millennials, appreciation, bots, microsoft teams, slackbot,

Dishonesty can, and most likely will, fly your startup into the mountain

Stas Kulesh
Stas Kulesh Follow
Jul 29, 2019 · 12 mins read
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Hey, I’m Stas Kulesh. I grew up in the far-easter part of Siberia, studied Computer Science and Nuclear Physics, played in a band, got excited by the indie-games making and left the uni to become a digital designer. For several years in the early 00’s, I’ve been working remotely, traveling and blogging extensively (before that became a popular mainstream thing) and ended up in New Zealand.

Nowadays, I still play various musical instruments, run development and design shop in Auckland and take care of Karma bot. Hopefully, Karma bot will be able to take care of me at some point.

Karma is a chatbot that collects and processes in-chat data to build comprehensive performance reports and improve people culture. It lifts up the team morale while providing valuable insights for the leaders. Karma bot has more than 6,000 weekly users and $11k monthly recurring revenue from 90 paying companies, 750 new teams register weekly. The bot is available on Slack, Microsoft Teams and Telegram.

Karma bot for Slack

What motivated you to get started with Karma?

Originally, Karma bot was an internal tool we’ve built for our own digital studio Sliday.com (team of 24+ people, mostly remote employees). Then after a successful Product Hunt launch, we discovered that other people wished to use it as well. For a year or so, Karma bot was making less than $200 per month. We did not consider it serious enough, but more and more customers we asking for features and updates. Most of the new ideas got validated internally at Sliday.com, our distributed development team. That was probably a mistake as we should have listened more to the actual real-life customers, not our somewhat biased employees. As a result, the app grew out of proportions and became convoluted and hard to use and understand, difficult to explain and to sell.

We picked up the development in 2017. Went through Y Combinator Startup School in 2018. My business partner, David Kravitz has been working on Karma bot almost full-time since November 2018 focusing mostly on sales and marketing.

YC SUS 2018 really helped. We re-worked the pricing model, simplified the product and made tons of improvements. Primarily, talking to customers (David does 5-10 demos a week) really helped to re-shape the product. The combined effort pumped the monthly revenue figure up: from $156 in Jan 2018 to $13,361 in Jan 2019.

Simply regularly tracking the important metrics (active users, amount of karma requests made, revenue, paid customers, etc) really helps to stay focused and identify mistakes and pitfalls early. Being brutally honest with yourself is crucial. Dishonesty can, and most likely will, fly your startup into the mountain.

What went into building the initial product?

Karma bot is a part-time in-house project of Sliday.com. I design and sometimes code (front-end mostly), David takes care of customer experience.

It didn’t take too long to build a prototype and fine-tune it for our own team needs. The transition to Slack was not easy and took almost a year. Naturally, we wanted to make this new workspace more fun, more engaging. Sliday team suggested a feature and together we implemented that. For more than a year Karma bot was primarily an internal tool. Although, we made it available on Slack store, we didn’t really invest much thought and time into keeping that relevant, attractive and all.

It’s hard to estimate the amount of funds that David and I spent on this, but the time-tracking system recorded 8,308.42 hours against Karma bot project. If one believes in ’10,000 hour’ rule, we’re likely to become experts in the in-chat appreciation and engagement area in 2019.

We rolled out a major update and picked the product up in Nov 2017. It took almost a year to figure out the customer base. That attracted more customers and gave Karma bot more exposure. Early in 2018, Microsoft approached us and paid $100k for developing Karma bot for their fresh and app-hungry Microsoft Teams platform. All IP remains with us.

Sliday team consists of 20 employees. As a digital studio, we provide design and development consultancy and production services. Our top developers have been working for us for 5+ years. The preferred tech stack is Ruby on Rails + Angular.js + Postgres. We’re shifting the front-end to Vue.js at the moment.

The core team consists of: 

  • UX/UI design and front-end coding - Stas Kulesh
  • Karma bot app - 2 senior backend developers, Alexis and Victor.
  • Front-end - digital nomad and mentor Arkady.
  • QA - a part-time contractor Max.
  • Illustrations - remote creative Alya from Vladivostok, Russia.

David Kravitz does CX, QA, project and product management, sales and operational work.

Together we have built 100+ of digital products: web apps (https://phben.ch), browser extensions (https://palette.site), mobile apps (https://getskorch.com). We have been one of the earliest developers on both Slack app marketplace and MS Teams bot store and gained knowledge about the platforms as they grew bigger.

How have you attracted users and grown Karma bot?

The initial launch went rather well. I was new to ProductHunt and chat bot scene was rapidly growing. We kept adding more features and launching each bit as a sub-product, as a result Karma bot got featured 5 times, gathered approximately 2,500 upvotes and gained the initial user base.

While the Product Hunt was working OK, it didn’t really bring the customers we were interested in. Most of the early Slack adopters were startups, small robust or free (non-profit) communities. They didn’t really see enough value in the product. The early days teams were ready to pay $6/mo or $99/year. Yes, we gathered some feedback along the way, but ended up with almost 100,000 registered users and just $126 monthly recurring revenue. Laughable really.

We tried Facebook advertisement and Google Adwords, but quickly realised it takes a lot of effort to setup marketing campaigns properly. These paid advertisement channels consumed more than they brought in return.

What really gave us the push in terms of user acquisition is the partnership with Microsoft. Julian from Seattle HQ office lead us through the process of making bots for MS Teams chat platform. Microsoft helped us to test and launch Karma bot on their new marketplace. To this date Microsoft HQ team sends karma to each other. I must admit, the development process for MS Teams is not as smooth as it could be, but the userbase has so much potential as it is mostly enterprise.

