The New American Micro-SaaS Dream
microfounder.com
microfounder.com
It's just called being an entrepreneur and starting a business without getting funding. You get to choose how big or small you want to get it and you realize that you don't have to make it big, you can live a comfortable lifestyle if you want to.
The little problems are learning how to entrepreneur successfully, have the money and energy to do so, and getting lucky enough to find the right idea, right market, right timing with the right messaging.
It all seems so easy when you see someone making a boring, bland, basic ass tool collecting $1MM ARR, but you can't just easily do the same. It's possible, but good luck.
You also learn that you don't have to sell a recurring service or even software at all, you can just sell "stuff" and people will buy it if there is a desire.
Re: "survivorship bias" fair point, but all winning businesses and the end state returns of VC funds are all survivorship driven - losing entities drop out of history and fund returns, and in ugly cases the public stock markets too. The twitter feeds of many of the companies listed are very much building in the open and the ones that fail are in that sample set.
It was interesting to me the types of businesses that are making money (in this list)--several Twitter audience growth tools, a few tools related to social media content, etc. Very marketing tool heavy list, but a few B2B plays in there too.
It'll get them excited enough to want to read more on the primary site about how to do it, how to be an indiehacker and "micro-founder", more exotic and exciting words for "entrepreneur" that have less slog associated with them. They'll sign up for the email list and get entered into a drip campaign that'll feed them more fantasy without the slog. After email 5 they'll download a PDF cheatsheet, after email 11 they'll sign up for a time-limited pre-order of the new $129 book on for $39, but only if they sign up now. They'll read the book and then sign up for the exclusive paid forum access. A few months later they'll be signed up for the $1200 video course that is a 1:1.02 rehash of the book they already bought. They'll have started subscribing to all these podcasts and going to all the sites, they'll be excited, they'll get ready to quit their job, but they still won't really know anything about how to vet and build a business, how to deal with everything themselves now that they are self-employed, or how not to spend all of their innovation chips building their new microsaas on the newest, sexiest platform on the top of HN today. After awhile you realize the person running the blog's only success was selling this dream to you and enough others like you that they can now live their dream.
It's fine if you want to start your own business and anything is possible, but this article isn't doing anyone any favours, it's just hollow, self-serving temptation pointed at a lucrative audience.
If anything, picking generic successes that seem even more easy or understandable makes it worse, because those are the hardest to successfully do. Giving very niche examples would have been more benefit, but those people generally fly under the radar.
That's the trick. It was a lot of work to get to $1M. That said, there's almost infinite space in the market for micro-SAAS.
Mine took about 2 years, from 2000-2002. I finally sold it last year so I won’t mention the name, but I’ve been doing the four hour work week since 2001. I sold an eBay-related service during the bottom of the first dot com crash. No one else was willing to charge for access to a web service at that time except maybe Wall Street Journal.
Lemlist is doing $10m, only 3.5 years after launch.
https://blog.lempire.com/from-0-to-150m-valuation-in-3-5-yea...
Plausible got to $1M in 4 years.
https://plausible.io/blog/open-source-saas
Hey (email) did $5m in first year of launching service.
https://www.theverge.com/2020/6/16/21293156/hey-email-servic...
There’s a bunch others.
Sort of the opposite of a startup.
At least, I assume I got lucky. I’ve only done this once. Twice? I have yet to attempt.
I remember the early days of painful uncertainty and minuscule MRR before I really understood my market. Could I break through that “fog of startup” a second time?
Whether you’re on the venture treadmill or your aspirations are smaller (but every bit as valid, IMHO), building a great business — solving a real and pressing problem, communicating that solution to the right people at the right time, and capturing some of the value created — well, it’s never easy.
I appreciate the aspirational tone of the article, but I don’t feel that it captures… any of this? To me, anyway, it feels important to at least acknowledge that much of the work is unglamorous grind whose outcome is always in doubt.
It’s a shame that in software we must always “go big” or go home. Particularly when much of the world runs on broken or nonexistent software.
For me, it was mostly podcasts on commutes and physical chores. I listened to podcasts about web development, JavaScript, backend, data flows, infrastructure. I built small systems that used this understanding, cementing it in my brain with the pros and cons of approaches where the rubber meets the road. Then I listened to podcasts about small business, particular successful SaaS companies, marketing, sales approaches, management, hiring and all the ingredients that made them successful. Side benefit of this exploratory research is that it makes you very valuable in the market.
Find a need, think of how to serve that need, judge its longevity, quality, and value. Then you put your now sharp tools to work. Idea evaluation is a good skill, and required. You need to be brutally rational about the ideas. Emotional attachment helps drive your motivation to work on it, but it won't magically make customers appear.
