That is true. But note that they are based in Bangalore, 25K USD MRR is a ton of money (it is a lot of money even in the US). If they maintain this for just a year or two, they're likely set for life.
Sometimes it works out to just ride the wave :)
Sometimes it works out to just ride the wave :)
Not bad, if it keeps running on autopilot for a few years.
Say, you can keep it running for 3 years. This is close to $1 million USD gross. This could easily pay your cost of living, while you work on the next product. But you must also factor in taxes.
But this is HN, so of course all this is obvious.
To quote the adjacent comment: “No sh*t Sherlock”
Gross Income, for 2 partners. As I wrote, best case you get 100k per partner net after 2 years, ceteris paribus. But they are living from this business so less money for the company.
> Say, you can keep it running for 3 years. This is close to $1 million USD. This could easily pay your cost of living, while you work on the next product.
Yes but that is a truism. If your business does well for several years, you will have a cushion for your next venture.
I wrote because I wanted to write against the naive view many people in HN has about "developing countries", yes COL is lower but there is no magic place where 100k USD will set you for life. You still have to pay taxes, many goods cost the same or more than in the US, good healthare insurance is not low, etc, etc. My rule of thumb is that you need at least a mimimum 1MM to retire, no matter in which part of the world,of course if you pick London or Zurich the amount will need to be higher. This assume a family of 3, no further income, no house owned and to live a modest middle class lifestyle.
2,200,000 * $0.005 per session message (Twilio cost for WhatsApp messages to India) = $11,000
I probably have that wrong, but I'm sure that's a big expense.
150k * 0.66 (extremely optimistic gross to net-income factor) = 100K
You and me have different notions of "set for life"
EDIT: I fudged a factor of 2 in the math, the final number is 200k, my point still stands.
First, your assumptions on net income are too pessimistic. Small founder-operated SaaS can be extremely profitable.
Second, and more importantly, you are ignoring concepts of LTV and NPV of future cash flows.
Assuming 80% SDI and a churn-rate that is < 5% (ideally < 3%) you are looking at a business worth $700-950k right now. Why? An income stream from a growing high margin SaaS business is a coveted and valuable thing.
Finally, when you have a business with 300k ARR you begin to unlock more options for yourself -- small acquisitions (traffic/content/funnel), ads, product improvements.
The likely path here is that their income will continue to grow and they will either be taking $200k a year in income or sell for > $2 million in a couple years, or both.
Having built a small SaaS business to this size myself for many years, i can totally recommend this path for independence and financial freedom.
Are they? On the contrary. You are telling me that out of 100k of gross sales, after discounting: Operational costs, insurance, income taxes assuming at the end if you get 67K is pessimistic? I didt not even budget money for sales and marketing.
> Second, and more importantly, you are ignoring concepts of LTV and NPV of future cash flows.
I am not, that was not even a question on my initial answer. My original answer was to deny this: Operating a 2-person 25k MRR company during 2 years will set you for life. My answer is no. You are assuming a lot of other stuff that was never in the original discussion.
> Assuming 80% SDI and a churn-rate that is < 5% (ideally < 3%) you are looking at a business worth $700-950k right now. Why? An income stream from a growing high margin SaaS business is a coveted and valuable thing.
Yes, but that is trivially true. If you assume the company will grow the valuation will reflect that. Everybody knows that. That was not in the original discussion. This also depends on the business model of the company, a SaaS company critically depending on a 3rd part ecosystem is significantly riskier than an independent one.
> Having built a small SaaS business to this size myself for many years, i can totally recommend this path for independence and financial freedom.
I agree. But you need more than 200k USD to be set for life.
I agree with you that $333USD/mo is not a ton but 5X that is more than lots of people live on in north america.
My friend lives on ~$2,000/year in Southeast Asia, but just provides for himself.