I spent a long time daydreaming about having it hit four-digits in recurring revenue — it felt like such an accomplishment that if I were able to crack it, it'd be a dream come true. It's certainly not enough to live off of (especially living in Seattle), but it's a non-trivial amount of money and gives me a great source of pride.
The idea of doubling that amount, though, seems — well, if not _exhausting_, certainly unappealing. I can't think of a way in which my life would be improved by additional revenue, but I can think of a lot of ways it would be hampered by having twice the customer base:
1. More customer support and time spent writing emails
2. More time working on features that aren't what I care about
3. Less freedom to experiment with other projects or ideas
One of the joys of having a project that is truly _yours_ is that you alone get to dictate your terms of success.
Have you experimented with removing your free plan? Curious to know what your support-time is in relation free:paid plans. Just from my anecdotal experience free-plans attracted the wrong type of customer for me, switching to paid with a free trial worked much better. When you have a large team and can built fancy funnels to make freemium work it seems like a great idea from a marketing perspective but for small(ish) companies I really doubt the numbers (% of upgrades from free to paid after a certain period of time) make sense in a lot of cases.
I think this is one of things where my Business Brain 100% agrees with you (the majority of my customer support burden comes from free plans, though it's worth pointing out something like two-thirds of my paid cohort converted from free) but my Hacker Brain things this project _should_ have a free plan, because free plans are nice and good and neat.
Others have pointed out about the free plan and I mostly agree with them.
One thing that hasn't been mentioned yet is the opportunity to position your product as the alternative for people that think mailchimp is just too much. Tell me this on the headline. "The easiest way to run your newsletter." sounds generic. Maybe something like "Write and click send, that's all it takes. No templates, no extra steps."
Finding people that want to send a simple newsletter without all the steps of mailchimp should be easier. Tell your customers early that you will handle the migration part and you might find more conversions as well.
Consider hiring a virtual personal assistant and delegating the low impact, high (time) cost tasks. There will be an inherent limit to how much money you can make if you try to do it alone.
If you truly want to learn to build a business, realize that you aren't a software developer anymore. You're a businessperson and thats completely different. It's a different field and you can have a lot of fun learning it. It's a reward experience.
I say this from experience. I grew my company from 2-3k MRR and did it all myself. It was only when I realized I needed to hire myself out of low level tasks and focus on the important things did I start to make real strides. It wasn't long before I was well beyond that MRR level (now have 6 employees)
Something I've found helpful is to make a list every day of the tasks you completed, and circle anything you could've delegated. This is then an iterative process to help you improve your delegation skills, which should allow you to focus specifically on business tasks that provide the most leverage.
Can I ask - how do you send emails programmatically? Every time I've done this for personal projects, I run into issues. Whether it's auth blocking from GMail or whatever. Seriously would appreciate even just a nudge in the right direction.
Not OP but I've spent a lot of time setting up email sending for SaaS apps. It shouldn't be too difficult, just use a third party provider like sendgrid and make sure your DKIM and SPF records are setup properly and you should be good to go. I've also used stuff like Amazon SES and it's not worth the trouble for side projects (or even medium sized, real businesses, honestly). If you have specific questions feel free to ask.
Just took a look at your landing page, cool idea -- one element of your service that really stood out was down at the bottom "Free concierge onboarding".
Really interesting offer. Do you find new subscribers take you up on this a lot? Seems like a great way to improve your migration tooling!
I had a similar experience growing my company (funnily enough, also a note taking app). When I reached the point where I had everything I needed, I had to ask myself, why keep going?
The answer for me was a custom-fitted realization that building a company is to be treated no different than a game. A factory building simulation game, like Factorio. The goal isn't to achieve operational bliss, because that goal is wickedly unattainable (or also extremely attainable, but would mean you'd accomplish that goal by simply just not playing at all). It is instead to grow, build, scale, solve, for no reason other than it being enjoyable to do so. Because playing the game, for problem-solving minded individuals, is a lot more stimulating than not playing it.
I wrote more about my personal experience with this here:
Nice job ripping a new asshole in a theme-park version of buddhism, but I'm not entirely sure what you're trying to communicate here. I mean, yeah, sitting on your ass doing nothing your entire life is a bad idea, sure.