Then you try to execute. Good execution is the hardest part, and you give yourself the best shot by head down improvements in your skills. For software, your first goal is to produce something that serves the need and can acquire a few paying customers. The less "other stuff" involved the better, just serve the need. Once you have paying customers leverage their feedback to grow the product and pick the best direction to feel out where the market for it really is. Non-paying feedback is much worse than someone else with skin in the game, paying customers are key.
It's a lot more blood and sweat than the article seems to point out. I like bootstrapping, but it means long evenings and weekends unless you have a sizable nest egg for a runway. Or better if you can afford to work only part-time and can find an accommodating position.
Be ready to fail the first few times and try again. 2-3 significant failures under your belt is pretty normal for a successful SaaS bootstrapper.
If you have the stomach and drive for it. Then you to can reach this definition of success.
There are tons of small underserved markets that would provide nicely for an individual or small team.
I've created 3 products thus far. One is abandoned as failed. One is currently flirting with profitability with about 30 paying customers, there is definitely a positive market signal here, and I'm trying to take it to the next level. The other is an MVP, but it is apparently still missing bits to give it a real go in the market, so it needs more investment. All of my products are B2C.
I've also been working at small businesses for years and have built several products that are not mine. Mostly MVPs style products, but also some more ambitious projects. Mostly I've been the solo dev, but occasionally I run a team. These have also been, largely, marketplace failures. Some have seen success.
I've been really living and working micro-saas for about 3-4 years as both founder and dev. I feel like I've trained my instincts correctly. I WILL make this work, even if I have to build #4, #5, and #6.
Jason Cohen talks a bit about why creating a B2C business is extremely difficult, and why B2B is better for self-funded startups. Amazing talk, and everything he said matches what I have seen of other businesses locally and my own experience (I am a successful B2B self-funded co-founder in one of the categories he mentioned).
The other microconf talks are also worth watching, as they have bits of very valuable information, but Jason’s talk is just next-level and all of his info seems solid.
I flitted around a bunch of others always looking for quality hosts and topics. I didn't like most of those I found with signal-to-noise too low. There were others, but I can't recall them off the top of my head. I didn't really maintain a list.
* Startups for the rest of us
* Art of product
* Out of Beta
* Indiehackers
* Software Social
* Build your SaaS
The guy doing Startups for the rest of us, Rob Walling, also runs a bootstrapper conference called Microcof that I recommend checking out.
Here’s a great, actionable, talk he did at the equally informative Rob Walling’s conference.
(I have followed this advice, and it has brought me a level of success and comfort I didn’t know I could have, as an admittedly run of the mill developer)
Caveat: when someone talented explains things, there is a lot of “it’s obvious” (to them) and they can easily explain why it is obvious, and it all sounds convincingly obvious (successful founders often are very convincing - correlation). However the details of how he learnt his opinions and the details really really are not obvious unless you have the right talents, or perhaps if you can develop the right skills (where it is only rarely obvious how to learn them well).
Aside: I loath the term micro-SaaS - especially when applied to a business with “$1,000,000 ARR” - but even the spelling is crappy. What does micro imply? Jason mentions at the start he prefers the word “self-funded” which I really like (presumably the title of the video uses “bootstrapped” because that’s more common?).
You can just say "decelerate".
[edit] Apparently I'm wrong. All the definitions of deceleration I can find are actually negative acceleration.
(What you were describing is negative jerk.)
* snap is equivalently called jounce.
I’ve had two successes that were only tangentially connected. The first was consulting, then building my own app, now I’m entering selling hardware.
I went from building industrial BLE sensor apps for $/hr, to selling licenses for a niche electron app (talking to hardware, label printers), and soon I’ll be selling physical hardware (label printers) bundled with my app.
Each success let me bootstrap the next. I’m still solo, and plan to grow to 7-figures over the next 18 months. Buckle up!
You can read a bit more about the label printing solution I’ve built at https://sourceforge.net/articles/qa-with-label-live-how-we-m...
The value of the business is not necessarily in the code (any decent coding team could recreate the software bar a bunch of edge cases in a few months), but moreso in the relationships I have in the industry I'm in.
These relationships can't be copied or stolen readily. And if someone was out to steal them - I'd see them coming.
There are hundreds of thousands, if not millions of people building small businesses to leverage a tiny opportunity in the market. Build a feature that no major player has captured yet.
This is good for the user for a time. But then they end up with a ton of tiny subscriptions, and trying to link them together to make a complete product. All these tiny companies competing for eyeballs, to get the marketing to be recognized on top of the other tiny companies building similar tools.
