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State of Independent SaaS 2021
- limedaring 6y agoReally valuable insights; really shows how different independent SaaS is. For instance, 56% of founders are solo in indie SaaS, whereas a lot of traditional VC accelerators prefer (or require) at least two founders on a team.
- randlet 6y agoIt's tough to find two or more compatible and like minded people who can afford to make (effectively) zero money for an extended period of time. Having VC money makes it possible to support a bigger team from the outset with less financial risk to the founders. This may contribute to the bias towards single founders in bootstrapped companies. I'm a solo SaaS founder and would absolutely love to have a partner but the few people I've discussed it with have not been able to tolerate the financial risk / lost opportunity cost.
- kirktrue 6y agoAdditionally, the demographics on slide 7 point to the majority of founders being over 30. This age group often coincides with a greater likelihood of having a partner, mortgage, children, etc. Thus the risk aversion for that group is likely also higher. Finding 2+ people with the risk tolerance alone limiting, much less having a complementary skill set, interests, goals, etc.
- codegeek 6y agoI am a solo SAAS founder and I would say that other than the financial risk/lost opportunity cost, the major hurdle is finding someone ambitious and driven enough who is willing to slog it out with you. The drive, the ambition and will to do whatever it takes day in, day out is not that easy to find. Especially when you have to find others who may not feel the same about your brand/product/business.
- ta1234567890 6y ago> VC money makes it possible to support a bigger team from the outset Yes. However, in practice, it is very rare to be able to raise money before the founding team has already been working on the business for a few months. Hence, by the time VCs put money into the company, most likely, the founders have already incurred their most significant financial risk.
- Terretta 6y agoFind a seasoned co-founder who has had an exit and doesn't need another exit to retire, but does need a mission to stay sharp till then.
- xwdv 6y agoI am such a person. I could afford to work for years without money thanks to my high net worth and investments in the tech sector, and have over a decade of software development experience in building robust web scale applications. Unfortunately, most potential co-founders write me off when they discover I’m ethically challenged.
- ZephyrBlu 6y ago> ethically challenged Is that like a euphemism for sociopath? I'm being slightly facetious, but I don't really know what you mean by "ethically challenged".
- icedchai 6y agoHow are you "ethically challenged"? And what prevents you from simply BSing them so they don't discover this?
- DiggyJohnson 6y agoWhat a fascinating response.
- withinboredom 6y ago> most potential co-founders write me off when they discover I’m ethically challenged. I would have loved to have come across this comment years ago. I was building a bit of awesome software that turned out to be "illegal" ("PayPal is a bank -- oh, you're a regulator? PayPal isn't a bank!" kind of illegal). It was really interesting, but my cofounder backed out once we ran into regulation designed to keep us out of the market. I wanted to keep going and pretend the regulation didn't exist/apply to us.
- soneca 6y agoAnd they say that growth has correlation with the number of founders (up to 3 founders), so it makes sense as for VCs growth is basically the only thing that matters, not so much for bootstrappers.
- bandrade 6y ago75% of those with free trials do not require a credit card up front. This was always my preference as a purchaser because I didn't have to bother my boss and get approval to try out a product.
- shoo 6y agoOn another hand, as mentioned in the report, if a SaaS operator does manage to close a sale to a larger business then that larger business is likely to provide the SaaS operator a much higher lifetime value due to lower price sensitivity and lower churn rate. But at some point it crosses over into high-touch enterprise sales process with multiple approvals from multiple stakeholders, long time horizons. It'd be quite interesting to have survey data on what the sales process is like. But probably only relevant for SaaS businesses that sell to government / large business customers.
- xcast 6y agoThe lower barrier to entry does show a pretty significant uptick from unique visitors to trial customers as well. On the other side of that coin, the data shows that converting trial users to paid customers is way more likely when you have already collected payment information at the start of the trial. I think your customer base really defines willingness to put up a card up front.
- kirktrue 6y agoI'm with you on that. But my understanding of slide 55 is that requiring a credit card up front doesn't pose much of a problem to growth.
- mikekoscinski 6y agoIt looks that way to me too. I converted the conversion rates from unique-trial-paid for each scenario. It looks like 0.846% for credit card required upfront and 0.264% for no credit card required. So *net conversion is ~3.2x higher when a credit card __is__ required upfront.* Showing my work: I eyeballed each bar chart and turned it into a data table. I'm getting median unique-to-trial conversion rates of 3.1% (credit card required) and 6.1% (credit card not required). I'm then adjusting these to account for the % of "don't know" responses. So, adjusted medians of 1.8% (cc required) and 3.3% (cc not required). Following the same process for trial-to-paid yields medians of 47% (cc required) and 8% (cc not required). Multiplying each pair yields 0.846% (cc required) and 0.264% (cc not required) unique-to-trial-to-paid.
- kirktrue 6y agoA love the idea origin breakdown on slide 17. Over half of the product ideas (~57%) came from experiencing a problem/issue firsthand. The percentage tips to ~90% if you also include experiencing a problem/issue secondhand (through friends, clients, customers, etc.). A measly 8% came from research alone.
- Axsuul 6y agoWould be interesting to see MRR + growth based on this.
- kirktrue 6y agoYes. The origin of idea is the easy part. Personally, I procrastinate starting a product/service because I feel that I have to have an amazing idea before I get started. (There's nothing new under the sun.) As this slide reinforces, though, a given person already knows many problems/issues that could be used as a starting point in a product/service endeavor.