I guess this applies to solo founders (like me) and micro teams but after making a decent livelyhood from SaaS too, my experience is that a lot of people confuse product and project.
I mean a project is something you do in your leisure time (like on a weekend) and it's meant more to show off your coding skills or scratching your own itch or maybe like gaining the pleasure a painter gains from drawing a picture.
A product otoh is a very different beast. It does need a project but that is like may 10-15% of it. The rest is a whole new world of selling, maintaining, growing which has things like content marketing, link building, SEO, optimizing Salescopy, sending out emails, building an affiliate program, recruiting affiliates, A/B testing, conversion optimization, reducing attrition, giving bonuses, doing discounts and coupons, cross-selling, upselling, funnels, analytics and a hundred different things.
The product makes you money, the project gives you pleasure of coding. For new founder and especially programmers trying to make a buck selling online services it can be a easy pitfall.
This makes some sense of it. The author has a project that happens to have some financial reward.
A startup SaaS is a product, and while a project can become a product, I think it is better to set out from the beginning as a product. And for projects to remain so and be treated that way as the author describes.
Projects are great, but revenue is the primary metric for most SaaS products, and and if you follow YC school of thought you should be chasing growth of that metric.
Have a question. I do pay for few things (netflix, amazon prime and couple of others). Their services are natural candidate in my opinion for being billed monthly.
Now everyone my cats included are trying to sell their wares however small they are as a service. If I've paid monthly fee for every notepad sized program I use I'd be out of commission.
How does this business model manage to survive is puzzling to me.
To play devil's advocate, part of the reason that this business model survives is because of how much better it is for the creator of the service.
Receiving a steady flow of income from those who use your product every month is a great proposition. Additionally, if you build a product useful to more people, your monthly income increases (it's recurring, as opposed to being cash-flow based).
On the user's side, the argument is twofold:
(1) there's increased competition. Economically, the switching cost is lower if you're paying each month— to make an analogy, it's easier to convince someone to lease a new car at the end of a lease than it is to convince someone to buy a new car when they have already bought a car. This allows a lot of new and impressive SaaS companies to grow like wildfire.
(2) there's more freedom of choice, because you're entering a relationship with a company only for a period in which it benefits you enough that you want to continue using it (and as mentioned above, there's ideally plenty of alternatives). This motivates companies to improve their offerings.
While it isn't perfect, I doubt amazing apps like Notion would exist if not for a subscription model. It just isn't worth it to make a perfect note-taking app otherwise.
I agree, it's ridiculous! Not to mention that many app developers (as mentioned in the post) can't grind along on a single app for 10 years, so you most likely are not getting $5/mo (or more!) of value out of the product for 10 years.
Sublime did it best, IMO. Charge a non-negligable amount ($70) for an individual, but pennies to a company. That's how many of us got our licenses. That $ should be enough to run their business if it's a good product, and when the $ dries out because of competition, make something new! Seems greedy that everyone who writes a note-taking app thinks they deserve a subscription in perpetuity.
The flip side of the story is that Sublime died. I know they have had some updates recently, but for years it was completely stagnant. The hole that was left by Sublime was filled by VS Code. Maybe Sublime would've survived with a subscription model?
When you're paying a subscription you are paying for the maintainer's continued interest in the product over time, which is not to be underestimated. Software rots quickly.
Well people seem to expect support and updates in perpetuity.
In reality most software offered a pseudo subscription through updates. Every couple of years they would offer a new release with heavily promoted features to entice you to open your wallet. Bug fixes were often an afterthought.
It's common sense that these SaaS products are targeted towards people who use them enough to pay for it, monthly.
The reason why it's better for the creator to offer it paid only, is that they can focus on shipping features only for those who care about their offering enough to pay for it. These users could be described as power users in comparison with people who expect the service to be free.
The website FAQ even says that this is for professional use, which means that the person who's subscribing, needs to use this on a day to day for their work (or something that's important to them).
Subscription model fits better. There are ongoing costs to maintaining the service indefinitely.
One off cost only really makes sense when you can sell a piece of software as being done essentially and move onto the next piece of software to charge a one off cost for. Having a one off cost to find ongoing costs probably isn’t going to end well as soon as a product is no longer growing.
