8 ms·

Ask HN: What is your playbook for profitable SaaS without outside investment?

69 points by _448 5y ago

Edit: What is your playbook for building a profitable SaaS without taking outside investment(debt or equity)? And how much time it took to reach profitablility?

deleted 5y ago
[deleted]
jf22 5y ago
There is no playbook. Every market and company is different. It took me over five years and two failed businesses to not reach profitability. Survivorship bias is a big thing in this space.
- pestaa 5y ago
  What product ideas did you try is you don't mind me asking?
  - jf22 5y ago
    First was event promotion automation. Like Buffer for events. I also had a business that sent customized physical therapy home exercise plans.
    - miniatureweasle 5y ago
      Wow, recently released my home exercise program software for physios and struggling to get clients. What made you drop the project? Any tips/advice would be really appreciated.
      - jf22 5y ago
        Don't underestimate the egos of doctors and how each one has "their way" they want patients to do exercises.
        miniatureweasle 5y ago
        Good point, thanks for the reply.
bberenberg 5y ago
Build on someone else's Marketplace. Identify a niche where your product name will be the primary form of initial marketing in that marketplace. Keep costs as low as possible. Time to profitability is a function of how much you can manage costs.
stevekemp 5y ago
My approach has been to resell something that already exists, with a healthy margin. Of course there are downsides, as well all know starting a business relying on Twitter's API, for example, ended badly for almost everyone. But if you get lucky, or you're quite small, then there's room for you to collect money with a simple wrapper or two around existing services.
- connectsnk 5y ago
  Can you give some examples if you don't mind me asking?
  - RileyJames 5y ago
    Not the OP, but their comment makes me think about all the apps (primarily saas) built on top of the Xero API, as part of their marketplace. Build a decent product which covers an edge case (niche) or a feature not provided by the API providers product (Xero) and then sell to the existing customer base. Some advantages: - there is already a user base, and their options for solving problems are 1) pay a dev to build x feature, integration. 2) find an add-on product which does xxx or 3) drop Xero and move to xxx competitor who does offer it. 1 & 3 are expensive, time consuming and unlikely the businesses field of expertise (software) - sales and support at the Saas api provider can become your sales funnel. Not automatically, you have to network / educate them about your solution, and the problem it solves. But once they know, it becomes to ‘unblocker’ for a subset of sales. Which become your customers. I think many B2B Saas product that offer (and support) an API could represent a similar opportunity. There are obvious risks, just like with Twitter. The api can change, but I think that less likely in B2B, changes are likely to be improvements or expansions of feature set, even if it’s disruptive to your product / service. But the major risk, which you must be aware of, and plan for, is the changing strategic priorities of the company you’ve integrated with. At a certain point customer growth isn’t enough, and ppl start searching for revenue opportunities. All these Saas businesses using the API become targets, either for acquisition or for duplication. Duplication doesn’t mean death, particularly if you have a niche play, and have continued developing your product. But it will significant halt the growth. All that said, I think it’s a good option for HN / solo / dev first founders who can do the product research, find the gap, and build the solution. Because it seems like the next part (getting paying users) is where most of these adventures run into trouble. *I was at Xero 5 years ago, but I think this is valid for any B2B. I’d suggest scoping earlier stage products with strong growth, as the runway til their growth slows and they start looking for revenue alternatives is longer. It also allows you to grow with their growth.
high_byte 5y ago
the only way to be profitable is to start selling. the only way to avoid debt is to have money. the only way to have money without investments is to sell from day 1. either you invest with time & money, or lots of time, or lots of money... but sooner or later you need to sell. so if you don't want to invest money, or lose time, better sell & pre-sell before it exists, or before it is automated. grow afterwards
PinkPigeon 5y ago
