Ask HN: What is your playbook for profitable SaaS without outside investment?
Edit:
What is your playbook for building a profitable SaaS without taking outside investment(debt or equity)? And how much time it took to reach profitablility?
What is your playbook for building a profitable SaaS without taking outside investment(debt or equity)? And how much time it took to reach profitablility?
I am certainly monitoring this thread with a lot of interest.
My approaches and results so far:
- Email marketing. This was done by identifying businesses in the local area (roughly 1,000 of them) and just churning through contacting them, ideally with the name of the owner sourced from their website. Result: literally not a single response or conversion.
- Posting to Facebook, Twitter and LinkedIn with tutorials, news, offers about my product every 3 days. Result: also zero. I should note that I have never had a social account before this, so I have no existing networks of friends and family to rely on.
- Talking about my product on Hackernews. Result: hundreds of page views and 4 free trial signups. Nice! Finally something.
- Reddit posts: tens of page views, no signups, so far as I can tell.
I have a few more routes, like paid for advertising, but I am honestly trying to do this all at a cost as close to 0 as possible (FWIW, I'm paying about £10 a month for my VPS and Cloudflare workers, that's it)
The product is a static website builder that's supposed to be much easier to use than WordPress, mostly cheaper and also super usable on mobile (which is rare I believe).
https://pinkpigeon.co.uk if you're curious, and apologies for the self promotion.
Who is your target customer? A small business owner without a website? In which case listing features like "Cloudfare CDN" and "DDoS protection" won't resonate with them at all.
A couple of other things that jumped out from the pricing page:
* 10,000 for submissions a month is pretty meaningless: if 10,000 people a month are interested in my business I am motivated to spend a lot more than £7.99 to capture and process them. Either make the limits really small to feel like a limit, or just say unlimited.
* support responses in 5 days ... this would be a red flag regardless of price. As a small startup the one thing you can offer is exceptional support (since you don't have many customers to offer it too!). If it takes off lower the expectations, but I'd suggest 1 day even for the lowest plan should be doable (and if not raise the price...)
A business owner doesn't really want a website builder at all, they want a website: lead more with your 'custom websites' page. If £199 is too much of a hurdle for them then realistically they aren't going to be a great customer anyway. Maybe offer a couple of business a free website to have some real world referable examples.
If you are targeting website designers (which are probably an easier to identify market) then focus more on the builder itself, maybe stressing the mobile friendly side (though I don't really see how that helps me if I am a designer ... I won't try and work from my phone).
Good luck!
Yup, I like to think I was always quite realistic about the chances of succeeding in this market (mind you, my definition of success is reaching a few hundred customers, not millions, haha). Wordpress and Squarespace are incredibly entrenched and their marketing makes it seem like there are no alternatives, but there are. Discoverability is the main issue.
> Who is your target customer? A small business owner without a website? In which case listing features like "Cloudfare CDN" and "DDoS protection" won't resonate with them at all.
This is a very good point and I have struggled with this. If you were a dev who wanted to re-sell and make websites for others with my system, you could. If you were a business and wanted me to build your site, well, I offer that as well. If you wanted to do it yourself, business or not, then you could, too. The problem is, I don't know which of these routes could work. So I don't want to commit to either of these branches. At the same time, offering them all waters down the proposition.
> * 10,000 for submissions a month is pretty meaningless: if 10,000 people a month are interested in my business I am motivated to spend a lot more than £7.99 to capture and process them. Either make the limits really small to feel like a limit, or just say unlimited.
Good point, I think I might make them unlimited.
> * support responses in 5 days ... this would be a red flag regardless of price. As a small startup the one thing you can offer is exceptional support (since you don't have many customers to offer it too!). If it takes off lower the expectations, but I'd suggest 1 day even for the lowest plan should be doable (and if not raise the price...)
Another very good point. I think I wanted to play it safe here. Is it better to commit to a turnaround time at all? Or is it easier to just say 'exceptional support', which I am indeed aiming to provide (and I think there aren't many situations where it would take me 5 days to respond. It's much more likely to be same-day), or is that too vague?
> A business owner doesn't really want a website builder at all, they want a website: lead more with your 'custom websites' page. If £199 is too much of a hurdle for them then realistically they aren't going to be a great customer anyway. Maybe offer a couple of business a free website to have some real world referable examples.
