Reselling Software: Don’t Start a SaaS – White Label Someone Else’s Instead | Hacker News Reader

Reselling Software: Don’t Start a SaaS – White Label Someone Else’s Instead

sidehustlenation.com

The company I work at has a couple offerings that are just branded versions of software from other companies. It isn't great. When there are bugs, issues, or feature requests, you can't fix them, you can only try and hope that the developers will fix them. But your priorities aren't their priorities. And if you make tweaks on your own, good luck getting vendor support after that. They will just blame all the issues on your changes (rightfully so). Internally, hundreds of people have pleaded for my company to start making our own competitor instead of continuing to just rebrand this other piece of software. Now the vendor is changing their entire business model, so we basically just have to send our traffic to them so we have 0 control of the customer experience at that point.

This just seems like a "get rich quick with no effort" article, but I guess I shouldn't expect anything different from a site like "side hustle nation". Maybe white label software will become the new drop shipping... which is also awful for anyone who actually cares about their customers and the quality of the product they ship.

> hundreds of people have pleaded

IMO your company just made wrong decision buying whatever you stuck with. I have a feeling this is about much smaller companies.

We are careful not to play favorites with customers, whether the relationship is direct or through a reseller. Success for our resellers translates into success for us. Every unit sold matters. Every relationship matters. Critically, every re-order matters. We prefer to smother every relationship with unfailing responsiveness. We never say, "no", but we do say, "not now". The (vanishingly) few customers we have lost, we go through an all-hands soul-searching to understand the "why". Our group and individual integrity is, at the end of the day, the only thing we really have.

I want to point out that "side hustle" should not be a dirty word. I introduce myself as a professional sea kayak instructor and guide with a side hustle as a founding software engineer. My colleague introduces himself as a sea kayak instructor and guide with a side hustle as a high school math teacher and director of the school district's drama program. Autobiography is a skill we should all practice; how you write and speak about yourself translates quickly into who you will become.

>I want to point out that "side hustle" should not be a dirty word.

You're right, but it has become very much associated with people trying to "hack" work to generate "passive income", which usually means something that is a borderline scam.

Sea kayak instructor/guid, math teacher, and software engineer all sound like perfectly respectable ways to earn money. Most "side hustle" bloggers are pushing things like drop shipping, YouTube Shorts/TikTok that just steal content from other people, being a middleman for credit card processing, crypto/NFTs, arbitrage plays that involve gutting store inventory or show tickets that hurt normal consumers (if people want to do the work to hit up garage sales and stuff that's fine), etc.

That being said, I do like the idea of leading with your passion instead of what would generally be considered your primary job. It gives people a lot better idea of who you are, or at least what you'd actually want to talk about.

Totally agree! I live in my own bubble and discount everything written on the internet by some (often arbitrary) percentage. (Dons flame-retardant suit.) I double that percentage if Elon Musk or Marc Andreessen have skin in the game in the last five years. (I admit they both had good ideas and implementations, but those feel like ancient history.)

Straight talk, though: software engineering feels like a "hack". I spend a few hours a day making modest adjustments to a SaaS (that adds real value for our customers) and the income feels passive. I spend several hours outside, where the solutions to the software engineering problems reveal themselves.

I take Rich Hickey's "Hammock Driven Development" as a metaphor for, in my case, "Kayak Driven Development".

It sucks from employee perspective, but the thing that matters in the end is what you see under the bottom line. I'm pretty sure this is financially the most sensible option for many companies in certain niches. Doesn't mean it is necessarily nice thing to work with, which can be quite different thing.

The fundamental problem with white label resellers (different from customs deployment services like WordPress consultants or Microsoft MVPs) is that the only "value add" is marketing lies.

Or see it the other way around: if you have a SaaS, don't underestimate resellers.

My company has its own product, but we also provide white-label services to other companies. We're terrible at marketing, and some of our partners operate in certain very specific niches, with their pool of clients. It's a mutually beneficial relationship.