I don't have one yet. Still working that out! I am certainly monitoring this thread with a lot of interest. My approaches and results so far: - Email marketing. This was done by identifying businesses in the local area (roughly 1,000 of them) and just churning through contacting them, ideally with the name of the owner sourced from their website. Result: literally not a single response or conversion. - Posting to Facebook, Twitter and LinkedIn with tutorials, news, offers about my product every 3 days. Result: also zero. I should note that I have never had a social account before this, so I have no existing networks of friends and family to rely on. - Talking about my product on Hackernews. Result: hundreds of page views and 4 free trial signups. Nice! Finally something. - Reddit posts: tens of page views, no signups, so far as I can tell. I have a few more routes, like paid for advertising, but I am honestly trying to do this all at a cost as close to 0 as possible (FWIW, I'm paying about £10 a month for my VPS and Cloudflare workers, that's it) The product is a static website builder that's supposed to be much easier to use than WordPress, mostly cheaper and also super usable on mobile (which is rare I believe). https://pinkpigeon.co.uk https://pinkpigeon.co.uk if you're curious, and apologies for the self promotion.
- HeyLaughingBoy 5y ago
  I assume you're identifying businesses to contact by those that don't have websites, or have bad ones? If so, what if in addition to offering subscriptions to your product, you offered website design services (can be easily offloaded) along with that subscription? That way, they get a site built for them, but they can do the updates themselves.
  - PinkPigeon 5y ago
    Thanks for the input! We do actually offer that as well. And at pretty darn competitive rates (because we can build sites very quickly), but have not had any interest from that angle yet either. Yes, we've contacted businesses which have terrible / no websites. But it's surprisingly tricky getting people out of the mindset of "I hate my current website setup, so all website setups must be terrible"
- owenversteeg 5y ago
jdvh 5y ago
We've built a couple of saas businesses without any investment, as complete unknowns. It's doable, and today it's easier than it has ever been. You can go from 0 to revenue in less than 6 months. The big problem is that there is a ton of software out there, including free software, and people will only pay if your product is much better in some way that actually matters. If you only give yourself a few months to build a product you can only build a couple of features, so those features better be really good.
- offtop5 5y ago
  How big of a team do you have. Even if it's from your personal funds, if you're maybe paying a few contractors $10,000 a month, that's still an investment.
  - aframe 5y ago
    It’s not an outside investment though.
joshontheweb 5y ago
I was able to bootstrap a SaaS business by working as a contract engineer half to three quarters time and building my company in the remaining time. I lowered expenses by moving in with family and eventually to SE Asia until profitability. This meant I had infinite runway but also it took longer . I prototyped for six months and then ran/tested the service for free for almost two years before it was ready for paid plans. Then it went from 0 to ~15k MRR in the first month. A couple of tricks like requiring Dropbox connection for users file storage and utilizing webrtc’s p2p capabilities helped keep running expenses manageable during the lead up to profitability.
- falco925 5y ago
  I have a similar story except I didn't move anywhere to reduce burn, I just worked a full time job and built the company in my off hours. But I did prototype, charging a small fee, for almost 2 yrs too. Once I launched the v1, I went from 1k MRR to 20k MRR within 12 months. Congrats on your success. It's always hard work.
visox 5y ago
i had couple tries on this topic, latest "finished" product is https://insightrend.com/?page=term-trending https://insightrend.com/?page=term-trending so far didnt "make it", but i think i may return to it eventually, i didnt try everything with it yet. I always found it super hard to market my products (or there are other problems with me lol )
- maxk42 5y ago
  Looks interesting! Tried signing-up for the free emails and no network activity in the networking inspector
  - visox 5y ago
    Thats weird i will check it
  - visox 5y ago
    indeed i found a bug, had same id on 2 elements :/ i fixed it.
lucas03 5y ago
I am trying to build a SaaS myself, currently, it's at $80 MRR with minimal costs (single server). Though if I counted my time spent there and compared to the average salary, that project would be a total failure. It's been probably 15 years since I started thinking how having a passive income covering living costs would be greatly liberating. I like FIRE movement, and was lucky enough to create a website for tracking dividends as my master thesis at the university. As any website requires time just to keep it running, I always knew I have to create a website that would be useful for me, so I don't lose interest in it and the project doesn't die after few months. Financial independence is not that hard, it's just simple math on cash flow and how inflation and debt works. I knew dividends will be probably hard to beat long-term with other passive