How to Come Up with Profitable Business Ideas
indiehackers.com
indiehackers.com
1) Be embedded in the industry for a while
2) Make lots of connections, build credibility
3) Build SaaS app to solve key pain point you experienced in #1
4) Sell to the folks you know from #2
5) For bonus points/de-risking: find 25 potential customers (from #2) and reach out to them and validate this idea (Jobs-to-be-Done). Get a handful of them to commit, even verbally, to buy this when you've got an MVP built.
[1] Clearly this is not the only way to be successful, but "I have a random idea lemme build it" is a great way to be not successful
[2] Succeed = your business that makes enough revenue to support you and a reasonable lifestyle, equating (and/or eventually surpassing) what you would typically make at a W2 gig, from a diversity of customers and not trading your personal time for money.
1) Consult in the industry as a contract developer at X/hour rate.
2) When you find a problem that they're facing that you might be able to turn into a business, offer them 0.75X/hour while you work on it in exchange for the right to commercialize it.
Obviously this doesn't work for everything, but it's a non-obvious way to get paid while fixing a real problem and build a business.
I should print this and frame it in my home office. You rock!
How much of the company did you own when you sold it?
How did the sale happen - did someone just turn up and offer you money, or did you go find a buyer?
Was there negotiation from a higher price down to $10M?
Did they buy the entire company from you or just buy the software assets?
How long did the sale take from when the buyer turned up till money in your account?
How much money did you end up with after paying tax on the sale?
What did you do to celebrate?
What did you do next - another business, get a job, sit at home watching TV?
Would you have handled the sale process differently if you could do it again?
I kind of needed to raise the money. The wheels were falling off the bus because the software was so bad and it needed to be professionally written. I should have raised less and sold sooner though.
I’ve seen owners (either single or partners) who own between 5% and 100% of the business when they sell it. Unfortunately, most of them seem to own between 5 - 35%.
Most of the sales I’ve been involved with are the company trying to find a buyer. However, occasionally a VC will flat out ask if the company is for sale. Though it’s probably 10 to 1 in my experience.
There’s usually some level of negotiation. There is a “SAAS multiplier”. Right now the VC I consult for looked at about 3 - 5 times EBITDA. This gives you a healthy negotiation range.
People should absolutely consult an accountant and an attorney when figuring out what to do with the money they make. Often if you handle it right you can pay significantly fewer taxes. Taking stock or equity is a good way to handle reduction of those tax burdens.
I’ve seen people celebrate by buying multiple very expensive cars. A house on the beach in Hawaii. Huge trips. I’ve seen people blow huge amounts of money very quickly. The fastest was two guys who blew through $3,000,000 each in 6 months. It was stupid.
Most of the sales i have been involved in kept the former owners in a working capacity at the company.
I hope this helps a bit. Obviously it’s just my observations.
When I first saw indiehackers, I was in love with it. The execution was fantastic. You did a great job.
Then it got bought, and changed. Now it's forum-first, interviews second, and half of them are sort of locked.
Why do you now have to sign up for a forum to view the older product interviews? It's super annoying, so I just stopped reading. It also seems detrimental to the people who gave interviews early, they wanted press, rather than being hidden behind a sign up thing.
Is there any interest in reverting from this pinterest-style login-wall, or is that just too costly?
If this sounds blunt, it's only because I'm disappointed that a site a loved became less fun to use.
The page was more clearly arranged and you could browse it without being logged in or having an account. There is also this ridiculous "stripe-verified" badge for businesses doing business with Stripe now, which is not that interesting for indie hackers I guess.
It also seems the interviews are not that important anymore, but being some kind of community is - but I don't think that people want that, because we have that already here or at reddit - the nice thing were the interviews.
That's a fair point I hear quite a lot. Not sure what the reasoning is there (assuming it is the case).
>> It also seems the interviews are not that important anymore, but being some kind of community is - but I don't think that people want that, because we have that already here or at reddit - the nice thing were the interviews.
Have to really strongly disagree on this point... The IH community is - without a shred of doubt in my mind - the single most impactful thing Courtland has built at Indie Hackers. Happy to believe that you don't want that, but there are a lot of founders and lurkers on the IH forum who really do want it...
That it's incredible inconvenient? I don't want to do discussion there, but just read what other people tried and did.
The result is that I just make throwaway accounts for such websites to get to the content and I appreciate if I don't have to do that.
I guess that it's just a Stripe marketing channel and the number of sign-ups supports some metric.
What do you mean by summary?
https://www.indiehackers.com/products
is closest to the old layout where each block linked to the founder interviews. I basically wrote the site off until today because it looked like the interviews had been walled off.
- outsourcing to humans
- asset acquirement leverage
- education
- outsourcing to ai
- event organizing
- adding a missing feature to a platform
- internet marketing saas
- copied a website and added a missing feature
- micro feedback as a service
Copying a website and adding a feature is great for someone who spends their time becoming a better software craftsperson.