If there IS A SERVICE. Releasing new version of software is not really service, Netflix is. If new version is compelling enough I'll upgrade, if not then it is vendor's problem. As a customer I could care less what suits better for Vendor. I am not paying $5-10 or even more/month 100 times. That is insanity.
The most important thing a SAAS founder can do is to clearly understand their own goals (which is exactly what this article's OP did) and then develop a realistic plan of achieving it.
I bumped into a tool recently that helps simplify some basic financial modeling and goal setting for SAAS companies called http://www.Simsaas.co
I'm always surprised how little financial modeling and goal setting is baked into the "side project hustle" mentality.
I've watched a lot of companies wind up on a treadmill - pumping dollars into marketing acquisition for non-sticky customers vs. focusing on product side improvements to extend retention.
Or stagnating at a level BELOW that "hey I'm making enough to live on forever" and letting a project deteriorate vs figuring out how to drive a little more marketing.
Yes! I wish more developers would heed this. There have been quite a few apps that I started using when they were new, simple, and focused. Then feature after feature gets added and over time the app becomes less attractive and less fun to use.
Jamie Zawinski once said every program attempts to expand until it can read mail. Those programs which cannot so expand are replaced by ones which can.
These days that could probably be updated to say every app expands until it can share to social media.
I think a lot of us know this, but customers demand more...I am selling a scheduling app for small businesses, and I wish I can just make the app better instead of building new features, but if you have over 1000 customers chances are you are constantly getting 10-15 new feature requests on a daily basis, it's hard to ignore those, especially when some customers give low ratings to your app with reasons like "missing feature X", even tho the feature was never promised to them.
> chances are you are constantly getting 10-15 new feature requests on a daily basis, it's hard to ignore those
What I've tried to do at work is to leverage other programs as much as possible.
For example, many customers want our program to massage the data slightly, or maybe augment it with some fixed values etc. Instead of making dozens of different ways to do this, I focused on making it easy to export data to Excel (or similar) and import it back in again. The import/export routine is generic enough that it takes me 15 mins tops to add it to a new form if it needs a bit of custom handling. If it's just a generic grid it's a one-liner.
Similar for file integrations. We can do (S)FTP, again with a reusable framework making it a breeze to add. For anything else we just access a (shared) directory and the customer can use what they want.
Fortunately for us though, we don't rely on ratings as such, so we can be a bit more strict.
I follow the same philosophy, but my side-project got out of my control and its monthly profits now cover 12x my expenses.
Of course, maintaining it became a lot more stressful than when the MRR was at $10k and I had to hire a small team to help.
I still try to keep things under control by spending most of our time on product and customer support, and zero time/dollars on marketing/ads. This keeps our growth rate manageable (3%-5% per month). I also ignore all interested investors/buyers that want to scale the business.
At our revenue level, I realize I could probably sell the business and never have to work again, but I'm enjoying the ride and afraid of what the pressure to scale could do to our customers.
One of the things I have observed over the years is that some people are motivated to build technology because they like building things, and some are motivated by the fact that builders of technology make money.
People who like the 'art' of building this stuff, are (again in my experience, not an exhaustive study or anything) generally much better programmers and engineers that the purely financially motivated folks.
I don't disagree, but this romanticized view of the selfless visionary engineer/designer/founder is counterproductive.
the truth is that moderation is important. you need both. do both. be flexible. pay attention. know when to shift focus. getting stuck on one thing at the wrong moment is how you go out of business. don't go out of business.
going out of business is decidedly the most anti-user thing your company can do.
I think we're on the same page here, there is a reason that sociopaths who use 'money' as their scorecard do better (at least initially) as CEOs. It is also this same principle that explains why startups with multiple founders have a higher correlation with success than solo founders. Having the ability for one person to both pay attention and recognize it is time to shift focus can be rare.
I totally agree with this too. So three sources of joy; money, elegance, and utility. Of course that reminds me there is the "other" side of developers the ones who find joy in puzzle solving, overcoming artificially imposed barriers, and discovering protected knowledge.
Readit News
I've got a side project that's current bringing in around ~2-3K MRR (https://buttondown.email).