income, so I was pretty confident I would keep building a dividend tracking website for me, even if nobody else would be using it. I thought there must be a better way to track dividends than putting them manually on spreadsheets. So how much time it took me to reach profitability? Probably a few years. I have not been asking for paid membership before that. I added a paid membership that was equal to free membership about a year ago. I called it supporter, as there were no upsides from paying for it. But some payments did come. And as I had new ideas, I started to bring these ideas to life only for paid memberships. Slowly it grows. I still want to have a usable free membership for the majority of users, but I think I would not be doing it forever for free. So what I think works well? Find a community for a problem you are solving, so you get a lot of feedback and improve it all the time. Give paid membership to valued members in those communities - moderators, admins, youtubers, ... Be active on those reddits/facebooks, solving their problems and getting the users for your service. As the site grows, you can slowly implement more and more features for paid membership only, until you have a good free/paid ratio (up to you to decide ideal %). Most importantly I still use it myself, for tracking my own portfolio - https://www.digrin.com/portfolio/24-dividend-growth-investing/ https://www.digrin.com/portfolio/24-dividend-growth-investin... and keeping an eye on my estimated financial independence year. I feel much better building a tool for myself and like-minded people, not just profit.
rwhitman 5y ago
It's 2021. There is very little opportunity left in SaaS that hasn't had mind boggling amounts of investor capital thrown at it. These are your competitors. In every single conceivable niche. Not bootstrapped companies. Venture backed. Millions in capital earmarked for marketing and sales. For things like mattress testing and sushi restaurant POS. There is no playbook for profitable bootstrapped SaaS in 2021. The winners either have a special secret that they wouldn't share for the world or they're lying about being profitable.. or in most cases the "successes" are simply such amateurs they don't understand basic accounting and believe that "profitable" means "slightly more monthly revenue than the cost of the servers". If you embark on this be aware, the days of having your own little saas as passive side income are long behind us. This is serious serious stuff now.
- aframe 5y ago
  Don’t listen to this negativity. This is absolute narrow minded hogwash. I’ve been part of two profitable-without-outside-investment companies that have started in the last twelve months. The only secrets are to be - or work with, experts in the field, and solve a problem. It’s the usual adage. An expert can mean you’re qualified in the field or you’ve been in the specific game a long time. Just make sure it’s a real problem and that you don’t spend months beavering away at your secret project without speaking to people and validating. Just don’t listen to people like this who tell you the hotels’s full. There’s always space at the Invention Inn. Good luck.
  - krishvs 5y ago
    I think you and the GP comment both have valid points. Being unnecessarily negative gets us nowhere..but I do think for the most part VC funding has made things much much harder for startups that want to bootstrap. VCs have created a winner takes all mindset. I think this is a net negative to the entire ecosystem. The costs are 10x more for marketing and sales than it was maybe 10 years ago. Some might say do content marketing, promote on social media etc..these are long term strategies that make zero sense for founders starting from scratch with no following. The costs for building products have become minuscule but marketing costs have skyrocketed.
- 5y ago
softwaredoug 5y ago
1. Be a consultant in a specialized domain 2. Notice a problem everyone is having in your domain (a problem you're tired of solving over and over) 2. Go from 40 hrs billable -> X hrs a week billable. Spend 40-X hrs on product to solve problem 3. Tell your clients about your product that solves the problem you see they're having. Use their feedback to make it better. 4. If clients stay engaged and love it, then you invest deeper into it 5. If you're known in your domain, you probably have the beginnings of some marketing channels to share your product. 6. Talk about the _problem_ not your solution per-se. Make a lot of content marketing about the problem people are having. Seed Google and adwords with this content. 7. If (6) draws people in AND you can convert them to try out your tool, you have the start of a marketing/sales funnel 8. You can decide if you try to convert (7) into consulting clients or SaaS sales. If the SaaS sales is working out, and they pay a price that makes it worth your effort, then you're, and your marketing funnel continues to be strong, THEN and only then you might be on a path to profitability