(With the caveat that, if your aim is to build a pool of clients to then sell the company, well, we don't 100% own these clients).

Sounds like an MLM business...

MLM are about selling the pyramid. Partnerships are about selling the products other produce.

Microsoft does this really well.

Channel sales are important. When other people get rich off you, you get rich too.

You need more levels for that. Resellers in the model described by the GP make their money by selling the product, not by recruiting more resellers.

Without the "ML". The goal is to resell the software, not recruit people below you to resell and recruit more people, etc.

It's a bog-standard value-added reseller (VAR) model that has been around for decades. It actually can be a great thing because most industries have idiosyncrasies that can benefit from a focused approach from the vendor/reseller.

How do you calculate pricing? I have a saas and a lot of customers ask me for a white label solution, so they can resell it to their own customers, but I always struggle with how do I price it correctly.

The standard structure is referred to as Value Added Reseller's. Pricing and support is a balancing act because the VAR owns the customer relationship, not your business. Email me if you want to have a conversation as I ran a business with VAR relationships as well as direct sales. Email is in my profile.

My business does exactly this. We have a very small sales team, but the firms white-labelling us have tens-to-hundreds of folks in sales and marketing, and sometimes provide a SaaS into which they bundle our white-labelled product. Our ("our"?) sales funnel is in the triple digits, and we have largely migrated away from sales towards fulfilling orders. It is a wonderful place to be!

If I had to choose between owning the sales relationship or the technology I know which I'd choose. Enjoy it while it lasts.

We have our own customers, too. In addition, the folks white-labelling use us in-house. We aren't strangers to the companies receiving our white-labelled SaaS; we do the initial customer on-boarding and provide all the higher-tier support.

Eleven years and counting....

But hey, you do you! I will be long retired by the time anyone gains traction with a competing offering. See you on the beach!

Pretty much any on-prem software vendor is some mix of direct sales, partner sales, and through distribution. And in the case of, say, a product primarily for SMBs, the mix is probably going to tilt pretty heavily to partners. There's a lot of leverage to using partners and many of them will know and be connected to some market a lot better than you do.

There are differences with SaaS but they may not be as big as you think. For example, AWS mostly started as a go online with your credit card sale. Now? They have a big enterprise sales force and lots of partner relationships.

I bumped into a friend on the street a year ago he and told me about the business he had recently co-founded and taken through YC: https://www.ycombinator.com/companies/partnered. I told my co-founder about it and it became a significant part of his sales toolbox. I saw my friend last week and shared the single criticism my co-founder had. My friend told me they had recently been acquired by a competitor whose core functionality resolved our pain-point.

Strategic partnerships and white-labelling seem to be critical tools for growth in the current climate.

Whether or not there's any white-labeling involved, partnerships (VARs, SIs, now often public cloud providers, etc.) have been a key part of sales strategy for many types of products for decades.

I think it comes down to who is the most easy to replace.

If the sellers kind of have a big chunk of the market, and can choose between vendors, you're indeed in a difficult spot.

On the other hand, if the market has multiple sellers, and you offer a unique technology, I wouldn't worry too much.

Why white-label instead of affiliate-selling without the brand dishonesty?

In our case, there is no "brand dishonesty". In some cases, the front-end is co-branded, in others the front-end is white-label while the resulting product, if used, has our branding. And sometimes the end-user gets the raw data without a need for our branded artifact. In the absolute best-case, the customer automates their interactions and never sees any branding. (I know the marketing people on here blanched when they read that.) Our concern is utility for the customer, growing that utility, retaining existing customers regardless of how we acquired them and who got the generous sales commission, while growing the number of customers and the volume of product used year-over-year.

Affiliate sales have always seemed more dishonest to me than working with a vendor who adds value to our product for our shared customers.

As being also terrible in marketing..

What kind of SaaS is suitable for such a model? Any examples maybe?

This reminds me of those “The Rich Jerk” style get-rich-quick “courses” that were popular in the early ‘00s.