I have done that actually. Still no responses. I have a feeling that email marketing is not the way to go these days.
> If you are targeting website designers (which are probably an easier to identify market) then focus more on the builder itself, maybe stressing the mobile friendly side (though I don't really see how that helps me if I am a designer ... I won't try and work from my phone).
The mobile angle came from the fact that a fair number of business owners (n=10) have told me that, if they were to update their website at all, they would be doing it after work hours, which is when they are on the sofa with their phone or tablet. They don't want to sit at the computer / desk after already doing that all day in the office. So, making the whole thing work on mobile seemed like a useful differentiator over Wordpress or Squarespace, as they certainly don't work on phones (tablets are better).
Thanks for all this advice, it really helps to get outside perspectives on this stuff. I can see that positioning is my biggest challenge for now.
Good luck with whatever you do! My email’s in my profile if you have any ideas or questions.
The thing is, and that was one of your central points, website builders are not compared side by side. I am thinking of making some content that does this, which may also help.
I'll give you a shout via email to talk more in depth.
If so, what if in addition to offering subscriptions to your product, you offered website design services (can be easily offloaded) along with that subscription? That way, they get a site built for them, but they can do the updates themselves.
Local businesses that already have a website, don't need another one.
Agencies use their own tools for site creation and are hard to convince.
( I suppose the email marketing was targeted to all businesses)
> You identified you're niche wrong, i think. Your description is literally targeted for developers and your landing page too.
That's a good point. Being a dev myself, I probably projected what I'd care about a bit too much.
> Local businesses that already have a website, don't need another one.
This is an interesting one. When I initially started researching businesses, I found about 1,000 of them, with terrible Wordpress sites. I'd say about 100 of them have updated their sites ever since. Which means some businesses do indeed look for, find and then go with a company to update their site.
> Agencies use their own tools for site creation and are hard to convince.
Yup, not going after them.
My target market is (was supposed to be) small businesses with terrible Wordpress sites, or no websites at all.
I may rethink the positioning a bit though, as these comments have been very helpful in elucidating some issues with it.
Thank you very much :)
Positioning as an agency tool is possible ( white label)
Simplifying your landing page and categorize niches is also possible
( Business owner, developer, agency, ... )
I think the repositioning could be done by focusing on sites with a bad mobile UI.
Ps. Don't forget that rl interaction improves conversion.
Of course there are downsides, as well all know starting a business relying on Twitter's API, for example, ended badly for almost everyone. But if you get lucky, or you're quite small, then there's room for you to collect money with a simple wrapper or two around existing services.
Build a decent product which covers an edge case (niche) or a feature not provided by the API providers product (Xero) and then sell to the existing customer base.
Some advantages:
- there is already a user base, and their options for solving problems are 1) pay a dev to build x feature, integration. 2) find an add-on product which does xxx or 3) drop Xero and move to xxx competitor who does offer it. 1 & 3 are expensive, time consuming and unlikely the businesses field of expertise (software)
- sales and support at the Saas api provider can become your sales funnel. Not automatically, you have to network / educate them about your solution, and the problem it solves. But once they know, it becomes to ‘unblocker’ for a subset of sales. Which become your customers.
I think many B2B Saas product that offer (and support) an API could represent a similar opportunity.
There are obvious risks, just like with Twitter. The api can change, but I think that less likely in B2B, changes are likely to be improvements or expansions of feature set, even if it’s disruptive to your product / service.
But the major risk, which you must be aware of, and plan for, is the changing strategic priorities of the company you’ve integrated with. At a certain point customer growth isn’t enough, and ppl start searching for revenue opportunities. All these Saas businesses using the API become targets, either for acquisition or for duplication.
Duplication doesn’t mean death, particularly if you have a niche play, and have continued developing your product. But it will significant halt the growth.
All that said, I think it’s a good option for HN / solo / dev first founders who can do the product research, find the gap, and build the solution. Because it seems like the next part (getting paying users) is where most of these adventures run into trouble.
*I was at Xero 5 years ago, but I think this is valid for any B2B. I’d suggest scoping earlier stage products with strong growth, as the runway til their growth slows and they start looking for revenue alternatives is longer. It also allows you to grow with their growth.
There is no playbook for profitable bootstrapped SaaS in 2021. The winners either have a special secret that they wouldn't share for the world or they're lying about being profitable.. or in most cases the "successes" are simply such amateurs they don't understand basic accounting and believe that "profitable" means "slightly more monthly revenue than the cost of the servers".