69 points by _448 5y ago

Edit: What is your playbook for building a profitable SaaS without taking outside investment(debt or equity)? And how much time it took to reach profitablility?

deleted 5y ago

[deleted]

jf22 5y ago

There is no playbook. Every market and company is different. It took me over five years and two failed businesses to not reach profitability. Survivorship bias is a big thing in this space.

pestaa 5y ago
What product ideas did you try is you don't mind me asking?
- jf22 5y ago
  First was event promotion automation. Like Buffer for events. I also had a business that sent customized physical therapy home exercise plans.
  - miniatureweasle 5y ago
    Wow, recently released my home exercise program software for physios and struggling to get clients. What made you drop the project? Any tips/advice would be really appreciated.
    - jf22 5y ago
      Don't underestimate the egos of doctors and how each one has "their way" they want patients to do exercises.
      - miniatureweasle 5y ago
        Good point, thanks for the reply.

bberenberg 5y ago

Build on someone else's Marketplace. Identify a niche where your product name will be the primary form of initial marketing in that marketplace. Keep costs as low as possible. Time to profitability is a function of how much you can manage costs.

stevekemp 5y ago

My approach has been to resell something that already exists, with a healthy margin. Of course there are downsides, as well all know starting a business relying on Twitter's API, for example, ended badly for almost everyone. But if you get lucky, or you're quite small, then there's room for you to collect money with a simple wrapper or two around existing services.

connectsnk 5y ago
Can you give some examples if you don't mind me asking?
- RileyJames 5y ago
  Not the OP, but their comment makes me think about all the apps (primarily saas) built on top of the Xero API, as part of their marketplace. Build a decent product which covers an edge case (niche) or a feature not provided by the API providers product (Xero) and then sell to the existing customer base. Some advantages: - there is already a user base, and their options for solving problems are 1) pay a dev to build x feature, integration. 2) find an add-on product which does xxx or 3) drop Xero and move to xxx competitor who does offer it. 1 & 3 are expensive, time consuming and unlikely the businesses field of expertise (software) - sales and support at the Saas api provider can become your sales funnel. Not automatically, you have to network / educate them about your solution, and the problem it solves. But once they know, it becomes to ‘unblocker’ for a subset of sales. Which become your customers. I think many B2B Saas product that offer (and support) an API could represent a similar opportunity. There are obvious risks, just like with Twitter. The api can change, but I think that less likely in B2B, changes are likely to be improvements or expansions of feature set, even if it’s disruptive to your product / service. But the major risk, which you must be aware of, and plan for, is the changing strategic priorities of the company you’ve integrated with. At a certain point customer growth isn’t enough, and ppl start searching for revenue opportunities. All these Saas businesses using the API become targets, either for acquisition or for duplication. Duplication doesn’t mean death, particularly if you have a niche play, and have continued developing your product. But it will significant halt the growth. All that said, I think it’s a good option for HN / solo / dev first founders who can do the product research, find the gap, and build the solution. Because it seems like the next part (getting paying users) is where most of these adventures run into trouble. *I was at Xero 5 years ago, but I think this is valid for any B2B. I’d suggest scoping earlier stage products with strong growth, as the runway til their growth slows and they start looking for revenue alternatives is longer. It also allows you to grow with their growth.

high_byte 5y ago

the only way to be profitable is to start selling. the only way to avoid debt is to have money. the only way to have money without investments is to sell from day 1. either you invest with time & money, or lots of time, or lots of money... but sooner or later you need to sell. so if you don't want to invest money, or lose time, better sell & pre-sell before it exists, or before it is automated. grow afterwards