And what's the goal of almost all of these little tools? To make a small difference in the efficiency of somebody running their business. Minor efficiencies, not game changers for the most part.
Then one of the big players comes in and adds the feature to their main product. Poof, everything somebody worked long and hard for disappears.
Niche to find what you can build that's larger, but I think staying niche as a goal is a challenge.
It's entirely possible to make a living from crumbs as long as there are enough of them.
It depends a lot on how you market yourself.
Basecamp is a good - admittedly cliche, though - example. Now they have Hey. It's an email client for $100/yr. And they continue to make millions, despite sharing the market with giants.
The reason people use their services is not only because of the features. They also build a relationship.
One doesn't stay married because there's no other potential partner around with better features. It's because there's a deeper relationship, a bond. Might be stretching now? Perhaps...
There's a lot of wisdom in the statement above, but you also have a point... which I think you went much too far with.
Basecamp is not a relationship; it's a brand, but it's much weaker than, say, Apple, Ferrari, Nike, etc.
See, Basecamp was what all the kool kidz were using. And the Basecamp founders were soooo koooool! They even wrote a book! Oh yeah, and they used "the hot new technology" red choo-choo trains, er, uh, I mean Ruby on Rails.
Hey, if people can feel passionately about sugar-flavored water with bubbles in it, they can feel passionately about software... I guess.
Buuuuut the inherent problem is this: you can show off your Apple, Ferrari, Nike, etc. to your friends and to the girls/women you want to impress.
Basecamp, not so much. Basecamp seems like a dying brand to me. I don't see why anyone would begin using Basecamp these days because it's waaaaay overpriced.
But for a 40 year old who started using it 18 years ago, sure, he might have enough money, nostalgia, and, well, laziness, to keep using it.
I doubt Basecamp has many users under the age of 30, and probably never will. And I doubt it has many new users. At the end of the day most software doesn't have a social aspect to it; these days I assume Basecamp essentially is seen as a commodity (like a pillow case) by most people, even those who use it. Twitter, Instagram, Facebook, and YouTube are outliers which are extremely popular and have network effects.
You can also position yourself to be an acquisition target.
You can still work a 9-to-5 and enjoy the benefits those come with as well as having supplemental income. Because you’re still in a career as a employee at this stage, a big player coming to eat your lunch isn’t going to be financial ruin, only a lifestyle change if applicable.
The bigger goal (for me at least) is to get enough cash in an index fund where the money you need each month is exceeded by monthly gains of your investment portfolio.
Did you mean "mirage" instead of "oasis"?
The reach of the internet is so great that even simple ideas are still raking in thousands of dollars per month.
I remember sitting at a dinner table with new acquaintances, and my -now ex- girlfriend saying it’s baffling how seemingly simple apps [1] even make any money. They were making twice her monthly salary at the time :D
Started with AOL downloads in the beginning
Businesses like this are a dream, but it's also a risk. To me seems like the next goldrush, and those mining and rushing to the gold are usually the ones to lose as well.
I feel anxious and not sure if I want to support such movement.
There's a second thought: I don't think paying 10/15 small SaaS each with their own instability, billing issues, risks. Imagine running just an ecommerce like this [0]. This is not the future I want to see for internet businesses. You shouldn't need a plethora of small suppliers to just run a blog with payments. Or most things.
Isn't it fragile to a platform to just take it all?
I feel conflicted.
[0]: Interesting comment from an e-commerce entrepreneur - https://twitter.com/benedictevans/status/1543740260265361408
On the other hand, there are small companies that have their niche and nobody bothers to steal them customers.
It's hard to put your faith on a product you don't know will exist in 2 years.
It's really just one notch above the drop-shipping 'dream'.
But there is something to be said for making a bunch of money for a short amount of time and have enough to be buying your house outright. That will set you up for an easier life in the future where you do not need to be a "wage slave" just so you can keep up with the monthly rent or mortgage payments.
Having a guaranteed roof over your head whatever happens (even if you can only afford candles and basic pasta to eat) frees you up a lot. I guess in America it probably doesn't help much since you might need medical treatment one day so you'll need several hundred thousand dollars in reserve for day to day medical expenses, but anywhere else in the world you could live quite happily on the odd small contracting job here and there if you know you have zero housing costs (or close to zero when considering maintenance and taxes etc)
And even if they do cover you, from what I understand you still need to actually pay some percentage of the hugely inflated costs yourself.