I spent a long time daydreaming about having it hit four-digits in recurring revenue — it felt like such an accomplishment that if I were able to crack it, it'd be a dream come true. It's certainly not enough to live off of (especially living in Seattle), but it's a non-trivial amount of money and gives me a great source of pride.
The idea of doubling that amount, though, seems — well, if not _exhausting_, certainly unappealing. I can't think of a way in which my life would be improved by additional revenue, but I can think of a lot of ways it would be hampered by having twice the customer base:
1. More customer support and time spent writing emails
2. More time working on features that aren't what I care about
3. Less freedom to experiment with other projects or ideas
One of the joys of having a project that is truly _yours_ is that you alone get to dictate your terms of success.
Others have pointed out about the free plan and I mostly agree with them.
One thing that hasn't been mentioned yet is the opportunity to position your product as the alternative for people that think mailchimp is just too much. Tell me this on the headline. "The easiest way to run your newsletter." sounds generic. Maybe something like "Write and click send, that's all it takes. No templates, no extra steps."
Finding people that want to send a simple newsletter without all the steps of mailchimp should be easier. Tell your customers early that you will handle the migration part and you might find more conversions as well.
If you truly want to learn to build a business, realize that you aren't a software developer anymore. You're a businessperson and thats completely different. It's a different field and you can have a lot of fun learning it. It's a reward experience.
I say this from experience. I grew my company from 2-3k MRR and did it all myself. It was only when I realized I needed to hire myself out of low level tasks and focus on the important things did I start to make real strides. It wasn't long before I was well beyond that MRR level (now have 6 employees)
Deleted Comment
Really interesting offer. Do you find new subscribers take you up on this a lot? Seems like a great way to improve your migration tooling!
Deleted Comment
Deleted Comment
The answer for me was a custom-fitted realization that building a company is to be treated no different than a game. A factory building simulation game, like Factorio. The goal isn't to achieve operational bliss, because that goal is wickedly unattainable (or also extremely attainable, but would mean you'd accomplish that goal by simply just not playing at all). It is instead to grow, build, scale, solve, for no reason other than it being enjoyable to do so. Because playing the game, for problem-solving minded individuals, is a lot more stimulating than not playing it.
I wrote more about my personal experience with this here:
https://listed.to/@mo/2476/play-the-game
Deleted Comment
I mean a project is something you do in your leisure time (like on a weekend) and it's meant more to show off your coding skills or scratching your own itch or maybe like gaining the pleasure a painter gains from drawing a picture.
A product otoh is a very different beast. It does need a project but that is like may 10-15% of it. The rest is a whole new world of selling, maintaining, growing which has things like content marketing, link building, SEO, optimizing Salescopy, sending out emails, building an affiliate program, recruiting affiliates, A/B testing, conversion optimization, reducing attrition, giving bonuses, doing discounts and coupons, cross-selling, upselling, funnels, analytics and a hundred different things.
The product makes you money, the project gives you pleasure of coding. For new founder and especially programmers trying to make a buck selling online services it can be a easy pitfall.
A startup SaaS is a product, and while a project can become a product, I think it is better to set out from the beginning as a product. And for projects to remain so and be treated that way as the author describes.
Projects are great, but revenue is the primary metric for most SaaS products, and and if you follow YC school of thought you should be chasing growth of that metric.
Have a question. I do pay for few things (netflix, amazon prime and couple of others). Their services are natural candidate in my opinion for being billed monthly.
Now everyone my cats included are trying to sell their wares however small they are as a service. If I've paid monthly fee for every notepad sized program I use I'd be out of commission.
How does this business model manage to survive is puzzling to me.
Receiving a steady flow of income from those who use your product every month is a great proposition. Additionally, if you build a product useful to more people, your monthly income increases (it's recurring, as opposed to being cash-flow based).
On the user's side, the argument is twofold:
(1) there's increased competition. Economically, the switching cost is lower if you're paying each month— to make an analogy, it's easier to convince someone to lease a new car at the end of a lease than it is to convince someone to buy a new car when they have already bought a car. This allows a lot of new and impressive SaaS companies to grow like wildfire.