PinkPigeon 5y ago

I don't have one yet. Still working that out! I am certainly monitoring this thread with a lot of interest. My approaches and results so far: - Email marketing. This was done by identifying businesses in the local area (roughly 1,000 of them) and just churning through contacting them, ideally with the name of the owner sourced from their website. Result: literally not a single response or conversion. - Posting to Facebook, Twitter and LinkedIn with tutorials, news, offers about my product every 3 days. Result: also zero. I should note that I have never had a social account before this, so I have no existing networks of friends and family to rely on. - Talking about my product on Hackernews. Result: hundreds of page views and 4 free trial signups. Nice! Finally something. - Reddit posts: tens of page views, no signups, so far as I can tell. I have a few more routes, like paid for advertising, but I am honestly trying to do this all at a cost as close to 0 as possible (FWIW, I'm paying about £10 a month for my VPS and Cloudflare workers, that's it) The product is a static website builder that's supposed to be much easier to use than WordPress, mostly cheaper and also super usable on mobile (which is rare I believe). https://pinkpigeon.co.uk https://pinkpigeon.co.uk if you're curious, and apologies for the self promotion.

HeyLaughingBoy 5y ago
I assume you're identifying businesses to contact by those that don't have websites, or have bad ones? If so, what if in addition to offering subscriptions to your product, you offered website design services (can be easily offloaded) along with that subscription? That way, they get a site built for them, but they can do the updates themselves.
- PinkPigeon 5y ago
  Thanks for the input! We do actually offer that as well. And at pretty darn competitive rates (because we can build sites very quickly), but have not had any interest from that angle yet either. Yes, we've contacted businesses which have terrible / no websites. But it's surprisingly tricky getting people out of the mindset of "I hate my current website setup, so all website setups must be terrible"
owenversteeg 5y ago

jdvh 5y ago

We've built a couple of saas businesses without any investment, as complete unknowns. It's doable, and today it's easier than it has ever been. You can go from 0 to revenue in less than 6 months. The big problem is that there is a ton of software out there, including free software, and people will only pay if your product is much better in some way that actually matters. If you only give yourself a few months to build a product you can only build a couple of features, so those features better be really good.

offtop5 5y ago
How big of a team do you have. Even if it's from your personal funds, if you're maybe paying a few contractors $10,000 a month, that's still an investment.
- aframe 5y ago
  It’s not an outside investment though.

joshontheweb 5y ago

I was able to bootstrap a SaaS business by working as a contract engineer half to three quarters time and building my company in the remaining time. I lowered expenses by moving in with family and eventually to SE Asia until profitability. This meant I had infinite runway but also it took longer . I prototyped for six months and then ran/tested the service for free for almost two years before it was ready for paid plans. Then it went from 0 to ~15k MRR in the first month. A couple of tricks like requiring Dropbox connection for users file storage and utilizing webrtc’s p2p capabilities helped keep running expenses manageable during the lead up to profitability.

falco925 5y ago
I have a similar story except I didn't move anywhere to reduce burn, I just worked a full time job and built the company in my off hours. But I did prototype, charging a small fee, for almost 2 yrs too. Once I launched the v1, I went from 1k MRR to 20k MRR within 12 months. Congrats on your success. It's always hard work.

visox 5y ago

i had couple tries on this topic, latest "finished" product is https://insightrend.com/?page=term-trending https://insightrend.com/?page=term-trending so far didnt "make it", but i think i may return to it eventually, i didnt try everything with it yet. I always found it super hard to market my products (or there are other problems with me lol )

maxk42 5y ago
Looks interesting! Tried signing-up for the free emails and no network activity in the networking inspector
- visox 5y ago
  Thats weird i will check it
- visox 5y ago
  indeed i found a bug, had same id on 2 elements :/ i fixed it.

