I’m still finishing up my existing client projects, but I’ve stopped taking any new work. Starting in May, Sifter will begin paying all of my bills. It’s not quite a full-time salary, but it’s well on the way. Hopefully this will be useful for others out there looking to go out on their own as well. I’ve put together this timeline of our significant events as well as our revenue growth. (You can click the image for a larger view.)

An illustration of two timelines showing that the features would take the time amount of time to implement regardless of when it's launched.

During the beta we only charged $5 for paying accounts so that we were making sure the billing system was working well. The bars during those months represent the revenue that we would have made if we had been charging full-price during that time. There are a few additional points that are potentially interesting for someone else interesting in a hosted web application business.

  • Sifter was profitable as soon as it launched. I wasn’t making a salary, but Sifter has been comfortably covering its own bills since the day we went live.
  • I developed Sifter part-time with some basic assistance from others. This kept our costs very low and also gave us a lot of flexibility as there wasn’t a need for coordinating multiple people who were working other jobs. It also imposed a significant constraint in that I was the bottleneck for everything.
  • During the 16 months of working on Sifter part-time and consulting part-time, I was working about 60 hours per week and effectively making about 50% of what I made before quitting my job.
  • Sifter didn’t pay me any money at all until April 2009 when it began paying me about a quarter salary.
  • All of the initial startup costs were covered by the initial investment from my business partner. Those included all of our legal work, business insurance, hosting, and some other miscellaneous expenses.
  • Advertising was effective and worked well for us, but I wouldn’t bet the farm on it. It would take a significant outlay of advertising dollars to match the results that we’ve seen simply from blogging about the design process. Advertising is a good compliment to other growth strategies, but I wouldn’t advise relying on it as your only growth strategy.
  • Next Update is profitable and debt-free. At this point, we’re confident that we’ll continue to grow organically with no need for any additional capital.

Long-term, we’d like to share more, but for now we’re easing into it. While it hasn’t been a walk in the park to get here, it’s certainly possible for a web application to be developed, launched, and support an employee at a modest salary in under a year and a half. With more design or development help, we probably could have accelerated that timeline, but we’d have more employees to support and more pressure to grow. As it stands right now, we can grow sustainably without any unnecessary stress, and we don’t have any debt looming over us.

Hopefully that helps provide some insight. If you have any other questions, let us know. Unless it’s about the number of accounts or precise revenue numbers, we can probably answer it.

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