This content is utterly devoid of anything of value and is chock full of highfalutin promises of untold wealth, just listen to my podcast, sign up for my newsletter, click my affiliate links, buy my book, tweet about my blog, upvote me on HN!

Most of my revenue comes from companies that basically resell my product with some cherry on top specializations for their local markets. I have managed to develop a mechanism (also just the nature of the product) that charge per end user so it's protected against exploitation. No marketing/landing page required on my end, my clients end up making avg. 6x on top. win win.

This is actually a great business model. Most Americans underestimate how big the world is. You'll never be #1 in Brazil and Pakistan and the Philippines, South Africa, Egypt etc etc if you do it yourself, but resellers can make a great living off that.

Is it saas? How do you enable your customers to specialize your software?

I work for a SaaS that explicitly allows reselling and rebranding.

We change a few variables for what color scheme and theme is applied, what support docs are linked, and what which domain names are used. Other than that, there is very little code difference between what we sell direct and what the resellers present to their clients. Some of those resellers are big names with enterprise reach that we will never have. In the end, it all works just fine for us.

It's open source and designed to be built on top of and to easily deploy at scale.

Every instance is linked to an end users number, licenses are sold per number per month. Self-hosted SaaS.

A startup (series A-B) I worked for was basically a thin wrapper providing physical goods around the core features of a delivery SaaS (series A) - our core features were so entwined with theirs that when they went belly-up, we panicked and bought their source code for an ungodly sum. Then we took over hosting their product for just ourselves, and so had to learn how to run _their_ software too. It was written in a different language than most of our engineers knew, and had pretty much no documentation. We didn't know enough about their software to fix new bugs easily as they came up, and didn't have enough `people * time` to figure out enough to fix the old ones.

Entwining our business with theirs was a good way to get off the ground. But when they crashed they nearly took us with them.

This is a great parable in the making, something something depending on vendor APIs

Not always a bad thing though. I know the Stripe connect API so well at this point I could move payment processing in house based on their data structures and save money on fees.

Did you end up making money off that product line?

I’ve worked at a couple places where the business folk sold our product below cost, and some of our customers built their whole roadmap around us, while we quietly ran out of money.

Without the middleman, you maybe pulled it off.

We eventually straightened things out enough that the product ran on its own, but when I left there were plans on the backburner to replace it. Not sure how the financials worked out there in the end!

I have done the exact opposite!

Does anyone know if there's any value in a 5+ year old 95% working SaaS web-app with a "very messy" codebase?

I personally have two systems (my first attempts at live SaaS systems) that have been just closed but have been working "live" for 5+ years- both made in Laravel with Angular 1.4 front ends, they look good! - but the codebase is "a pile of patches on top of a chaotic prototype".

One is a system made for physician doctors training courses; you can make groups, set up courses with calendars, send invite e-mails, and they can turn in papers and teachers can grade them, make pdf's of the papers, set up calendars with files for the students etc.

The other is an accreditation system, you can create an application template and invite users to fill in the application with a sleek interface with autosave etc, and have other people grade the applications.

I don't have time to maintain either system and have been wondering if the systems should be just retired or could be resold somehow, even if the codebase is not in shape to be "taken over" easily. A huge amount of works has gone into them.

Have anyone been in similar situations and have advice? :)

The most important question is... does it makes money.

If yes, then reselling is totally possible. The price may be lower due to the shape of the codebase, this is a discussion to be had. There are definitely people interested in taking this kind of system and keeping them alive longer, if not investing in straightening them out.

All depends on what value they find in them.

> A huge amount of works has gone into them.

"work" has no value on its own. Work is the function; it is the output of that function that may have value. The difficulty is in figuring out who would value it the highest.

For example, an existing customer base is valuable, especially if paying. A working and nice-looking UI, even with a poor backend, is valuable. The combination together might be valuable.

A line of code doesn't have a lot of value, which means that a large company might easily replace a poor backend by throwing some developers at it. Most people buy what they can see, and what they can see in this case is a "look good" front-end that are working "live" for 5+ years.

