The Anti-Unicorn: Lessons from Bank Statement Converter
We are often bombarded with the narrative of the "perfect startup," the unicorn, destined for massive investor funding and eventual market domination. These companies often operate at a loss for years, aiming for a monopoly before dramatically increasing prices. However, there's an alternative: a sustainable, profitable, and less stressful approach. Angus Chang's Bank Statement Converter exemplifies this different path.
A Simple Solution, Significant Returns
Bank Statement Converter, a seemingly simple website that converts bank statement PDFs into CSV format, offers a masterclass in building a successful startup. Its journey, both in triumphs and challenges, serves as a valuable guide for entrepreneurs seeking independence without crippling debt. This application, requiring minimal maintenance, generates over $20,000 in monthly profits for its founder, demonstrating the power of a focused approach. Instead of chasing inflated valuations, this product prioritizes providing value, charging fair prices, and generating real revenue.
From Problem to Product: Solving Your Own Needs
Angus Chang, already an experienced entrepreneur, created Bank Statement Converter out of personal necessity. Faced with the tedious task of manually extracting transactions from PDF bank statements, he developed a script to automate the process. This highlights the importance of identifying and solving your own problems, which often leads to the most viable business ideas. As an aspiring entrepreneur, you should keep a list of problems encountered instead of focusing solely on ideas.
B2C vs. B2B: Targeting the Right Customer
While solving your own problems often leads to B2C solutions, a B2B approach is generally more profitable. Businesses are more willing to pay for value than individual customers who are always looking to save money. Fortunately for Angus, the problem of converting bank statements is highly relevant to businesses like accounting firms. This allowed him to target a market that would readily pay for a solution that saved them time and effort.
Timing Isn't Everything: Focus on Real Problems
Bank Statement Converter launched in March 2021, amidst the hype surrounding Web3, and later, AI. It achieved steady growth, demonstrating that success doesn't always require chasing the latest trends. Instead, many smaller businesses continue to face unsolved problems, or problems that can be solved more conveniently. Rather than striving for uniqueness, focus on a product that addresses an existing need and charges a reasonable price. A product with an existing market proves that people are willing to pay for this solution.
The Fortune 5 Million: Focusing on Smaller Markets
Many overlook the potential in smaller businesses. While the focus is often on the Fortune 500, the "Fortune 5 Million" – smaller businesses with unmet needs – represent a significant opportunity. Don't dismiss SaaS products as oversaturated. Bank Statement Converter proves that simple, effective solutions can thrive even in established markets.
The Power of Design and Outsourcing
Angus partnered with a designer early on, recognizing the importance of UI/UX. By inviting Dom to be a co-founder, he ensured that the product was visually appealing and user-friendly. This highlights the importance of focusing on strengths and outsourcing weaknesses. It is important to delegate tasks that aren't directly correlated to value in order to maximize efficiency.
Sacrifices and Validation: Early Challenges
Bank Statement Converter wasn't an instant success. It lost money for a considerable period, primarily due to Google Ads. While conventional wisdom advises against scaling prematurely, Angus used Google Ads to validate the product and identify potential customers. Even if the numbers don't add up, if some users are using the product and sticking around, then it is worth continuing to try to make the product more profitable.
Technology Stack: Simplicity and Efficiency
Bank Statement Converter is built using Kotlin (backend), KTOR framework, PostgreSQL database, and Next.js with TypeScript (frontend). Angus hosts the backend on AWS Lightsail and utilizes Ansible for virtual machine setup, builds, and deployments, foregoing Docker for simplicity. The efficient deployment process (using Buildkite) and comprehensive unit tests ensure rapid and reliable updates. This simple but effective technology stack allowed Angus to focus on developing a better product.
Pragmatic Product Decisions: Removing Friction
Angus prioritizes simplicity and removing friction. He streamlined the login process by initially favoring Google authentication and eventually eliminating the need for login altogether. It's better to make it as easy as possible for people to give you money. These pragmatic decisions demonstrate a focus on user experience and conversion.
Pricing and Value: Understanding Your Worth
After discontinuing Google Ads, Angus made two crucial changes: he increased prices significantly and nerfed the free tier. By more than doubling the cost, he found that the drop in users was offset by the higher revenue. The free tier should only be used to build trust, not as an alternative to the product. This highlights the importance of understanding the value you provide and charging accordingly.
Investing in Internal Tools: Long-Term Efficiency
Angus also invested in building quality internal tools. The benefits of automation are inversely proportional to the size of your team. He abstracted the PDF conversion process using YAML files, enabling him to update converters without deployments. Another internal tool that Angus built was a tool that helped him calculate pricing for customers based on their location and requirements. These tools streamlined his workflow and improved efficiency, especially important for a small team.
Customer Feedback: A Tight Loop
Maintaining a close feedback loop with customers is essential. Angus uses various channels like a support email and chatbot to gather feedback, addressing bugs and implementing valuable features. This customer-centric approach ensures that the product evolves to meet the needs of its users. Angus is also honest and authentic in his communications, which is a great way to manage relations.
Saying No: Protecting Your Vision
When contacted by the Australian Tax Office for a potential large-scale deal, Angus ultimately declined, recognizing the increased responsibilities and compliance burdens. He prioritized sustainable growth over a single, demanding client. It's important to be comfortable saying no in order to protect your vision and maintain a healthy work-life balance.
Strategic Client Relationships: Avoiding Toxicity
While pursuing larger clients can be beneficial, it's crucial to maintain healthy relationships and be willing to walk away if the situation becomes toxic. Angus encountered a client requesting API access and extensive support for new bank statement types. He eventually started charging for his time and declined a strict SLA, demonstrating the importance of setting boundaries.
Marketing Experimentation: Finding What Works
Angus experimented with various marketing channels, including referral programs, social sharing, and content marketing. Ultimately, he found that SEO and word-of-mouth, combined with his initial success with AdSense, were the most effective. The URL being an exact match of what people will be searching for definitely helps. The key is to experiment efficiently to avoid wasting time and money.
The Essence of Simplicity: A Sustainable Model
Bank Statement Converter's success lies in its simplicity: a simple solution to a real problem, executed with a pragmatic approach. It demonstrates that a successful startup doesn't need to be a unicorn; it can be a sustainable business delivering tangible value to customers.