I have a cousin in Florida who was charged $700 for some cortisone cream, but "good news" they only had to pay 20% because their insurance covered it! That is still $140 for something that in the UK is approx £2/$3 (three) (e.g. https://www.expresschemist.co.uk/hydrocortisone-cream.html), assuming you need to pay at all (many people get these things entirely free, and if not it will be at some fixed peppercorn price regardless of what the drugs actually are).
If basic skin creams are 700 bucks, I can't imagine what actual treatment costs. You'll want to keep a significant buffer of cash in case you are unfortunately sick one day, otherwise if you cannot pay your medical bills then I presume they will declare you bankrupt and force you to sell your house to pay the bills. The last thing you want if you have a heart attack or cancer is that your kids now also don't have a home as well as you not being there to support them etc. To me it feels irresponsible to just trust that insurance will cover you when in reality there is a not insignificant risk that you will not be covered and instead have some huge bill arrive one day that you cannot pay.
What does happen is the hospital bills you $50 for what amounts to a bottle of Tylenol. The insurance provider says no, we only pay $8 for Tylenol, and the hospital relents and charges $8.
If you don't have insurance to call them on their inflated pricing you end up with the rather obscene bill. As an individual you have precious little pull other than, will you discount if I pay it all now? Which they usually will. This depends on having that ability, and 30% off doesn't make up for a 400%+ markup.
But hospitals have to pull a profit despite dealing with tons of regulations and non-paying patients they have to treat anyway. So as a result they bleed who they can, it's a mess.
And that's why the US has thousands of medical-caused bankruptcies yearly.
Source: I work for a major insurer/provider on the West Coast.
One concern I have though, is coming up with an idea I'm passionate about enough to run with.
Where are these business ideas found? A Ubiquiti host is great one, for example.
As I recently wrote in one of the latest newsletters (you'll find it on MicroFounder, called "keep going"):
"It can be easy to abandon your project as soon as you launch and don’t see instant results – be it visitors or paying customers – but I’ve been looking closely how microfounders build their startups for the last 3+ years and I’ve almost never seen a real overnight success."
You can throw some keywords into the Google Keyword Planner tool, and see what people are searching for. Or just run a normal google search for "tools for <industry>" and see what pops up.
Don't be discouraged by competitors. Their existence basically pre-validates the market for you. Just make sure you can differentiate yourself somehow (usually, on price because your product will be less feature rich initially).
And I'll throw this in without any kind of justification: don't make a SaaS for other developers, or lawyers.
Google for "sales safari amy hoy" and you'll find many summaries like https://egghead.io/learn/30x500/sales-safari
And it really boils down to: keep your eyes open when you're reading forums / mailing lists / discord etc. Pay attention to what people complain about, what they say they need or want. And then create products that address that.
This takes hanging out with non-tech people, or at least reading what they write, or what others write about them.
i literally did nothing different. sometimes i ponder whether capitalism really is the result of dice rolling and the participant thinks they have greater influence than they really do.
While simple, this is not an easy call to make, I imagine.
To me markets look like evolution processes: there's definitely a vector towards better efficiency, better "fitness", but the trajectory is more like a random walk than a targeted shot.
With that, markets fail, but all highly-planned regimes have historically failed even worse.
What I take from this is that one should not emotionally invest in a business, and not make a serious business out of things that one has emotionally invested in. Be curious, try things and see if they work. Many of the best-looking of them won't; some of the sillies of them will.
The most ambitious people used to be conquerors, trying to force humanity into subjugation to rule as much as possible.
Now, the most ambitious people do everything they can to solve problems, as that is how you gain the most resources and personal wealth.
The end result is the capitalists that win, win big. But to me this is far superior than the alternative.
The “dice rolling” process you feel is random can be studied and optimized to increase your chances of success, either with better targeting or with more dice rolls. This is the product development process and the risk involved is why creators of successful businesses deserve huge rewards.
Again I compare it to something like poker tournament. In the beginning you are trying to build enough chips to get ahead the pack, there are lot of failures, risks are unknown
There is all manner of marketing possible at all price points. Just hitting up your network is marketing. I have successfully sold products by having people answer questions all day every day to the long tail of Reddit comments in honest ways explaining how our product solves their problem.
then I moved on to "content marketing" and "selling before you have a product" and I also struggled. Spending hours and $$$ on content that nobody even read or saw. Without a product I could not even get past "do you have a demo".
This road is full of pitfalls, false promises and outright gambling at times. I wish I had the resources I have now to spray and pray (try everything and see what sticks literally).
I wish I could just hire somebody like you hire coders. The difficulty comes from not knowing if this marketer is just blowing hot air or know what they are doing. Obviously, past performance helps but I find it a lot easier to find coders vs sales & marketing ppl.
