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Now if you can get [to $1 to $2 million inn run rate] in 12-18 months, that’s great. 24 months is probably OK, but at the edge for most people. Or if it’s a s

by patio11 14y ago

Now if you can get [to $1 to $2 million inn run rate] in 12-18 months, that’s great. 24 months is probably OK, but at the edge for most people. Or if it’s a semi-mythical lifestyle business, maybe it’s OK. You know what you call semi-mythical things with existence proofs? Empirically observable facts. As contrary to, say, unnamed $1 MM run rate SaaS businesses killed by competition. I'm having great difficulty thinking of one. Granted, I don't know the histories of all the hundreds of companies that fit the terrible nightmare of selling millions of dollars of software at 90% gross margins, so it's possible you could come up with an anecdote or three... Also, if you sell a million a year in software, and you need help, you buy help. People who are additive to revenue aren't cheap but they are, well, additive to revenue. Support folks? Very inexpensive - a plumbing firm with 30% gross margins at the same scale can trivially hire them.

badlogic2 14y ago
(This is a bad-logic account). What you say about "a plumbing firm with 30% gross margins at the same scale can trivially hire them." But most software businesses do NOT want to be a plumbing business. Given a choice between renting a shabby office downtown that is an hour commute, or investing in a thousand dollars of services and equipment to make a distributed team a reality, which one would you have more confidence in having a big vision? Exactly. This has been a bad logic post, thank you.
BobWarfield 14y ago
Keep in mind Jason is very much talking about a VC-funded SaaS company rather than a bootstrapped SaaS company. A boostrapped company may take quite a lot longer than 24 months to hit $1M and no harm no foul. Many of the famous bootstraps took 24 mos to be big enough for 3 founders to quit their day jobs. The difference is the $1M VC funded SaaS company will have been wildly unprofitable while the bootstrap will have been profitable every step. The VC world rightly regards SaaS as a landgrab and some of Jason's other posts approach it that way. Hence the companies are run unprofitably so they can be grown faster. My impression from his posts is he doesn't have a lot of experience with the bootstrap world or doesn't think much of it. I frequently write counterpoints to his posts on my Smoothspan blog.

by patio11 14y ago

badlogic2 14y ago

(This is a bad-logic account). What you say about "a plumbing firm with 30% gross margins at the same scale can trivially hire them." But most software businesses do NOT want to be a plumbing business. Given a choice between renting a shabby office downtown that is an hour commute, or investing in a thousand dollars of services and equipment to make a distributed team a reality, which one would you have more confidence in having a big vision? Exactly. This has been a bad logic post, thank you.

BobWarfield 14y ago

Keep in mind Jason is very much talking about a VC-funded SaaS company rather than a bootstrapped SaaS company. A boostrapped company may take quite a lot longer than 24 months to hit $1M and no harm no foul. Many of the famous bootstraps took 24 mos to be big enough for 3 founders to quit their day jobs. The difference is the $1M VC funded SaaS company will have been wildly unprofitable while the bootstrap will have been profitable every step. The VC world rightly regards SaaS as a landgrab and some of Jason's other posts approach it that way. Hence the companies are run unprofitably so they can be grown faster. My impression from his posts is he doesn't have a lot of experience with the bootstrap world or doesn't think much of it. I frequently write counterpoints to his posts on my Smoothspan blog.