If you embark on this be aware, the days of having your own little saas as passive side income are long behind us. This is serious serious stuff now.
An expert can mean you’re qualified in the field or you’ve been in the specific game a long time.
Just make sure it’s a real problem and that you don’t spend months beavering away at your secret project without speaking to people and validating.
Just don’t listen to people like this who tell you the hotels’s full. There’s always space at the Invention Inn.
Good luck.
VCs have created a winner takes all mindset. I think this is a net negative to the entire ecosystem.
The costs are 10x more for marketing and sales than it was maybe 10 years ago. Some might say do content marketing, promote on social media etc..these are long term strategies that make zero sense for founders starting from scratch with no following.
The costs for building products have become minuscule but marketing costs have skyrocketed.
"the days of having your own little saas as passive side income are long behind us"
You are so far off. In fact, I think the days of small/profitable/bootstrapped SAAS businesses are just starting. A lot of people are realizing that the glamor of VC is not worth the hassle and if they are looking to create a decent income for themselves with entrepreneurial freedom, it is definitely possible now. In fact, almost everyone expects to pay for subscriptions these days (we can argue whether its good or bad). It is much easier to start a SAAS business today with barrier to entry being so low. Of course, it is extremely hard to get success with it but that's the case with any business.
It took me over five years and two failed businesses to not reach profitability. Survivorship bias is a big thing in this space.
I also had a business that sent customized physical therapy home exercise plans.
2. Notice a problem everyone is having in your domain (a problem you're tired of solving over and over)
2. Go from 40 hrs billable -> X hrs a week billable. Spend 40-X hrs on product to solve problem
3. Tell your clients about your product that solves the problem you see they're having. Use their feedback to make it better.
4. If clients stay engaged and love it, then you invest deeper into it
5. If you're known in your domain, you probably have the beginnings of some marketing channels to share your product.
6. Talk about the _problem_ not your solution per-se. Make a lot of content marketing about the problem people are having. Seed Google and adwords with this content.
7. If (6) draws people in AND you can convert them to try out your tool, you have the start of a marketing/sales funnel
8. You can decide if you try to convert (7) into consulting clients or SaaS sales. If the SaaS sales is working out, and they pay a price that makes it worth your effort, then you're, and your marketing funnel continues to be strong, THEN and only then you might be on a path to profitability
either you invest with time & money, or lots of time, or lots of money... but sooner or later you need to sell. so if you don't want to invest money, or lose time, better sell & pre-sell before it exists, or before it is automated. grow afterwards
It's been probably 15 years since I started thinking how having a passive income covering living costs would be greatly liberating. I like FIRE movement, and was lucky enough to create a website for tracking dividends as my master thesis at the university. As any website requires time just to keep it running, I always knew I have to create a website that would be useful for me, so I don't lose interest in it and the project doesn't die after few months.
Financial independence is not that hard, it's just simple math on cash flow and how inflation and debt works. I knew dividends will be probably hard to beat long-term with other passive income, so I was pretty confident I would keep building a dividend tracking website for me, even if nobody else would be using it. I thought there must be a better way to track dividends than putting them manually on spreadsheets.
So how much time it took me to reach profitability? Probably a few years. I have not been asking for paid membership before that. I added a paid membership that was equal to free membership about a year ago. I called it supporter, as there were no upsides from paying for it. But some payments did come. And as I had new ideas, I started to bring these ideas to life only for paid memberships. Slowly it grows. I still want to have a usable free membership for the majority of users, but I think I would not be doing it forever for free.
So what I think works well? Find a community for a problem you are solving, so you get a lot of feedback and improve it all the time. Give paid membership to valued members in those communities - moderators, admins, youtubers, ... Be active on those reddits/facebooks, solving their problems and getting the users for your service. As the site grows, you can slowly implement more and more features for paid membership only, until you have a good free/paid ratio (up to you to decide ideal %).
Most importantly I still use it myself, for tracking my own portfolio - https://www.digrin.com/portfolio/24-dividend-growth-investin... and keeping an eye on my estimated financial independence year. I feel much better building a tool for myself and like-minded people, not just profit.
so far didnt "make it", but i think i may return to it eventually, i didnt try everything with it yet.
I always found it super hard to market my products (or there are other problems with me lol )