SaaS lessons shared on the Framework podcast
July 20, 2020
Last month I joined Tom Creighton and Robert Hayes on the Framework show to chat about how Fathom Analytics works as a privacy-focused and fully self-funded software company.
Below is a rundown of some of the points and topics we covered in the conversation.
Starting Fathom Analytics as the first simple, privacy-focused web analytics company
Our conversation started where Fathom started. One day I became frustrated with Google Analytics: it was complicated, it was from a company I didn't trust, and I didn’t use 99% of the features, so they were cluttering up my screen and making it so I had to click 20 times to get to any data that was relevant to my business. Google analytics made me sad to look at and use. So, I spent an hour designing a mockup of what I figured website analytics should look like. Simple, privacy-focused, and looking like a modern interface.
Google also gives us analytics for free because they make so much money off our data, which didn't sit well with me. (But then again, their analytics are also illegal, so it's truly free if you face fines).
At the time, there wasn't any competition for simple, privacy-focused analytics. No one else was doing this, and when I tweeted my idea for Fathom as a screenshot, it quickly took off and people wanted it to be built.
The first iteration of Fathom launched on June 12, 2018. We built this open-source version first, as a proof of concept that folks would want super-simple analytics, and it instantly got thousands of stars on Github and has been downloaded over a million times.
Each step from idea to launch happened because we noticed an overwhelming demand for Fathom. First, via the mockup on Twitter. If it hadn't gone "mini viral", I may not have proceeded. Next, if the open-source version hadn't skyrocketed in popularity, the paid version wouldn't have existed. Then, if the first paid version hadn't become so popular, we wouldn't have built any new features or updates . And finally, if Fathom hadn't got to a point of being profitable (paying our salaries and then some), we wouldn't now be working on it full-time. Each step was only taken when we saw the demand for it. This is how bootstrapping/self-funding should work.
Fathom Analytics, the business model
The problem we wanted to solve with Fathom, from day one, was that we felt there was an intersection between privacy and simplicity that could solve so much for most people, in terms of using their website analytics to help them with their own online business and website.
Baked into our DNA is the fact that Fathom has to look and work as simply as possible, and also never store and sell personal data.
The business model of an advertising company is to give a product away for "free" but turn around and sell personal data to generate revenue. It's not a coincidence that one of the biggest advertising companies in the world gives aways its analytics product. This isn't an altruistic endeavour on their part, it's calculated and done so because they rent, sell, retarget our data on a massive scale.
The business model of Fathom is wholly different. We are a software company, not an advertising company, so we charge a fair price for our service. We generate revenue/profit by offering our customers Fathom from $14/month, which is both fair to our customers and helps us stay infinitely sustainable (profitable businesses don't really go out of business).
If we charged less, we wouldn't be able to afford our industry-leading backend that keeps our servers always-online, infinitely scalable when there are massive traffic spikes, and fast, so freaking fast. If we charged less, we'd end up with a budget solution hosted on a couple VPS servers (which would be prone to outages, slowing down from spikes, and not able to render customer dashboards at the speed we feel is appropriate).
Our business model works perfectly for a self-funded, bootstrapped software company. We don't need to sell data, since we sell software. We don't need investment because we iterated as we grew, and now that we're profitable, we wouldn't even have a use or need for outside money (plus, it would take away from us being able to make decisions based solely on the needs of our customers).
Good data practices, how we wish the internet as a whole worked
The fundamental way that Fathom works, the way it anonymizes and never stores personal data, and the way it values never collecting or selling personal data is the way we wish the internet as a whole worked. Protecting personal, digital details couldn't be separated from Fathom Analytics, because it's how our software is built, it's how we show data on our dashboards, and it's what we believe to be true as "the right way of existing as a software company online".
We don't have a privacy-focused analytics tool as a marketing tactic, then go out and use retargeted ads (which require personal data being collected and sold) because we feel retargeted ads should be banned.
The way that we process what a page view is, what a unique visitor is, and how that data is stored on our server in a way that's hashed has been copied by other companies, because it's the smartest way to honour the digital privacy of internet citizens.
Both Jack and myself, live on the same internet as our customers, and see how many data breaches, targeted ads, and social networks promoting misinformation happen. We do our best as people to protect ourselves and our data, and have build our software in a way that we would feel comfortable using. If personal data isn’t collected in the first place, which is how Fathom works, nothing can be ever be leaked, since that data doesn’t exist in the first place.
The audience for Fathom Analytics isn't everyone
While our customers split down the middle (or so) in terms of those who care about simplicity and those who care about digital privacy, most care, at least a little, about both. We feel like we provide amazing value to those people who want simple, privacy-focused website analytics.