Marketing is an art - truth be told, all of business is an art, which is why expertise is valued so highly. The moment something becomes commoditized is the moment you no longer need experts and the solutions are widespread.
If you are bootstrapping, I think it's easiest to actually have a bare-minimum product first. This is a risk - you need to put the time and effort into building something to sell. If you yourself are not an engineer, then it becomes even harder.
If you aren't going to bootstrap, then you need to have connections. At this point in my career if I chose to start a new company in the area where I am well-known and successful, raising a few million dollars for a seed round would be easy. But this is after more than a decade of building contacts, reputation, and so on - if I was just starting out, that would be impossible.
Starting a new, successful business is a puzzle. If it was easy, it wouldn't be rewarding. Good luck!
and I think back to your point about knowing the buyer being critical. there is also a huge barrier/cost to acquiring that information in some spaces, and often you can get false signals from your potential buyers.
As engineers than the best products we create is the one we solve for ourselves. My strength is not in cold calling/reaching out to ppl on linkedin/customer development interviews. It's intuition.
but does it affect the outcome, does having a stronger intuition and your discipline to follow it result in a successful outcome compared to when you don't? I think the question is then what comes first, luck or intuition?
Is success mostly luck? Or is it mostly skill?
You repeatedly state that it's mostly luck. A poker tournament.
At the same time you believe some marketers are better than others and want to hire the good ones.
So it must be mostly skill. But you said business success is luck. Hire random people as marketers, random people as programmers. It doesn't matter if they have skill since it's all luck anyway.
At any given time, the proportion of skill/luck can wildly fluctuate and is not know until a result is observed.
so while I recognize I need skilled people to increase my probability, I am cognizant also of the uncertainty or luck factor.
it was "almost done".
but I came to the conclusion and insight that I should be enjoying the journey as much as the end goal, and as such I stopped development.
for now.
A 'niche product' is usually be more economically better provided by a slightly more generic product, or a 'product feature' at by BigCo or SME.
Of course there are always going to be 'hyper niches' with very, specific and applied technology, but I don't feel this is the case.
I think most of these micro saas just have customers that 'like them' and 'pay a certain amount' 'because' and not really fully taking into consideration the added complexity, cost, overhead, resiliency.
In China, they have hugely complex manufacturing supply chains - yes - you need the little 'mom and pop shops' to provide that hyper niche component - but with generic SaaS it's not the case really.
All of that said, the theory falters a bit when you have A) Big Corps and SMEs that languish and fail to provide features, or have monopoly pricing power (though the later is not usually the case, usually the price is near $0) and B) Surpluses are not shared aka if we all used BigCo and SME SaaS, they'd 'keep' all the surpluses and so everyone else is resigned to working at Starbucks. The $1M SaaS is basically a way to leverage power extract some surplus at the cost of overall efficiency.
Again, legitimately hyper-niche solutions notwithstanding.
I don't know what the answer is, but it's worth contemplating what this means structurally. At least it's not completely vapid 'Social Influencing' and scammy value destroying Crypto/NFTs.
Forget the economy. If you want to build something, build it. Worry about your impact on the economy when you're worth a few billion $$$. IOW - you'll never have to worry about it.
If that’s the case what type of company is worth considering for someone like with a poor background like myself to escape the rat race?
For 'individual contributors' the best thing is likely 'highly skilled things' that cannot be scaled via automation, best example Doctor or Dentist.
Or businesses that are inherently local i.e. contractor/construction.
There should theoretically be 'space' a the long tail for niche providers of goods as well (i.e. Shopify Store) but for SaaS it's a bit doubtful.
Also, theoretically, the efficiency in tech should roll into higher tax revenue and public services ... but that's not likely the case sadly.
In reality, there might be plenty of room for overlapping, small time SaaS makers to exist, even though there might be a ton of duplication and inefficiency in the market.
What are your thoughts on indie hacker?
Imagine there is 'no market' for a specific kind of custom bike pedal maker for any individual city. Too small. But across North America - well - maybe there is enough of a market. Shopify enables little long tail retailers that may not exist otherwise, that can legitimately creative value and do something the 'Big Cos' cannot.
As for 'selling software' I'm not sure how Shopify works for that, though I can vouch that they have a good website maker, I like it better than Wix.
Indie Hacker is a neat place, probably some very good advice for tooling and tricks to use at the micro scale, just understand there's probably a fair bit of BS going on there, and that it's definitely oriented towards 'small time thinking'. Which is fine, but just be wary that's what it's about.
Work with 4ish clients max at a time. Its really chill.
More services! /s