"They say it's a dark pattern. That's a cowardly, lose-win way of doing business." Jay Tan talks growing to $30k/mo.

Jay Tan was coasting on $30k MRR when X started charging a prohibitive price point for their API: $42k/mo. So he shut it down and started working on Zylvie.

The obvious takeaway here is that platform risk is real and you shouldn't be dependent on any one service... but Jay took a lot more away from his journey than that.

I caught up with him to dig a little deeper and learn from his experience of going from $0 to $30k MRR, and back to $0 again. 👇

Be lazy about your marketing

James: Let's start at the beginning. How did you grow Zlappo to $30k/mo?

Jay: I have a particular fear and disdain for marketing. It makes me feel oily trying to grovel for others' attention and liking on Twitter by putting on a rah-rah hustle "worksona," plus it feels like a massive distraction from what I enjoy doing (and indeed what I believe to be the main needle-mover in any nascent software business): building the product.

James: I think a lot of indie hackers share that sentiment. So what did you do?

Jay: Instead of accepting marketing as a necessary evil, I constantly tried to find ways — just like a lazy developer — to outsource marketing.

James: Freelancers?

Jay: For Zlappo, I invested my marketing efforts in building and promoting an affiliate program and paying my enthusiastic customers a commission for doing the heavy marketing lifting for me. I also partnered with AppSumo, which eventually accounted for 50-80% of my monthly revenue.

Have affiliates and give them 50%

James: Why affiliate marketing?

Jay: The most effective marketing is marketing that comes from other users, not from you. There's no greater social proof than seeing/hearing someone other than yourself waxing lyrical about how wonderful your product is and the specific benefits that they got out of it.

I learned this quite early with Zlappo, when I realized nobody gave a damn when I wrote long blog posts expounding the benefits of my own product, but, when I surveyed my users who ended up upgrading, I discovered they chose my product because their favorite influencer swore by it.

James: How much of your revenue came from your affiliate program?

Jay: I'd say half of my MRR.

James: What did you offer your affiliates?

Jay: 50% commission. It's a lot more attention-grabbing and converts better, compared to something like 20% or 35%, which sounds relatively paltry.

James: Forever?

Jay: I didn't pay them out forever, only for the first 12 months or whenever the referred user unsubscribes, whichever is sooner. I disclosed this upfront to any affiliate that signed up with me. Still, "50% commissions for the first 12 months" sounds better than "25% commissions in perpetuity".

James: How did customers learn about the program?

Jay: Advertising it in-app in multiple places. Just a prominent button in the dashboard did the trick.

James: How did you pay them?

Jay: I pay my affiliates out only upon request (one-click redemption in the affiliate dashboard), so this helps me to conserve cash flow for other business operations.

Believe it or not, it's relatively rare for smaller affiliates to make a redemption.

6 tips for mitigating the risk of lifetime deals

James: You also mentioned lifetime deals. People seem to either love or hate these; nothing in between.

Jay: Founders are very reluctant to run lifetime deals, especially when their products start gaining traction because they believe that they will cannibalize MRR and also they'll be forced to support a growing bunch of non-paying "deadweight" customers over time. Not true!

James: No?

Jay: They aren't the same customer. There are many customers who hate subscriptions, and to get them to pay just $10/mo would feel like pulling teeth, but getting them to pay $500 once-off is a breeze. Lifetime plan customers are a lot more trigger-happy and they'll purchase your deal "just in case."

This also means that lifetime plan customers use-churn a lot more than subscription customers. Like 80% of your lifetime plan customers aren't using your product anymore after a couple of months, so the worry about having to support a large number of non-paying customers for life is definitely overblown.

James: Any tips for making LTDs work?

Jay:

1. Have as many plans as possible, so lifetime users on lower plans can "upgrade" and grow into higher plans over time. Try 5 plans to start.
2. Have your cheapest plan at $99. That's the highest platforms like AppSumo or Pitchground would typically accept. And you'll fight tooth and nail if you want to increase your pricing in the future. They hate their vendors trying to increase pricing, and they'll threaten you with delisting.
3. NEVER map your lifetime plans directly to your monthly-paying plans. Your lifetime plans are supposed to be way more restrictive than your monthly plans due to their lifetime nature. This way, you can minimize MRR cannibalization and grow both subscription and one-time revenue in tandem, because neither option is obviously better than the other. You want to appeal to both subscription and lifetime customers. They're not the same people; you need to segment your target market.
4. Be super clear about the feature set for each lifetime plan. You're NOT obligated to extend every new feature to all lifetime plans. You can limit it to just the higher plans to encourage your lifetime users to upgrade to higher lifetime plans. That way you ensure that your lifetime users are a continuous cash cow, not once-and-done and you're on the hook to support them forever.
5. Always price your lifetime plans at higher than your subscriber lifetime value (LTV).
6. Be clear that "lifetime plan" means lifetime for the lifetime of the product, not the lifetime of the customer.

Dark patterns

James: What are some other things you did with Zlappo that go against the norm?

Jay: People say not to ask for credit cards upfront. They say it's a dark pattern. That's a cowardly, lose-win way of doing business. If you know you're offering real value, charge them upfront. You give them a free trial, they give up their credit card info. They must show goodwill when you show goodwill. It's a business, not a charity.

James: Any other "dark patterns"?

Jay: People also say that exit interviews before cancellation are a dark pattern. Churn feedback is of PARAMOUNT importance. It's the #1 form of feedback that you should care about. Feedback from paying customers is important, but as long as they're continuing to pay you month after month, you can ignore their complaints to a degree. But you better zero in on churn feedback, because whatever they're unhappy about, it was significant enough for them to cancel and stop using your product.