You should probably contact your largest competitors's partners/alliance/business development teams. Something might develop. Approach it as a partnership and alliance, and something might work out. One more thought, given that this is HN: companies don't actually negotiate with other companies, but: people negotiate with people. That's 90% of sales right there... being human and talking to other humans.

Try MicroAcquire. Although you'd have a bit better luck if they were already generating revenue, they do have sellers selling pre-revenue SaaS as well.

You could list them on Flippa, Microaquire, etc. You could get a few thousand dollars for the codebase potentially. This may not seem like much, but they buyer will have a massive amount of work ahead of them to find product/market/distribution channel fit.

[1] https://flippa.com/

[2] https://microacquire.com/

> I don't have time to maintain either system and have been wondering if the systems should be just retired or could be resold somehow, even if the codebase is not in shape to be "taken over" easily. A huge amount of works has gone into them.

How big is the userbase, how much do they pay, and how long have they been using this?

Products are frequently worth nothing, but lots of people would be interested in buy an existing pool of paying customers.

So we are clear, I do not profit from this. Happy to take a look and if relevant connect you to a friend who is using something similar at a large scale. IF interested, email is in my profile.

I'm surprised it doesn't mention selling "mash ups". I imagine there's some opportunities to talking to one service and decorating it with associated data from another service. Or even just better thought out aggregated services from one provider. I suppose then it's engineering, but the kind of thing an out of the box api proxy could do with just configuration.

A proxy would also open up opportunities like serving cached responses for more static calls, which would raise your margin.

> I suppose then it's engineering

Careful, that’s supposed to stay a secret!

https://news.ycombinator.com/item?id=31226100

I was exposed to the idea of reverse ETL recently. The essence of the paradigm is to have a workflow that retrieves data from your SaaS APIs, transforms and enriches it, and then ingests this data into other SaaS providers in order to automate various backend workflows.

In a way it’s similar to a gateway in that you are composing different backend targets. Although it might just be a marketing neologism describing middleware.

I continue not to understand the "reverse" in that name.

Like if you aren't already doing "transform", you probably aren't reversing it.

I’ll concede that the E, the T, and the L are the only operations I see in this model

Traditional ETL tools focused on getting data out of services and into a few places like a relational DB, S3, or some other such aggregated storage so they were read-only from services and read/write to DBs.

Reverse ETL is marketing to differentiate to the customer that you're pushing data into services as well, so that it's read/write to all.

Of course the concept is amusing to someone talking about ETL, but the market moved at some point to refer to the first functionality as ETL and so this is just a change to differentiate.

Parent didn't chose the best starting place to illustrate.

Typically, reverse ETL starts with "all of my data is already in an EDW" and goes to "I want to push it to my various app systems."

Canonical example: pushing system of record information to Salesforce to speed and enrich the sales cycle.

https://hightouch.io/blog/reverse-etl/

My bad. My introduction to the topic was through the lens of different use cases

Np! Wasn't intended as a slight. We all come into new things the way we do, rarely via the textbook definition (which typically doesn't even exist when we're first doing it!).

Still, my understanding is that ETL predates the whole "data warehouse" thing.

Like "extract" isn't any more specific than a source and "load" isn't anything more specific than a destination.

Someone should create a startup that offers SaaS attribute entity resolution in Log4j

Mixed thoughts here. If you have an idea of SaaS that exists in the domain/industry and not addressed for years and see an upward trend of adoption, then start one, execute it and maybe white-label your product to big brands that are usually slow to execute SaaS.

Be a Hubspot or resell Hubspot? Be Zoom or Ringcentral? (Ringcentral whitelabels Zoom)

Do not build another SaaS CRM and call it Web3 CRM :)

That doesn't actually sound like a bad idea, slapping web3 onto whitelabel software and selling at a premium. Heck some vc might even fund you to cold call clients out of your car at lunch time!

of the folks who left my work recently (6-8 months) theyre mostly selling crypto shovels.

