KIBI.ONE PRESENTS…
How the Founder of Morningscore Went From ZERO to $10,000 MRR
“For us the most important number right now is new customers, as that is what potential investors are focused on. MRR is less important.”
Kibi.One is a no-code SaaS incubation program focused on helping non-technical founders build software companies. Visit our homepage to learn more about our program.
Avoid Sketchy SaaS Investors, Be Wary of The Hype Around Paid Ads and Prove the Naysayers Wrong
Today, Kibi.One was lucky enough to sit down and chat with Karsten Madsen, the CEO of Morningscore, a super slick all-in-one SEO tool made for busy founders and marketers.
So let’s jump in.
💬 Hi and thanks for joining us today. Can you begin by giving us a little bit of background about Morningscore and when / why it was started?
Thanks for having me! I worked as an SEO consultant for many years and saw that customers struggled to understand if my SEO work would give them a positive return on investment or not.
I saw that this pain is universal and that led to the idea of Morningscore: We calculate any website’s SEO value in dollars, tell you where the opportunities for growth are, and what it takes to rank well for your desired keywords.
💬 What are you doing to separate Morningscore from the pack of other SEO SaaS companies? I watched your video about how Morningscore provides a method of calculating a precise value for your work obtaining organic rankings, but tell me what else you’re doing. How are you differentiating yourselves from big players like Moz or Raven Tools? Are you focusing on different features or a different user base?
We gamify SEO. People tell us that they get addicted to working on SEO with Morningscore because of the missions and green checkmarks in the tool. And this is just the beginning. By the time this interview is live you can probably unlock a dark color theme by completing our onboarding process. Other tools work more like a database, we are more like a to-do tool.
💬 You decided to take on investors to get Morningscore off the ground. Tell me a little bit more about this decision. How long were you operating Morningscore for without investors and what did the process of finding an investor look like? How have team dynamics changed since bringing an investor on-board?
We didn’t really run for a long time before we got an investor on board. This is my 2nd company so it’s less of a bootstrapped endeavour. It gives us more stability in a way to actually pay people a decent wage but it also is tough financially to run a startup like that and to find investors for that kind of journey.
Finding an investor is super hard. It’s easy to get them interested but there are many investors out there that might hurt your business because they see 👓 the world differently.
Chemistry between founder and investor is important. And we found our perfect match in an investor that has a crazy good reputation in Odense (our town). Morale and ethics are super important to me, so I consider myself very lucky to him as an investor. I met A LOT of sketchy business angels already.
💬 Haha. There is something funny about the words “sketchy” and “angel” together. What are the three most important pieces of advice that you would give to early stage SaaS companies looking to bring on no-sketchy investors?
Go look for an investor minimum 1 year before you need the money. Make sure you also challenge the potential investor to see if you have the same values. It’s a mutual relationship, not a slave/master thing.
💬 What were some of your pre-investment growth channels that allowed you to onboard your first users? Tell us a little bit more about how you approached growth in your early days. What worked, what didn’t?
Actually we didn’t really see much of a change after getting funded. Meaning the channels we use now are quite similar. And what worked? Honestly nothing really worked if you count input/output in terms of acquisition cost. It was super expensive and time consuming to get the first customers. A mix of organic and paid social media, blasting emails, calling people up, and of course using my network all helped. It was a struggle and it still is. Maybe even more now cause our goals are higher and increasing. If you hate to struggle don’t do a startup. I am addicted to it. Nothing beats the sensation of overcoming the seemingly impossible and proving the naysayers around you wrong.
“If you hate to struggle don’t do a startup. I am addicted to it. Nothing beats the sensation of overcoming the seemingly impossible ⛰️ and proving the naysayers around you wrong.”
💬 Now that you have some funding, have you focused more on opening up new traffic channels (i.e. more paid ad channels) or have you focused on better optimizing existing traffic channels?
We are doing direct sales now as an experiment for 3 months. And this was only possible because of a recent funding round. In general we are struggling to bring our CAC (Customer Acquisition Cost) down and the amount of signups per month up. So we are trying a lot of new channels and techniques.
💬 Today your company offers users many cool SEO features. You have rank tracking, site health checks, link reports, traffic reports, mission recommendations and much more. However, when you first launched your MVP what features did you launch with and how have you gone about expanding your feature set over time? What feedback loops do you have integrated into your company to help you get feature ideas from your users? Up until this point has your focus been on broadening your set of features, or adding depth to existing features?
Our roadmap is the best answer here. We launched our BETA in Feb 2018. It was a disaster if you ask me. The product wasn’t anywhere near good enough to launch but we had to do it not to run out of money according to my calculations. It was a big mistake. I listened too much to the Silicon Valley BS about “if you launch your product when it’s perfect you launched too late”. I understand the circumstances where this is true, but you can launch too early and COMPLETELY kill all hype. But luckily the hype came back after 1 year of intense development and the release of version 2.0. So in the end we survived. But what a ride…
And yes we ask our customers a lot for their ideas and they also give them spontaneously on the chat. Sometimes we implement an idea within half an hour of receiving the request and people are completely shocked it can go so fast. An awesome feeling for our developers.
“We launched our BETA in Feb 2018. It was a disaster if you ask me. The product wasn’t anywhere near good enough to launch but we had to do it not to run out of money according to my calculations. It was a big mistake. I listened too much to the Silicon Valley BS about if you launch your product when it’s perfect you launched too late.“
💬 As an SEO company, what are you doing to improve your own organic search ranking? What are some of the strategies and techniques that have worked best for you so far?
As you might have guessed it’s VERY competitive to rank for ‘SEO tool’ terms so we don’t have a real breakthrough on the super relevant keywords yet, but we do get quite some traffic for marketing terms and other more long tail keywords. So the short answer is that we are still working on it.