- javier2 6y agoSame, especially when there are competing companies well under way.
- shoo 6y agoRegarding "which best describes how you validated your original business idea?", is anyone aware of more research around the effectiveness or practicality of different validation approaches? That is, rough false-positive (validation indicated that business idea had sufficient market demand when it didn't) and false-negative rates (validation indicated that business idea had insufficient market demand when it did) for different validation approaches. Naively it'd be great to have data of the form "given our idea for a business was bad specifically because there would be insufficient market demand, when we validated the idea by method A (e.g. getting verbal commitment from n potential customers), validation result indicated there was enough market demand to proceed, we decided to proceed, but the business failed later specifically for a reason that the validation approach was intended to measure (customers willing to buy the service) and not for some other reason". I.e. known ground-truth, measurement, measurement result, decision to proceed or abort based on measurement result, actual outcome. Probably would be a very tricky thing to isolate the effectiveness of the validation approach and tease it apart from other confounding factors.
- johnsmith4739 6y agoCo-founder, 3rd startup, helped a handful of others grow. I meekly suggest a different framing or mindset. It is less "this idea is good or bad / market demanded it or not" - which suggests a passive, fixed worldview - I propose a more proactive approach: "am I able to make people adopt our solution or not." If you launch something innovative (i.e. not 1-1 comparable with existing alternatives) your effective market is 0. This applies even more if you create a new category. So you can be faced with the situation where market demand cannot be satisfied unless you know how to reshape its adoption dynamics. In this case, validation has multiple pieces that have to come together: is there compensatory behaviour to prove that existing solutions are underdelivering; can we identify an early adopter psychographic looking for a specific feature set we're able to create; do we have a way to get to them;
- polote 6y ago- How the founders were selected ? And where ? initially they say "hundreds of non-venture track" but then 14% raised money - What is a MRR Growth in dollars ? Thats not how we compute growth - Is that data statistically significant ? there 2% of companies which had 4+ more founders and still you try to make a correlation between growth and founders count. - There is 66% of companies who have employees but only 66% of founders who work more than 30 hours a week ? That doesn't seem right... I like the initiative, but we need more clarity to really be able to trust the data from this report
- ramimac 6y agoSlide 62 does present some of that context: Survey was sent to 25k founders in the MicroConf database, 673 respondents (534 completed the survey)
- dbbk 6y ago> - What is a MRR Growth in dollars ? Thats not how we compute growth It's a company's growth in MRR... I'm not sure what you're asking? Also who is the "we" here?
- polote 6y agogrowth is usually in percent. If you make $1000 more dollars per month, it doesn't mean the same thing if you do 1M ARR or 10k ARR
- whyleyc 6y agoThere is a slide on page 31 showing revenue growth expressed as a percentage.
- Silhouette 6y agoThere is? Page 31 of the document I'm seeing shows the percentage of businesses in each MRR category. As polote said above, it's very strange to see MRR growth figures given as a fixed dollar amount throughout the presentation. As a founder, you might be quite worried if your business was only growing by the same dollar amount each month over an extended period.
- davidw 6y agoRob Walling and that crowd are great. I read Start Small, Stay Small years ago and found it to be full of good advice that I was able to employ to make a "productized service". It never really took off, but paid for some new computers and a few vacations, and I learned a ton from it. Wish he or someone would update it, as I think it was a fantastic resource. It had a lot of specifics and details that more handwavy business books just sort of gloss over.
- emrah 6y agoI remember listening to one of his SFRU podcast episodes and he said he might go back and update it but he didn't sound too enthusiastic about working on a book project or that it would feel impactful enough for him to spend the time on it. So maybe but probably not..
- ayewo 6y agoJust barely 2 weeks ago, he declared on air [0] that he was finally writing another book. 0: https://microconfpodcast.com/episodes/let39s-answer-some-sales-questions-with-steli-efti https://microconfpodcast.com/episodes/let39s-answer-some-sal...
- itsdrewmiller 6y agoI love the "Expected/Unexpected" break down on the key insight slide intros to each section. Most of the unexpected ones I did not expect!
- tematema555 6y agoI assume SAAS is one of the best model for independent developer. If you build a helpful product, users will stay for a long time. If you build it well, it'll probably be alive for a long time. (low daily expenses needed)
- RicoElectrico 6y agoI thought of doing low-revenue-low-maintenance SaaS as a side job just to add to my income. Though I balk at the idea of having to support stuff. B2C is more tolerant of that, but with lower earning potential than B2B.
- tematema555 6y agoI don't feel support is a big part of the game if you build it right. B2C need some virality as user churn is higher. Anyway, good luck, my friend )
- hermitcrab 6y agoMy experience (16 years selling desktop software as an Indie) is that the guy with the @aol.com email who paid $30 can be a significantly higher support burden than the organization that bought $3k of licenses.
- dbbk 6y agoSupport can always be outsourced to a company like Foundkit
- 9967d2cad_askhn 6y agoJust listening to Rob, the founder of this conference and his various podcasts gives me a strange feeling. This guys is like the definition of sociopath. There exists a not so strong contrast between him and Jake Gyllenhaal's character in Nightcrawler.
- dang 6y agoPersonal attacks like this aren't allowed on HN. Please don't post like this again. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html