It's great utility indeed.

The biggest unlock that most HNers will miss in this article is what the guy did for lead generation.

"He would sit in his car at lunch and cold call roofers, plumbers, dentists, and other small businesses he saw as potential customers."

The calling isn’t the unlock. It’s what he asked them to do first.

An interview is much easier then asking them for a sale upfront. Everyone wants recognition.

The biggest unlock that most HNers will miss in this article is that this guy isn't selling software, he is selling marketing.

Honestly, I'm confused. This is at #13 at my time of writing. Never seen such low quality post (from my point of view) that high up and discussed like it adds value top ... what? whom?. Is this the eternal september Moment of hacker news?

People upvote the headline, not the article content

I agree. This is pretty horrible and I’m surprised to see the sentiment is as good as it apparently is. This is just bragging about how to create a 100% parasitic middleman venture that contributes absolutely no value to anything. One might suspect there is more behind this posting and comments

My company does this. Apart from our main market, we have a significant number of white labellers who work in the telco space and need Stu else to sell in order to get better revenue or to offer more services.

From what I’m understanding, they are doing pretty well. They wouldn’t make enough money to justify developing the product on their own, but they definitely make good margins.

We develop a system to add contact centers aimed at SMB’s for telcos, so it’s very niche - https://www.queuemetrics-live.com/resellers.jsp

Selling stuff != developing stuff. If you can develop and they can sell (and I guess you'd develop the product in any case) it's a win-win.

You don't even need to white label, the situation in scientific software is so bad that even a a slightly nicer UI + managed hosting (with typical enterprise SaaS level of data security/compliance) will net you many laboratories as customers. Unfortunately it requires significant domain knowledge which poses a challenge. The intersection between frontend UI people and scientific software developers is non-existent (outside of Matlab and Wolfram).

For a startup like ours (great product, traction, everything, but we lack the funds to really get out there, sales wise) we would LOVE to let a reseller use a white label version in markets that we're not present yet (aka. including the US).

If anyone is interested in reselling a psychometrics for HR processes SaaS (with scientifically valid, open source, computer generated assessments, remote monitoring and O*NET sourced profiles) – let me know.

SaaSaaS

is that pronounced sassass?

SaaS as a Service? Sounds fitting.

Shameless plug here. We are on the other side of this model where we have bunch of applications [0] available in AWS, Azure, GCP cloud marketplace which are very good candidates for white listing / VAR . Feel free to reach out to us (contact in profile) if any one is interested in reselling our products.

[0] AI/ML multi user development environment : http://www.techlatest.net/support/jupyter_python_notebook_su... Web based Ansible environment : http://www.techlatest.net/support/ansible_tower_support/ Metabase, opensource alternative for data visualization : http://www.techlatest.net/support/metabase/ R-Studio for data science & data visualization : http://www.techlatest.net/support/r-studio-support/

The ugly mug shot at the top of the read made me really question the reputability of the article. A smiling face tells me the article has no more content other than to make you feel fuzzy.

Edit: typo

It would be great to hear the trade offs from the perspective of original saas developer. How to make the best of it and not get conned.

Where is the value added, in this? Looks like a means to un-earned income for a very few, by driving up costs for the vast majority.

Did you read the article? It's not pirating and selling as yours, its reselling. Resellers exist for almost every kind of product or service. The original provider gets more sales, the reseller makes money from taking a cut, the customer gets the product/service. Manufacturers and service providers need distribution, resellers provide this. It's like paying a Chinese company to slap your own logo on a doodad and selling it on Amazon.

The point the are claiming is that resellers don't produce anything or add value. They would almost certainly agree with your Chinese/Amazon analogy and also condemn the resellers doing that. It's a common opinion among those who build stuff for a living and aren't responsible for marketing those things.

The resellers take care of marketing your product in a market where you probably don’t have any presence.

Sometimes. Sometimes they snipe you. But yes, I agree resellers have value. I'm just saying people who've never tried to sell a product rarely see it.