(2) there's more freedom of choice, because you're entering a relationship with a company only for a period in which it benefits you enough that you want to continue using it (and as mentioned above, there's ideally plenty of alternatives). This motivates companies to improve their offerings.
While it isn't perfect, I doubt amazing apps like Notion would exist if not for a subscription model. It just isn't worth it to make a perfect note-taking app otherwise.
Sublime did it best, IMO. Charge a non-negligable amount ($70) for an individual, but pennies to a company. That's how many of us got our licenses. That $ should be enough to run their business if it's a good product, and when the $ dries out because of competition, make something new! Seems greedy that everyone who writes a note-taking app thinks they deserve a subscription in perpetuity.
When you're paying a subscription you are paying for the maintainer's continued interest in the product over time, which is not to be underestimated. Software rots quickly.
In reality most software offered a pseudo subscription through updates. Every couple of years they would offer a new release with heavily promoted features to entice you to open your wallet. Bug fixes were often an afterthought.
The reason why it's better for the creator to offer it paid only, is that they can focus on shipping features only for those who care about their offering enough to pay for it. These users could be described as power users in comparison with people who expect the service to be free.
The website FAQ even says that this is for professional use, which means that the person who's subscribing, needs to use this on a day to day for their work (or something that's important to them).
One off cost only really makes sense when you can sell a piece of software as being done essentially and move onto the next piece of software to charge a one off cost for. Having a one off cost to find ongoing costs probably isn’t going to end well as soon as a product is no longer growing.
I bumped into a tool recently that helps simplify some basic financial modeling and goal setting for SAAS companies called http://www.Simsaas.co
I'm always surprised how little financial modeling and goal setting is baked into the "side project hustle" mentality.
I've watched a lot of companies wind up on a treadmill - pumping dollars into marketing acquisition for non-sticky customers vs. focusing on product side improvements to extend retention.
Or stagnating at a level BELOW that "hey I'm making enough to live on forever" and letting a project deteriorate vs figuring out how to drive a little more marketing.
Yes! I wish more developers would heed this. There have been quite a few apps that I started using when they were new, simple, and focused. Then feature after feature gets added and over time the app becomes less attractive and less fun to use.
Jamie Zawinski once said every program attempts to expand until it can read mail. Those programs which cannot so expand are replaced by ones which can.
These days that could probably be updated to say every app expands until it can share to social media.
I think a lot of us know this, but customers demand more...I am selling a scheduling app for small businesses, and I wish I can just make the app better instead of building new features, but if you have over 1000 customers chances are you are constantly getting 10-15 new feature requests on a daily basis, it's hard to ignore those, especially when some customers give low ratings to your app with reasons like "missing feature X", even tho the feature was never promised to them.
What I've tried to do at work is to leverage other programs as much as possible.
For example, many customers want our program to massage the data slightly, or maybe augment it with some fixed values etc. Instead of making dozens of different ways to do this, I focused on making it easy to export data to Excel (or similar) and import it back in again. The import/export routine is generic enough that it takes me 15 mins tops to add it to a new form if it needs a bit of custom handling. If it's just a generic grid it's a one-liner.
Similar for file integrations. We can do (S)FTP, again with a reusable framework making it a breeze to add. For anything else we just access a (shared) directory and the customer can use what they want.
Fortunately for us though, we don't rely on ratings as such, so we can be a bit more strict.
Of course, maintaining it became a lot more stressful than when the MRR was at $10k and I had to hire a small team to help.
I still try to keep things under control by spending most of our time on product and customer support, and zero time/dollars on marketing/ads. This keeps our growth rate manageable (3%-5% per month). I also ignore all interested investors/buyers that want to scale the business.
At our revenue level, I realize I could probably sell the business and never have to work again, but I'm enjoying the ride and afraid of what the pressure to scale could do to our customers.
People who like the 'art' of building this stuff, are (again in my experience, not an exhaustive study or anything) generally much better programmers and engineers that the purely financially motivated folks.
the truth is that moderation is important. you need both. do both. be flexible. pay attention. know when to shift focus. getting stuck on one thing at the wrong moment is how you go out of business. don't go out of business.
going out of business is decidedly the most anti-user thing your company can do.