Micro feedback as a service is a fascinating market I had never considered. Exceptional creativity there. Could be applied generally to many domains. PullRequest is doing code review as a service which is a great example of applying it to another specific domain.
Edit: formatting.
Screams of corruption but in practice not really so. The exec knows there industry well, finds out where they struggle to find solutions, passes info down to the company. The company then creates specialised software to deal with it and joins a tender. As they have a trusted person on board it assists in getting in the door. Also the competition will usually not be very technically advanced.
Revenue streams are variable from rev-share to cost + maintenance. In a lot of cases the same solutions can be sold to others within the same vertical or outside it. Anecdotal but founders Ive met in this area seem far more successful than those on a more traditional VC / bootstrapping tract. Perhaps because a lot of the hard part of enterprise sales is solved by the advisor.
This may be an asia-specific style of business, not sure.
It might seem rare in the States, but only because 1) the entrepreneurs heading these ventures do not want to give away profitable niches in the market and 2) they are not as fun to talk about as startups with lofty billion dollar goals.
What also helps, of course, is past experiences -- I've built a product that requires little to no maintenance (now), the prototype took one looong day and then another weekend to roll out, and it randomly picked up Toyota as a customer in its second week. New customers kept the thrill going, and when times were calm, I just let the website 'exist' on its own -- it's made over $100k and while those kinds of projects are my daily work (compared to an 'an actual job'), the time it required to maintain would've easily been available next to a moderately demanding job. Much like other things in life, even with software, it may need to simmer for quite a while before it really starts shining. There's no single recipe of success, but people tend to forget (while looking for big dramatic SEO-guru growth-hacking insights) that getting a few basic things right will improve your chances of success dramatically (managing motivation, knowing when to let things simmer (getting from 0 to 10, and from 10 to 100 customers can often take depressingly long), knowing when to let users guide you, stuff like that).
Worth mentioning that the original quote was "artists". There is a lot of valuable inspiration to be derived from other creative professions in this industry. "Measure twice, cut once" is one I've quoted a lot, originating from carpenters.
The CSE I founded (and sold, allowing me to retire comfortably) was neither original, nor particularly innovative in 1997 when I started (pricewatch.com existed etc.), and it's extremely profitable to this day.
There are plenty of good ideas out there and much more existing, profitable businesses in need of a slightly better competitor.
Several of these made money, most didn't. The best one was an ocr app which netted around usd 24k before the market got saturated.
It's very difficult to manage work with a side job and a family!
However, unexpected to me, the biggest benefit from these side gigs is that I am better at my day job. I have learnt new techniques and skills vs my peers. I am able to manage new situations better than others and make better predictions on outcomes. This has been the biggest benefit.
There's a lot to be said for companies that allow employees to officially pursue other (non conflicting) interests.
Right now I sell spare parts salvaged from home appliances headed for scrap, it is surprisingly profitable, so much that 2 people can't keep up with it (having full time jobs, though). Selling to small repair shops and directly to end users. Would be a great full time business, but unless an investor is interested, it will take a while.
Clearly I'm wrong, so take this comment as a "I'd love to learn more if you're willing/able to talk about it"
-Is selling to repair shops a big part of your business? If not, why are you doing it? Seems like it might be a time suck. You might be better off just putting all parts online and letting those small repair shops buy through that.
-Can you hire someone to do the grunt work (pulling parts etc)? I was always worried about hiring someone and then I realized that 1. you don't have to hire them full time, many people want part time work and 2. if you are profitable enough, they should be paying for themselves and then some. So don't be afraid just to hire some local labour.
-Why do you need an investor? Run the profits back through the business or put in some personal capital. $5000 will get you a part time employee working 25 hours a week for a few months.
I never sold directly but I did work for a company earlier in my career that served high amp tractor trailer generators, power distribution equipment (later the department I ended up bootstrapping for them), lighting, and grip equipment to the film industry.
Early on my time there I was tasked with unloading and either stripping down or full on demolishing multiple 50 ft tractor trailers stacked to the ceiling loads of old stands (scrap metal), lamps (scrap metal, wiring, ceramic housings, aluminum housings, electronics), and high-amp ballasts for old Xenon and HMI lamps (a lot of electronics including some pretty hefty transformers. I have a stupid story about almost killing myself crippling a 20year old capacitor in one of those things...).
I worked on that for at least 60hrs a week for many weeks at not a great wage but they willingly paid me a lot of overtime to do it.
A lot of those parts weren’t going into new products but repairing high value equipment that the longer it all lived the more profitable it was. They’re probably still using some of that stuff.
I would have never thought to have started a business doing it though! I think most places are more willing to exploit young employees for it.
Just like we'd use a bit of code to glue software utilities together, the same concept exists in hardware. Build simple interfaces to connect bits of hardware that were never designed to work together. A common, and cheap example are the USB to Serial converter dongles.
It's a great way to fix a 40 year-old machine that you can't get spare parts for: figure out a way to interface it to a more modern controller at a small fraction of the cost of a new machine.