James: So how did you get it?

Jay: I never let my customers go so easily when they were trying to cancel, I made them fill out a form before canceling. Most users didn't mind as much as you would think — it's mostly in the heads of the founders.

How to choose (and validate) an idea

James: Did your experience with Zlappo inform your new product?

Jay: Yes, when Zlappo failed, I knew I had to use the ongoing "regrets" I had with Zlappo as a blueprint on what to avoid with my next project.

I knew I wanted something inherently viral, something that pays me more the more my product earns my customers, something that's resistant/resilient to platform risk, something that serves a market I know about and have access to (small creators), and something that has existed for at least the last 10 years so as to reduce market risk (Lindy Effect).

James: Did that help you in the ideation process?

Jay: It definitely narrowed down the ideation process a lot. I had the idea for Zylvie within 2 weeks of Zlappo's API access being cut off.

It's a platform for small creators to host an online store and sell digital products to their audiences.

James: Nice. Tell me more about inherent virality.

Jay: I've always been fascinated by product-led growth. This past summer, I was reading "The Minimalist Entrepreneur" by Sahil Lavignia, and he said that the #1 reason his startup, Gumroad, grew so quickly with minimal work on his part was because his product was inherently viral. His users had to share his product to their audiences in order to even use it and get value out of it. This cemented the importance of baked-in virality in my mind as a long-term, sustainable growth driver.

It became my #1 non-negotiable in idea selection for my next product idea. So I deliberately selected an idea that markets itself. I worked hard to sniff out an idea that would benefit me directly, the more my users used my product.

James: I bet this has something to do with your disdain for marketing.

Jay: Yeah, picking an idea with baked-in virality can mean the difference between focusing on the product 100% of the time and still growing like wildfire, vs. having to slow down your progress by a factor of 2 because you have to keep context-switching between building and marketing.

In my opinion, solo founders have NO BUSINESS working on ideas without a baked-in viral component. People have literally given away 50% equity to marketing co-founders because they didn't start with virality in mind. It's an enormous strategic error most founders are too proud to admit.

James: It can't be added later?

Jay: The beauty of baked-in virality is that you can't fake it by bolting it on after the fact. Virality CANNOT be an afterthought, it must be prioritized from Day 1, at the ideation stage. The idea is either inherently viral, or it isn't.

Target crowded markets

James: Zlappo was in a pretty crowded space. Zylvie a little less so, but definitely has some big competitors. Was that something you did intentionally too?

Jay: Yes, crowdedness in a market is a good thing. It proves that the market exists, it's huge, and that it's growing. Don't be intimidated by it, embrace it.

James: Any benefits other than market validation?

Jay: It derisks the idea from the outset. You don't have to educate the market or try to convince people that they have a problem, because they already know it and are already paying for an existing solution. So all you have to worry about is convincing them that your product is the best fit for them. You can also use existing competitors as a benchmark on how to craft your product and differentiate.

James: How do you find the right crowded market?

Jay: One of the best ways to do that is to go to your competitors' pages on TrustPilot, G2, Capterra, etc., and sort the reviews by 1-star ratings. Try to distill what your competitors' customers are complaining about and see if there are any trends. This is your competitors' soft underbelly — this is where you must attack. They're obviously unwilling or unable to fix these issues, so this is where your opportunity lies to squeeze into the market.

Validation is for chumps

James: So your market was already validated. What about the product?

Jay: You don't need to validate a product before you build it. And if you really think what people say they will do and what they actually end up doing are the same things, you're going to have a terrible time in the real world!

The truth is, at the end of the day, you still have to fall back on your business acumen (a fancy term for "educated guesswork"). There's no customer development technique that can help you to assess market opportunities and guarantee that someone will buy when you build and finally launch that thing.

Plus, it also highly depends on your execution. Sometimes you have the right idea, but your product sucks, and you failed to make it not suck before running out of money, so the business still fails eventually.

James: Right, so validate the market but skip idea validation. Then build the MVP, and validate that.

The purpose of a business

James: Anything else you've learned that indie hackers should hear?

Jay: Your business is supposed to serve you; you're not supposed to serve your business. Your product will be fine, your business will be fine, your customers will be fine. Take a break and smell the roses, travel a bit, indulge in your hobbies.

Most indie hackers kill themselves over their business and end up miserable with no work-life balance whatsoever. In my opinion, they're completely missing the point of entrepreneurship.

James: Was Zlappo a lifestyle business then?

Jay: I'm not ashamed to say that I was happily and complacently coasting on the revenue it brought in until I sunsetted Zlappo.

The reason that "lifestyle business" is a dirty word is not because lifestyle businesses are bad. It's because it's a shaming term popularized by VCs, angels, and the entire startup ecosystem/machinery to dissuade indie hackers from bootstrapping and encourage them to take on funding while giving up sizable equity so these parasites can get on board and participate in your growth.

James: Lol, I take it you're not a fan of investors.

Jay: That's what I like about lifestyle businesses. It's not investor-centered. It's not customer-centered either. It's founder-centered. It serves you first and foremost, not anyone else.

If you're a founder who knows what's good for himself and what's important in life, you better think of your business as a thriving lifestyle business.

Your business should never be optimized for growth over your own quality of life. Life is way too short to do that.

James: Well said. Where can folks find you?

Jay: Twitter or check out Zylvie.

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