💬 What advice would you give to other SaaS companies when it comes to ranking their sites? What are some of the biggest mistakes you see SaaS companies make when it comes to SEO?
I see a lot of SAAS companies writing a lot of guides and articles that don’t rank because they forget to do link building and pick the right keywords🕵️ and optimize for them. So then your hard work is wasted. With a tool like Morningscore you can easily compare with competitors to see what it takes for you to rank like them.
💬 I also notice your SaaS has a generous partner program where you payout 40% to affiliates. How active have you been running your affiliate program and what percentage of overall site traffic has your partner program helped you bring in so far? What advice would you give to other SaaS founders who are thinking about starting a partner program?
Yeah we are pretty generous 😉 It’s quite new for us, we started pushing it in the spring of 2019. One of the first lessons learned is that it’s super hard to find partners. I thought you could just list yourself in a database and then people would come to you. In some niches you can I guess but with SEO tools it’s not easy. Especially since the competition is already there. So you need to do classic outbound stuff. Lately we got a few super active and successful partners which made it worth the investment in the first place. So that’s awesome! My advice is don’t expect affiliate to be a walk in the park. Be ready to push hard to find partners. Often you can’t approach them with the partnership directly. You need to first make them impressed with your tool, and then pitch the affiliate model afterwards. Otherwise they really don’t care.
“One of the first lessons learned is that it’s super hard to find partners. Lately we got a few super active and successful partners which made it worth the investment in the first place. So that’s awesome 👍! My advice is don’t expect affiliate to be a walk in the park.“
💬 You’re site looks beautiful! How much of your site has been guided by A/B tests and experiments and how much has been guided by the visual desires of your designers? How have you approached A/B testing and CR optimization so far? What are some of your biggest takeaways from your experience with conversion rate optimization so far?
Haha thanks a lot! We don’t have enough traffic to do A/B testing but we did optimize parts based on heat map data. Our designer has many years of experience, I trust that more than data to be honest. Dangerous thing to say in these big data times.
💬 Very dangerous indeed! Is paid placement a big focus of yours? If so, what paid placements have turned out to be most successful for you? Which paid placements have not worked well for you?
Lately we’ve had very little success. Some paid placements were just horribly underperforming. It hurts to think about it. We joke at the office that every time we pay there is zero effect and the opposite is true with organic placements. Of course this is not always true, and I hope we will get some strong results soon. It has happened in the past.
💬 Where does your team spend the most time between customer acquisition, monetization and retention? Where do you think you could do better as a company and what are you doing (or planning to do) to improve that?
A classic story of overly focused on acquisition. We suck at monetization but are getting better. Retention is kinda OK but only cause our support is quite good and we treat people writing us like friends. Other than that we have no real retention strategy right now. Why don’t we just get better? The keyword here is limited resources.
💬 Sketchy angles might be able to help you with that? Now if you’re comfortable taking about financial milestones (team size, user growth rate, monthly MRR milestones, ARR projection ballpark etc). Can you tell us a little bit more about your rate of scale? What’s the next MRR milestone you have your site set on?
Current MRR: $10,000 USD. According to this statistic about how fast companies 10x their ARR we are a little faster than average.
For us the most important number right now is new customers, as that is what potential investors are focused on. MRR is less important.
But by the end of 2019 our goal is to reach 20k MRR. Not an easy goal so we have a busy fall ahead of us. That means we need a double digit user growth rate 📈.
💬 How long did it take you to hit $2000 MRR?
9 months. Basically happened when we ended the BETA in September 2018.
💬 What are some of the biggest growing pains you’ve experienced so far and how do you manage to maintain company culture under scaling pressures? You’ve come a long way in a short amount of time and I’m sure you’ve gone through some difficult growing pains. What have your biggest struggles been under your current growth rate?
I covered it a bit in the other answers here but let me try to wrap up and throw some numbers in there as well. Right now our CAC (Customer Acquisition Cost) is around $340 USD but it is increasing while we need it to decrease. For many reasons, mainly training new people for scaling up has been tough. So right now a growing pain is maintaining an acceptable CAC while finding new channels to tap into. As I said before we had a few bad ad investments that hurt our CAC. At the same time we have some promising new channels like trade shows, giving talks, teaching people SEO, outbound sales and expanding the partner channel. A lot is at stake now for two reasons. Firstly we need to burn less money each month, so we can go longer before we need our next round of funding (basically getting a higher valuation is the goal). Secondly we need to show a positive growth story, and then it doesn’t look good if CAC goes up for a few months while amount of new customers is stagnating. That is the trend we are fighting to change now. I am optimistic, we have pulled wonders before.
“Right now our CAC is around $340 USD but it is increasing while we need it to decrease. As I said before we had a few bad ad investments that hurt our CAC. At the same time we have some promising new channels like trade shows, giving talks, teaching people SEO, outbound sales and expanding the partner channel. “
💬 Lastly, if you had to start over again and do three things differently, what would those three things be?
👉 1. Launch BETA when the product is actually useful to not kill the hype.
👉 2. Understand that it takes minimum 3 years to get proper revenue in a SAAS company and budget accordingly.
👉 3. Be more critical towards paid channels. Growth hacking is a big thing for a reason.
Thanks for taking the time to chat with us today. This was a truly awesome interview. I know our readers will take a lot away from this article. To our readers, if you want to learn more about Morningscore (and sign up for a free trial of their SEO software) please head over to their website to learn more!
If you have enjoyed this interview and would like to read more just like it, then head over to our SaaS marketing blog.
Kibi.One is a no-code SaaS incubation program focused on helping non-technical founders build software companies. Visit our homepage to learn more about our program.
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