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Bootstrapping With A Paycheck to YCombinator and $10M Series A: Ryan Chan, CEO of UpKeep (Part 3)

Posted on Thursday, Jun 13th 2019

Sramana Mitra: What did you do when that aha moment came?

Ryan Chan: I hadn’t talked to this friend of mine in almost three years. He said, “Ryan, I will give you a little bit of money if you quit your job today and start working on Upkeep.” I did.

I quit my job working as an iOS developer. Literally that same day, I sent in my two weeks’ notice. I said, “Okay. I’m going to dive and head in for this company called UpKeep.” I had basically a little bit of money saved up. But other than that, I was pretty much dirt poor living with my mom.

What happened was just this amazing coincidental and extremely lucky series of events. We had this amazing free user base that basically followed my and UpKeep’s progress over the past two years. When I quit my job, the first thing that I realized was that I’m pretty poor. I have no money.

So one of the first things that we did was, we created a free product and a paid product. Because we had so many people who are so passionate about the product that we are building over the last two years, we actually started having people convert over to this paid product and we developed more features on top of it. That was really cool. People were actually paying for this thing that I was just building for fun.

Sramana Mitra: How much were you charging them?

Ryan Chan: Our very first customer was paying $5 per month. Our second customer was actually Universal Studios Orlando. Universal Studios Orlando has a small group for the floats and parades. They were quoted for over half a million dollars to use this other system.

They said, “No thanks. We’re going to go find something super simple because that’s all we need.” They came across UpKeep in the app store. He basically said, “I’ve got a team of 15 folks. We love UpKeep. It seems like a really great product. We’d love for you to come out to Universal Studios.”

This was in Florida – Universal Studios Orlando. So he flew me and I brought my wife to Universal Studios Orlando. We got a tour of their entire floats and parades and maintenance team. It was amazing. It was one of the best experiences of UpKeep.

Sramana Mitra: Give me some numbers. How many free users did you have when you decided to do this full time and create this freemium situation? How many of them converted into paid users?

Ryan Chan: We have 10,000 free users at the time. So it was substantial. To me, saying that now, that’s actually a lot for a business application. It didn’t really hit me because it went from one to two to ten to hundreds. It was just this steady growth.

In terms of how many people converted, it was not like we had 10,000 converted paying customers. It was like we had 10,000 and 100 of them converted into paying customers in the first month. But it wasn’t necessarily about how many people converted or how much they were paying us.

It was just this idea that people were willing to pay money for this free product that I had been giving away for the past two years. It just made me realize I am building something that is generating this much or more value to them in their businesses. 

Sramana Mitra: That’s exactly right. It doesn’t matter how much. It matters that people are willing to pay and that’s very significant. In your first month, you’re able to hit a 1% conversion rate from free to premium.

Frankly, that’s considered very good whatever be that denomination of that conversion. As you went along, what kind of conversion rate did you settle into?

Ryan Chan: I think every single business is different. We segment all of our customers. But based off of the highly segmented customer or profile that we’re looking for, we can get conversion rates all the way up to 10% from free to pay.

Then obviously depending on who they are, which segment they come from, they could fall below 1% too. 

This segment is part 3 in the series : Bootstrapping With A Paycheck to YCombinator and $10M Series A: Ryan Chan, CEO of UpKeep
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