There are also some excellent plugin markets for most eCommerce platforms if you've got the drive to develop in them. Companies using an eComm platform are likely to be actual businesses so they are willing to spend more money for a quality plugin.
The other option is building a SaaS app and using a single WordPress install or WordPress multisite as the platform. I thought this was a crazy idea a couple years ago. Now I know of dozens of apps that have WordPress as the back-end, and it works well.
I presented on this a couple years ago at a WordCamp, and am giving the updated version in a week at WordCamp Belfast. https://wordpress.tv/2017/06/05/corey-maass-rapid-web-app-de...
Simple truth is that any successful business person does not go around talking about how much money they make unless they have to because it just encourages other businesses to copy their features.
Ramit Sethi had an interesting article a while back about finding profitable ideas. TLDR; look for reoccurring themes in the types of tasks/data/processes people are requesting in UpWork's marketplace (UpWork use to be oDesk).
Researching there has the built-in advantage that these are obviously things that people care enough about to pay money for, so that can serve as some preliminary validation.
https://growthlab.com/how-i-validated-my-business-idea-using...
I worked for a product company and I was supposed to add a set of new features to the product.
The way the company was setup, we were able to setup demos/calls with existing customers quite quickly.
Two of the existing customers are industry giants and as I walked them through the demo, they were able to actually name the exact API calls I would have been using for the demo. And then one of them actually effectively said "take my money already and ship it"
I quite lieterally asked them if they had such fine grained information on what we were going to sell them, then why are they even bothering to buy from us ?
The answer was, getting a well packaged solution as a feature set in a product they are already using is far more useful for them than to have to spend time themselves writing ad-hoc/free-standing programs which do the same things even if they have the resources to do it themselves.
1. They've transformed a capex project to a single, monthly opex line item, and
2. They've eliminated a host of risk management -- if anyone asks about any of a myriad of risk factors (password storage, gdpr, DoS attacks, whatever...) they don't say a word, they just point at you.
https://medium.com/@robertyusert/there-are-free-ethreum-spam...
https://www.indiehackers.com/round-table/how-to-come-up-with...
People who need stuff say it all the time. You know what happens when non-technical people say, "I need xxx" on a developer forum?
- They're told "just google it"
- They're told (implicitly) that they're stupid.
- Devs pretend not to understand what they are asking for because it isn't phrased exactly how they'd like to see it expressed.
I've made money from simply hanging out on certain forums, listening to what people want and then approaching them politely to offer a simple solution, asking questions along the way. It ain't rocket surgery, people!
Finding pain points is perhaps the easiest way to get business ideas. But as always, ideas are only a starting point, the implementation is what matters.
The opportunity exists in the business world because when companies become successful is when collective leadership becomes most focused on maintaining success. Usually, leadership tends to see more risk in the downside of the current plan and than upside in taking on new things.
Few things companies doing regularly:
1. View a temporary trend as a competitive advantage. 2. Focus on building reputational momentum. 3. Believe it’s easy to span across generations. 4. Love being right. 5. Love the new idea, not new way of thinking.
Being right and staying right is totally different. Doing well reduces the incentive to explore other ideas, especially when those ideas conflict with your proven business model.
The idea is not important as thinking. And knowing how your idea evolving is more important to have a good idea. Because you will realize how to generate your own point of view.
Usually, the traditional Business Thinking Process is:
Dissect the dominant business model in your industry. How big is the remaining market? Find a way to get in.
Instead, in order to master and beat the odds, you should just totally ignore “the market things” and think about:
What’s the business model other people can’t/hard to clone? What’s the opportunity cost of building it? What’s your advantage to build that business?
First, why can you ignore the market? Because Which market does not depend on you, it’s on the user. You’re not in the market you think you’re in – you’re in the market your users think you’re in. Most failed companies made the wrong “Awesome product” by choosing the wrong market and following the wrong standard.
If your business fits in a market design by someone else, your dead. Pepsi never catches Coke. Bing never catches Google. The real question is can you design a market that you can dominate.
Second, market-size is not important at all. Numbers are about the past if you wanna create new things, you need to focus on what’s the one that can’t be copied and people don’t know they need it yet.
If you thinking about market-size, the market you are talking about is old and full of competitors. Market means buyers not a customer segment or existing category.
So. Igore competition.
Create your own category.
Original post(https://github.com/functionalflow/brains/blob/master/_posts/...)
A side project is risk. It's time and money that you invest into something. Working with chains requires technical and engineering solutions. You can build dapps, tokens, chain integrations, or just set up some mining/nodes.
I mean, paying a middleman (the GaaSer) to do something better / more cost-effectively than you (aka any SaaS startup founder) can (if it is an area they can specialize in, and so achieve economies of scale). SaaS's (and other cos.) already use many SaaS's anyway - at least some of them do, I've read. It's like why we pay e-commerce companie like Amazon, rather than scouting for each item we want to buy at separate vendors or vendor's sites.
Growing mrr is a grind. It’s just the truth.