Sahil Lavingia I Started Gumroad as a Weekend Project and Now It’s Making $350k/Mo – Sahil Lavingia

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Hello! What’s your background, and what are you working on?

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Hi! My name is Sahil Lavingia. I run a small company called Gumroad, where we ship a super-simple e-commerce tool for digital content creators. Before that, I was at Pinterest where I designed and developed stuff, including Pinterest for iPhone.

Gumroad started out as a weekend project. I was looking for a way to sell an icon for a buck, and couldn’t find anything great online. So I built Gumroad. Fast-forward over seven years and we’re doing about $350,000 in revenue monthly, helping creators earn over $5,000,000 a month.

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What motivated you to get started with Gumroad?

I love building stuff. I really enjoy the process of taking a problem and coming up with a solution, and then shipping a prototype of that solution to see how good my concept was. Most of the time, it’s not that great.

But sometimes something works out really well, and then I have to decide if I actually want to work on the idea some more. Very rarely, the answer is yes. That was the case with Gumroad. The question at its core was really compelling to me: How easy could one make it to sell something?

When I first got to work, my friend, John, had started a payments company called Stripe and gave me a beta invite. That made my life a lot easier. I didn’t really know what I was doing, but some of that was intentional. I don’t think it’s always that advantageous to study up too much about a problem before you start working on it. Knowing too much about the space that problem occupies and its consequences can be dispiriting and might steer you away from approaching it with a clear mind. Spend a weekend being as idealistic as possible—you can always study and learn later and revisit the problem with the context and perspective of added knowledge, but you can’t do it the other way around.

A few months later, I left Pinterest to work full-time on Gumroad and raised $8MM from KPCB, Max Levchin, and other investors.

What went into building the initial product?

Almost nothing, really. Just one weekend of my time in April 2011. I had learned Python while working at Pinterest, and was able to hack together a basic CRUD application. The whole of Gumroad was a single main.py—one Python file. It was deployed on Google App Engine so I didn’t need to know how to do anything related to ops, nor did I.

If you keep things simple and learn how to copy/paste code from Stack Overflow and GitHub, you can get really, really far with an idea. Just make sure the idea is simple. Rarely will I ever work on anything more complicated than a weekend project.

“Nothing will teach you the lessons that real life will. Sometimes you just have to go out and get started. Just make sure you’re happy and having fun. And that you’re learning. The rest of life will fill itself in”.

In Gumroad’s case, it took about 22 hours in total to throw everything together, including the design. My only break besides eating was to meet a guy named Joseph Walla for coffee. I invested in his startup from that meeting—and they just sold for $230M to Dropbox. So that was a great weekend for me!

How have you attracted users and grown Gumroad?

People always ask me this, and the answer is always super boring: we sent a lot of emails. That’s really it. We scoured the web for people who could benefit from a product like Gumroad, and then told them about it. Literally thousands of times. That’s the only way, really, when you’re young and no one cares or knows who you are, to get folks to use your product.

Over time, we needed to do that less and less. But until you have a lot of customers or some other force that can supply some momentum, there’s nothing better than knocking on doors. Or if there is, I just haven’t found it yet. My sense is that people really just don’t want to cold email people, and are looking for an out. If that’s you: stop! It doesn’t exist! Just hunker down and dedicate some time to finding people, reaching out to them personally via email, phone, whatever, and being okay with it sucking for a while.

And you’re not off the hook just because you have an amazing launch. Nearly 50,000 people checked Gumroad out on the first day, which was great! Even more saw our fundraising announcement(s). But in terms of real customers, almost none of them came from all that fanfare. It was a lot of really consistent growth over a long period of time–mostly driven, especially at the beginning, by a hard-working sales team.

We never invested heavily in paid marketing, SEO, or anything like that. We tried content marketing; it worked okay, not great. Manual “sales” worked the best, by far. Word of mouth grew us beyond that. Those two things are responsible for 99% of Gumroad’s growth. It’s not a glamorous answer, but it’s true.

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

Our business model has changed since the beginning. At the start, we took a pure transaction fee of 7.5% + 25¢. We eventually restructured this to 5% + 30¢. Then, because we wanted to stabilize our own growth and focus on our specific value-add (not payments, but e-commerce) we switched to a hybrid model with a couple of options:

  • free and 8.5% + 30¢ a transaction
  • $10/month and 3.5% + 30¢ a transaction

SaaS has a very different growth curve and take rate, but we think it’s the right approach for us as we turn Gumroad from a VC-backed startup to a great lifestyle business.

Payment processing is core to using Gumroad, but really we’re just a layer on top of Stripe and PayPal (38% of our volume!). And we’ll add other technologies soon. So, we decided to pitch ourselves as e-commerce and charge like an e-commerce company would. We currently make about $330-350K a month.

If you’re interested in following our growth, you can do so on Twitter. It’s been pretty consistent thus far–almost nothing we build helps or hurts it. Gumroad just grows at the size of the market! Make sure you understand that before you decide to commit to something because it’s very, very difficult to go against market trends and existing consumer behavior.

After payments, hosting, and risk—our only three costs of doing business—we take home about 30% of the in gross profit.

What are your goals for the future?

I want to grow Gumroad into not just a great product, but a great company. A company that is having a large impact on the world in many ways beyond just our product. Our largest project on the horizon is open-sourcing the whole thing, so that people can build their own versions of Gumroad, and even compete with us.

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

I think the biggest challenge has been in having to reconsider my identity as someone who isn’t running a billion-dollar company, and maybe never will. From pretty early on in life I was obsessed with becoming a billionaire. It was a naive fantasy and probably led me to make some bad decisions.

” If you keep things simple and learn how to copy/paste code from Stack Overflow and GitHub, you can get really, really far with an idea. Just make sure the idea is simple”.

I’m in a healthier place now. I’m not trying to be a visionary—I’m just iterating upon a product based on our users’ real feedback. It’s simple, not sexy. And it’s leading to a much more sustainable lifestyle for me, Gumroad, and our creators.

There were more “obvious” or tangible hard things, like laying off 75% of the company, including my best friends. That was heavy. Everyone knows that’s hard, but it’s the small, existential stuff that will take a toll and you have to be prepared for the fallout.

Have you found anything particularly helpful or advantageous?

Almost nothing, to be honest. Nothing will teach you the lessons that real life will. Sometimes you just have to go out and get started. Just make sure you’re happy and having fun. And that you’re learning. The rest of life will fill itself in.

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

First, build something for yourself. That way you’re starting with at least one user, which is more than most startups have! Start as small as you can—a “quanta of utility,” some people call it.

Then, make sure you have a good understanding of the market. Talk to people within the market. Sell them on your product. Get them to use it. Ask for their feedback.

Once you have loving users, the rest becomes a lot easier. It’s still tough—but focusing on the first two points will get you headed in the right direction!

” Spend a weekend being as idealistic as possible—you can always study and learn later and revisit the problem with the context and perspective of added knowledge, but you can’t do it the other way around”.

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