lucas03 5y ago

I am trying to build a SaaS myself, currently, it's at $80 MRR with minimal costs (single server). Though if I counted my time spent there and compared to the average salary, that project would be a total failure. It's been probably 15 years since I started thinking how having a passive income covering living costs would be greatly liberating. I like FIRE movement, and was lucky enough to create a website for tracking dividends as my master thesis at the university. As any website requires time just to keep it running, I always knew I have to create a website that would be useful for me, so I don't lose interest in it and the project doesn't die after few months. Financial independence is not that hard, it's just simple math on cash flow and how inflation and debt works. I knew dividends will be probably hard to beat long-term with other passive income, so I was pretty confident I would keep building a dividend tracking website for me, even if nobody else would be using it. I thought there must be a better way to track dividends than putting them manually on spreadsheets. So how much time it took me to reach profitability? Probably a few years. I have not been asking for paid membership before that. I added a paid membership that was equal to free membership about a year ago. I called it supporter, as there were no upsides from paying for it. But some payments did come. And as I had new ideas, I started to bring these ideas to life only for paid memberships. Slowly it grows. I still want to have a usable free membership for the majority of users, but I think I would not be doing it forever for free. So what I think works well? Find a community for a problem you are solving, so you get a lot of feedback and improve it all the time. Give paid membership to valued members in those communities - moderators, admins, youtubers, ... Be active on those reddits/facebooks, solving their problems and getting the users for your service. As the site grows, you can slowly implement more and more features for paid membership only, until you have a good free/paid ratio (up to you to decide ideal %). Most importantly I still use it myself, for tracking my own portfolio - https://www.digrin.com/portfolio/24-dividend-growth-investing/ https://www.digrin.com/portfolio/24-dividend-growth-investin... and keeping an eye on my estimated financial independence year. I feel much better building a tool for myself and like-minded people, not just profit.

rwhitman 5y ago

It's 2021. There is very little opportunity left in SaaS that hasn't had mind boggling amounts of investor capital thrown at it. These are your competitors. In every single conceivable niche. Not bootstrapped companies. Venture backed. Millions in capital earmarked for marketing and sales. For things like mattress testing and sushi restaurant POS. There is no playbook for profitable bootstrapped SaaS in 2021. The winners either have a special secret that they wouldn't share for the world or they're lying about being profitable.. or in most cases the "successes" are simply such amateurs they don't understand basic accounting and believe that "profitable" means "slightly more monthly revenue than the cost of the servers". If you embark on this be aware, the days of having your own little saas as passive side income are long behind us. This is serious serious stuff now.

aframe 5y ago
Don’t listen to this negativity. This is absolute narrow minded hogwash. I’ve been part of two profitable-without-outside-investment companies that have started in the last twelve months. The only secrets are to be - or work with, experts in the field, and solve a problem. It’s the usual adage. An expert can mean you’re qualified in the field or you’ve been in the specific game a long time. Just make sure it’s a real problem and that you don’t spend months beavering away at your secret project without speaking to people and validating. Just don’t listen to people like this who tell you the hotels’s full. There’s always space at the Invention Inn. Good luck.
- krishvs 5y ago
  I think you and the GP comment both have valid points. Being unnecessarily negative gets us nowhere..but I do think for the most part VC funding has made things much much harder for startups that want to bootstrap. VCs have created a winner takes all mindset. I think this is a net negative to the entire ecosystem. The costs are 10x more for marketing and sales than it was maybe 10 years ago. Some might say do content marketing, promote on social media etc..these are long term strategies that make zero sense for founders starting from scratch with no following. The costs for building products have become minuscule but marketing costs have skyrocketed.
5y ago

softwaredoug 5y ago

1. Be a consultant in a specialized domain 2. Notice a problem everyone is having in your domain (a problem you're tired of solving over and over) 2. Go from 40 hrs billable -> X hrs a week billable. Spend 40-X hrs on product to solve problem 3. Tell your clients about your product that solves the problem you see they're having. Use their feedback to make it better. 4. If clients stay engaged and love it, then you invest deeper into it 5. If you're known in your domain, you probably have the beginnings of some marketing channels to share your product. 6. Talk about the _problem_ not your solution per-se. Make a lot of content marketing about the problem people are having. Seed Google and adwords with this content. 7. If (6) draws people in AND you can convert them to try out your tool, you have the start of a marketing/sales funnel 8. You can decide if you try to convert (7) into consulting clients or SaaS sales. If the SaaS sales is working out, and they pay a price that makes it worth your effort, then you're, and your marketing funnel continues to be strong, THEN and only then you might be on a path to profitability