The value is that marketing & sales are easily the harder discipline for most SaaS businesses.

Exactly. Why wouldn't you want to increase your sales reach? I think there's a subconscious bias on HN and similar spaces against anything that indicts the "if you build it they will come" dream.

There's also customer support. A B2B software vendor might want to let someone else do a B2C or B2B in some niche they don't have time for.

Meta-comment:

The author is relating second-hand information. That’s useful, it’s good to have people who have a skill of curating business advice and pointing us in good directions. But my first-hand advice is to recognize the difference between:

Alice: “I’m making five figures a month for five hours a week reselling five products.”

And Bob: “People like Alice make as much as five figures a month for five hours a week reselling five products.”

In the first case, Alice has direct experience with success. In the second case, the incentives are such that Bob is someone whose experience and expertise is in selecting stories that have verisimilitude, that is, things that sound true.

And what makes something sound true? Quite often, something we want to be true sounds true even if it isn’t, and something we don’t want to be true doesn’t sound true, even if it is.

Bob nearly always sounds more authoritative than Alice, because Bob’s business is sounding authoritative, whereas Alice’s business is being authoritative. Why doesn’t Alice always sound authoritative? Because she speaks the truth whether it appeals to our biases or opposes them, whether we want her truth to be true or not.

Bob, on the other hand, is an authority on what people want to hear. Bob is just as expert in Bob’s business as Alice is in hers. Bob uses metrics and data to write headlines and even choose the most compelling adjectives to use in his posts. Bob sounds authoritative to people lacking expertise in whatever Bob is talking about.

The Bobs of this world can (but don’t always) become “a poor man’s idea of a rich man, and a failure’s idea of a success,” because their customers are people early in their lives and careers.

So what to do when a Bob suggests something is true? Well, we shouldn’t dismiss it. But let’s think of it the way we’d think of Bob referring a candidate for a job in our businesses.

We might fast-track them into an interview, but we’d still interview the candidate. And so it must be with business advice. Bob pointing us to an idea is Bob referring an idea to us.

Our job is to take Bob’s referral and still validate the idea by seeking original, authoritative expertise. Bob’s value is suggesting ideas to think about, not teaching us about business.

p.s. I say all of the above as an authority on the subject: I’m a Bob.

That was such a good comment, I took a screenshot.

Well, wrong audience here. That's doing all of the hard work (marketing, selling) without any of the fun (engineering).

Actually, this is the perfect audience. Design and price your SaaS with the sales channel in mind.

Also, choose your channel wisely. For example, maybe randos working part time out of cars is the right choice for small/local business reputation management software.

It sounds like fantastic practice for those of us who want to learn something new (marketing, selling) without letting ourselves get distracted with the comfortable, safe stuff we already know (engineering).

I was wondering: is there a community online like HN for marketers?

I’ll (build one) and grand you premium access to one for a modest fee…

Product Hunt has a low code and non-eng community that includes that demographic.

You might be interested in https://barnacl.es/

Not much recent activity though.

https://www.indiehackers.com/ comes to mind.

> Reselling software gives you many of the benefits of a software business, without ... development cost.

This sound fishy.

> That means you can enjoy recurring revenue, selling one product to multiple customers

This is immoral and socially harmful.

> and strong profit margins by white labeling a software tool that already exists.

This is incestuous and immoral. Just make your software free and be done with it.

> These benefits are what attract many people to starting a SaaS, or software as a service,

Many gold-diggers hustlers maybe.

> After all, there may already be a tool that solves the same problem. Could you become a software reseller instead of a software creator?

If you don't want to do an honest day's work, then maybe.

> To help me learn more about reselling software (also known as white labeling), I connected with Chris Lollini. Chris is a self-described “recovering engineer” who started a marketing agency as a side hustle 9 years ago.

hustle is the appropriate term.

> That agency evolved into a multi-6-figure white labeling operation called Reputation Igniter.

Well, this certainly ignited that Lollini guy's reputation as far as I am concerned.

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