In having that specific focus of simplicity and privacy, we know we aren't for everyone. Those who don't care about privacy and need to mine personal data for the businesses to be profitable wouldn't make for good customers (nor would they choose Fathom). Those people who have spent months or years learning the ins and outs of complicated web analytics tools and have created complex business systems for their companies, would find Fathom doesn't have enough data for their needs.
We know that Fathom isn't for everyone, and we're good with that. Our software is highly and specifically opinionated so that we can best serve the exact type of person or business that'd get the most value from our product. Those are the types of people who make the best customers and in turn, get the most out of paying for our product.
In the beginning, Fathom was adopted mostly by people who were in my audience and wanted to use a new product I had built. Over time, this has completely changed to where most customers who sign up now may not even know who I am. They're people who care about digital privacy and/or just want simple analytics software that's easy to use because their focus isn't on learning how analytics software works, it's on making money in their business.
Most of our customers are small businesses, where Fathom is perfect for being able to learn what content on their site is popular and which sites are driving most inbound clicks. That said, we do have customers who are Fortune 500s, pioneers of the open-web, and even governments - all of whom have a mandate to be privacy-focused and GDPR compliant.
Fathom's marketing strategy is a constant not a finite point
Too many software companies create a big splash at launch and then fizzle out. There's a ProductHunt post, maybe a HackerNews or IndieHacker post, and maybe a blog post too. But then, that's it.
Our idea, from the get-go, was to find ways to constantly get people informed about and interested in Fathom Analytics. We do this by constantly creating content on several channels:
- Our podcast, Above Board. We don't have sponsors of our show because Fathom is technically the sponsor. While we don't straight-up advertise or even promote our software specifically on the show, we talk about it and share details people want to know about what it takes to run a self-funded software company.
- Our blog, the one you're reading right now. We write articles all the time, not just when we have something to pitch. Jack writes lots of technical pieces that provide value to developers and I write, well, pieces like this one.
- Our Twitter account. We've active on Twitter daily. Not just pitching Fathom, but engaging with our community and customers all the time.
- Constantly releasing features. By having lots of tiny feature launches, it gives folks something to talk about, share, review, and tell others about. If my own audience was the primary driver of customers at the start, word of mouth is now the primary driver (we've honoured that people love Fathom so much they tell everyone they know about us... a lot).
Another way we've been able to keep Fathom in front of people is our affiliate program. We have the most generous commissions in the industry, 25% for life. So if someone signs up via your referral link and pays us $14/month, you get 25% of that for as long as they are a customer. And luckily for our affiliates, our churn rate is super low (ha). There are affiliates who are also customers who now make more money than they pay us for their monthly plan.
Fathom's marketing strategy isn't just to talk when we have something to promote, it's developed a regular cadence where we share interesting and valuable information on a daily or weekly basis. This keeps top of mind for people who would be a great fit as a customer.
How Fathom creates new features
While we have customers ranging from one-person businesses to some of the largest companies on the planet, we always prioritize building and refining features that could be useful to all customers.
We have the same features for our smallest plan as we do on our biggest plan, outside of page views. Regardless of what plan our customers pay for, everyone gets up to 50 sites/dashboards, unlimited email reports, unlimited custom domains and unlimited uptime monitoring. The only difference for price is the volume of page views.
So when creating new features, our goal is to be able to add value to everyone who pays for Fathom.
For every new feature, we do the heavy lifting of thinking it through, revising it until it's as simple as possible, and testing the crap out of it. We even internally debate every nit-picked detail until it's perfect. This is done, not because we're neurotic about good software, but because we want to offer our customers the simplest way possible to achieve their goals with our software.
Since we have thousands of customers, we have a large enough sample size to look for trends in requests for what people wished Fathom could do (i.e. what new features to build).
We spend a lot of time learning from our customers, in regards to their wants and needs. Our support channel is managed by Jack and myself (cofounders). We don't pawn this off to someone else, because we feel that support is one of the most important things a company can learn from. It's not just helping customers, it's a marketing channel, a sales channel, and a way to build out a roadmap of features that can most benefit everyone.
Features that are added also never increase our pricing. Our pricing has stayed the same since we launched on our base plan, and each new feature we add doesn't also increase our pricing. This is because we want to keep adding more and more value to the price of Fathom and keep it as affordable as possible.
What's next for Fathom Analytics
We're totally happy in our little corner of the web, giving the people who value privacy and simplicity the best possible solution.
Jack and I are in this for the long haul - our company is profitable, our customer base has been growing well from the start without resorting to targeted ads for acquisition or ad-targeting, and once people try our software out, the vast majority of them stick around (and tell their friends).
We're going to keep being ruthless about creating amazing software and agonizing over the tiny details to make our experience both fun and easy for our customers. We're going to keep our cadence of talking to people who are interested or paying attention through our marketing channels. And we're going to keep thoughtfully adding features at no extra cost to our product, so it becomes even more of a no-brainer to pay for website analytics.