We did all sorts of marketing book tricks to get the message across. David and Vlad created a number of email sequences/flows at MailerLite to make sure teams learn about all the crucial features before they convert.

David spent endless hours sending out cold emails: today, he’s got 12,404 emails in his Sent folder. Crisp.chat became the preferable tool of choice for instant feedback and on-site support (902 conversations). The customers really dig that kind of instantness. We strived to stay robust and flexible.

With Karma bot we got accepted to Y Combinator Startup School and participated in 4 Pioneer.app tournaments. When possible, I posted on Reddit, Hackers News, all the regular geeky places. There is a Karma bot blog running on Medium, a Twitter account, etc.

I don’t believe in growth-hacking and the one-fits-all scenario for user acquisition. But I am certain that if a product is solving customer’s problems, saves time, makes her feel better, so she tells about it to her friends and colleagues – then it’s a go.

What’s your business model, and how have you grown your revenue?

Karma bot has always been a subscription-based paid product. Initially, we set a silly $6/mo per team (any team size) price and gave away $48 lifetime licences. Listening to the voices of reason and SUS advisors we updated the pricing model and stopped promising anything with the word ‘forever’ in it.

In February 2018 we introduced free accounts in Karma bot for Slack. Today, 1299 teams are enjoying free karma. And 100 (!) teams are paying. Stripe is an awesome, unbeatable really, tool for billing implementation, disputes, risk evaluation and revenue recovery.

100 paying teams, 100,000+ users, 1,000,000+ karma requests sent!

100 paying customers

We are a lean startup, we try to track the costs and cut the loose ends. Today, I think, we’re paying for Digital Ocean hosting (Got free credits from YC SUS), Readme.io, Crisp.chat, Satismeter.com, MailerLite.com, Stripe fees, Abstract.com design version control system and InVisionapp.com. Stripe has been working smoothly for us since the day one, we can’t recommend it enough.

Through the direct payments and recurring subscriptions on Stripe, we’re making around $5k on average and once got to $13.3k figure when we signed a pilot project with one of the current enterprise clients.

The hardest part was to fin what value people see in karma-tracking tool. Surprisingly, the more use it, the more value it gets. Our most valued, no-hassle customers are HipChat Karma bot converts. Slack acquired Atlassian’s HipChat and deprecated the product in Feb 2019. During that month ‘karmabot’ search requests and new subscription have peaked.

The overused advice about fanatically following your customers needs and feedback and solving problems they voice out – is super-useful. Also, karma sharing is a long-term habitual thing, and for a long time we’ve struggle to accept the ‘long-termness’ of it.

For the reference, I keep posting weekly revenue reports on Karma bot page over here: https://www.indiehackers.com/product/karmabot

Revenue

What are your goals for the future?

Focusing on one thing often was possibly the hardest skill to obtain over the past 12 months.

Nowadays, we’re looking forwards to building on top of ++, to bring more value and build what people actually want. We are about to launch Karma bot Rewards, the essential component to converting karma to the palpable real-life rewards. Earned karma coins can be spent on the actual perks: a cup of coffee, movie tickets, a restaurant meal for 2, a day off, a book, a learning course… David and I talk to 25 customers a week and this idea has long been on the TODO list. We put tons of effort in making it happen and truly believe it’s a game-changer for our robust startup.

I personally don’t have much experience in raising money from the investors, but it’s not unlikely we will be seeking for more resources to scale up faster.

What are the biggest challenges you’ve faced and obstacles you’ve overcome? If you had to start over, what would you do differently?

The biggest mistake was getting the wrong idea of the userbase. After talking to 100+ customers, most of whom are business owners, founders, tech leads and top management, we think, we know now that the actual value is in performance reports for managers and team leaders, not in making it fun and games for the employees. The actual paying customers are not the regular team members, but team owners: top management, CEOs and founders, people culture specialists. They need Karma bot for better control and transparency. Our chat bot helps them to sieve through the daily chat noise and track micro-feedback, record performance notes and spread team appreciation. Performance reports – is the real value of Karma bot, not the fun and games aspect of it.

What’s your advice for indie hackers who are just starting out?

Don’t build for the sake of building. Every product that you ship should bring revenue, one way or another. And it should be as automated as possible to save as much time as possible and bring as much money as possible. Even if is seems tiny and insignificant at first, over time, if you keep learning, making and shipping, it will become the essential part of your financial stability. Money usually is a good indicator that people appreciate your work. Learning to build to earn is an essential skill that in a long run frees more time for self-development and things you like.

I find it comforting, well, I wish to believe, that IH community is not about getting rich fast, but about that elusive work-life balance. In New Zealand, the well-developed, beautiful, remote and isolated country, finding balance is one of the core values of the society. In that regards I’m very much a follower of Jason Fried and David Heinemeier Hansson. “It Doesn’t Have to Be Crazy at Work”, “Remote Work”, “Re-work”, provocative as they are, are really good and practical materials.

Surprisingly, I get inspired by big ideas books like Our Mathematical Universe, Life 3.0 and Superintelligence. Through the vastness of the universe or the unimaginable complexity of our minds they show that most of the everyday things in most everyday situations don’t matter. One should do what what’s right, stay calm and carry on!

Where can we go to learn more?

You can learn more about Karma bot at karma bot.chat

Follow us on Twitter @karma bot_chat and definitely subscribe to Karma bot page at IH.

We’re totally inviting you to ask any questions in the comment section below. Good karma to you all. Namaste.

Originally posted at Indie Hackers: How Building to Earn Drove My Product to $7.3K MRR in One Year

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Stas Kulesh
Stas Kulesh
Written by Stas Kulesh
Karma bot founder. I blog, play fretless guitar, watch Peep Show and run a digital design/dev shop in Auckland, New Zealand. Parenting too.