evenings and weekends for a year and a half. In 2019, it was officially ready. Stephen turned to Lisa, his now significant other, to help launch it on Reddit and Product Hunt. Word of Metro Retro spread in the software community. During that first year in business, 10,000 users signed up and provided the early feedback Stephen needed to tweak the application and add new features.
In March 2020, Covid hit, and another 10,000 customers signed up in just three weeks. Why had it caught on so quickly? Every feature of Metro Retro mimicked what it would be like if people were in a room together. With teams running out of ways to connect, Metro Retro offered a dynamic and fun way to interact.
At that point, Stephen and Lisa asked Jamie to join as cofounder to help with sales and product growth. With Lisa working a full-time job, Stephen and Jamie would both be active founders, running the business day-to-day.
Half a Million Users But No Profits?
The first version of Metro Retro tested the market. Even with over 500,000 signups, it wasn’t making any money. People could access the complete tool for free. As a result, the founders weren’t paying themselves yet and were funding the business with savings.
While they could have implemented paid plans for the MVP, the founders were betting on a long-term vision of the product with far more capabilities – which would require an entire rebuild. In the meantime, they wanted to keep version one free.
In September 2020, Stephen started building version two. “We rebuilt the second version with a completely different code base. We were told that’s the one thing startups should never do, but we did it anyway,” Jamie says laughing. “Version one didn’t have anything wrong with it and people loved it, but we had the vision to build a collaborative tool for all meetings – not just retrospectives. Starting from scratch allowed Stephen to build the platform according to this goal.”
While building version two, the founders also sat down for a serious conversation. They each projected how much runway their money would give the company. With their savings nearing zero, it was crucial to transition Metro Retro from a free tool to a profitable startup.
In 2021, Jamie and Stephen developed a new per-seat pricing model. They launched version two slowly, starting with request-only access. Many customers were happy using the free version, but as soon as the founders showed them what they could do with the paid tool, they switched over. Jamie and Stephen kicked themselves for not having done this much earlier.
It took six months for Metro Retro to generate $5,000 in monthly recurring revenue. “I gave well over a hundred demos in the months following the launch of version two. It was a slog, but every single sale was amazing. It started with a team of five people signing up, and then a team of forty, and then a team of a hundred,” Jamie says.
However, it still wasn’t growing fast enough for the founders. A major obstacle was that their customer onboarding was still a manual process. Jamie had to send invoices and set up new client accounts himself. So, the next step towards growth was introducing self-service plans.
”It was only as of April this year that we launched self-service signup and payment inside the product. Now a customer can sign up for a free trial, enter their credit card, and get going by themselves. Within a month, we were profitable and able to pay ourselves properly for the first time,” Jamie says. Since then, Metro Retro has acquired entire company departments, won multi-year contracts, and upgraded existing customers.
One of the biggest lessons the founders learned was that they shouldn’t have waited so long to charge their customers. “We thought it would take a lot less time to earn significant revenue than it did. We were eternal optimists, always thinking we were three months away from making thousands, so we figured we could survive on our savings till then. But it didn’t happen as quickly as we had hoped. We should have charged earlier on – or at least found out why people wouldn’t want to pay for it so we could address those objections,” Jamie says.
There were times when Jamie banged his head against the wall seeing their user numbers and thinking how much MRR they could be making. He found himself doing a lot of theoretical calculations. For example, if Metro Retro had a paid plan converting three percent of free users, they’d be generating $25,000 a month. With those numbers, you can afford to think about the next stage of the business such as growing the team.
“What’s ironic is that we were asked quite often by our V1 users how they could pay us or how they could donate to the platform. We should have taken that opportunity in the early stages. Again, we were too optimistic that we were on the cusp of launching our paid product and that money would be headed our way soon. The lesson is if people ask you how they can pay you, give them a way to do so,” Jamie says.
When to Expand Beyond the Founding Team
To this day, Metro Retro’s customer base has grown almost solely through word of mouth – the founders have never spent a dollar on marketing. “We are terrible at marketing. The three of us come from non-marketing backgrounds. Metro Retro doesn’t have a lot of followers on social media. We only do emails for product updates. We don’t do content marketing. Our product has done most of the work for us, largely because Metro Retro isn’t something people use by themselves,” Jamie says.
An Agile coach or Scrum master will use it with their team or a consultant will use it with their clients. These power users expose the product to a new group of people with each meeting. Once they’ve learned about the tool, Metro Retro’s interactive capabilities draw people in. One of the features that proved to be unexpectedly popular was the confetti canon. People loved being able to shoot celebratory confetti across their whiteboard – and wanted to share it with others. The founders attribute their word-of-mouth success to this one feature.
Metro Retro’s marketing strategy is to use its website to showcase the product and provide pre-made templates for various meeting formats. If someone searches for an end-of-sprint retrospective, for example, they find one of Metro Retro’s templates and can sign up for free to use it.
The founders’ main goals for 2023 are to invest in new marketing channels and expand the team. Currently, it’s still just Jamie and Stephen working on Metro Retro together. “One of the biggest challenges is that it’s down to what Stephen and I can do each day. Stephen builds the tool and I handle the sales and customer support – but we also do everything in between,” Jamie says.
If there’s something the founders haven’t done before, like marketing, they either have to figure it out themselves or hire someone. So the next revenue goal for Metro Retro is to earn enough to hire a software engineer and a marketing expert. This way Stephen and Jamie can focus on growing Metro Retro into a sustainable SaaS business.
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