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Bootstrapped.fm, episode 35, "Hate the SaaS!"


#1

In this episode, we discuss screaming squirrels, being busy, clients, project estimates, VC backed companies, why we hate SaaS, mobile app ickiness, and the value of ideas

Listen to the show and view the show notes.


#2

@ian @andrey thanks for clarifying your stance on SaaS. It sounds like it’s primarily personality-driven, with the exception of the cash flow issue.

I have to say though that was a bit of downer of an episode!

Maybe for the next the next one you could cover what you spend money on and how you decide these things, as Andrey suggested at the end.


#3

Well, I hate SaaS too. I would never buy a SaaS product. I truly don’t understand why anyone would. Call me old-fashioned, but now that even my bank has plans to sell our purchase behavior to garden centers and super markets for commercial purposes, I rather keep it all as local as possible. At least that gives me the feeling I have a little bit control over my own things.

The only exception is remote backup. But then, the data leaves my place fully encrypted.

By the way, thanks for the podcast. You sound a bit like the tired and depressed duo, but hey, don’t worry so much!


#4

haha, we recorded this one kinda late so I think that came through. Also, it’s kinda more fun to be frumpy :smile:

We’ll try to keep it upbeat next time, though I think it’s an accurate reflection of the ups and downs in this biz.


#5

Hey Ian, there’s one thing that kind of struck me in this episode. You mentioned that competition is so brutal because everybody has the same information. There aren’t any secret tricks left. That’s kind of true, but it’s also kind of not true. Companies may know that onboarding is important. But have they all taken the time to create an awesome onboarding experience? Nope.

Anyway, that’s my peace. :slight_smile:

Hope to see you at baconbiz this year…I wasn’t fast enough to get a microconf ticket, though ben and my other PIC josh will be there.


#6

Yes that’s true. It’s not even so much the tricks but the sheer level of competition is amazing. When I released HelpSpot a fully in your browser help desk app was a new thing with only a few competitors. Now of course they’re zillions. It’s harder I think to get those angles, or maybe that pure tech angles are harder. You need a marketing angle to go with it which doesn’t always play to the bootstrappers strength.

Also in SaaS at least I now think a co-founder or more than one is crucial (like you guys!). SaaS adds loads more work to the product, I don’t think it’s optimal or perhaps even advisable for the MicroISV crowd in many spaces.

On the next ep I’d like to talk a bit about ways to maybe zig a little while everyone zags.


#7

Sounds like an interesting episode with the zigging and zagging.

Agreed on the cofounder comment, at least if your product has any kind of technical complexity. It does help with things like vacations and sleeping at night. The problem with cofounders is money. If you’re a solopreneur and making $100k a year, you’re killing it. Split three ways, not so much. :slight_smile:


#8

The grass is always greener, right? My sentiment on SaaS is that it might be a truckload of work, but businesses in general are a truckload of work, and you really cannot underestimate how much recurring revenue does to change the dynamics of the business. Bingo Card Creator would have me set for life rather than being “Oh, nice to have a bit of extra money” if it had yearly rebills.

I know it’s a heck of a lot easier to do a one-off consulting gig or a training event or a infoproduct to get money today, and I appreciate that selling a WordPress plugin means you never get woken up at night if Rackspace has a DNS issue, but OH MAN does having recurring revenue solve so many problems.


#9

Looking back that’s true, but maybe you wouldn’t have gotten so far with it if you hadn’t had that initial jolt of cash. But not just that, it’s much faster to get to market non-saas. There’s just so much more to build out.

Obviously most software going forward probably will be saas/mobile-saas but I do think it lowers the overall probability of success for someone starting out.


#10

Yeah :slight_smile: though nights aside just seems so key to be able to divide and conquer. Finding the right partners though I’m sure is tricky.


#11

Interestingly enough, GrooveHQ made the opposite point in one of their blog posts: (with apologies in advanced for sending you to a page that has one of those bleeping exit monitor things)

They basically decided to enter a crowded market with a good product (nothing revolutionary) and hustle like crazy on the marketing front. Apparently the plan is working. However, that kind of marketing effort is not possible for a solopreneur. And Alex is clearly a gifted promoter.


#12

Interesting thread :slight_smile:

I think competition is less of a factor than what most people think. Competition generally isn’t what kills businesses. If you don’t have any traffic it doesn’t matter if you have 1 competitor or 100. Same if a product doesn’t provide value and fails to convert people. It’s usually about finding the areas that are preventing growth/success and addressing those (usually not competition).

Anyway, I do see how it can be easier to get a quick win by doing a plugin or some other smallish product like that. At the same time I prefer a more direct route and going with recurring revenue right off the bat. Yep, it’s going to take longer and be a fair amount of work but anything of real long lasting value tends to be that way (unless you get lucky), and you have to get started at some point – if that’s your goal.

Funny enough, I never considered doing anything other than SaaS because the thought of having to support all these machines/servers/clients in unknown environments scared the crap out of me. To me, the easier route was a SaaS app (where I have a single environment and app to worry about). It’s mostly perspective (and background).

Re cofounders: I’ve never had one so the only thing I can say is that some people use cofounders as an excuse not to get started. It’s not that hard if you go about it the right way, and have the personality for it. People over-think things and make them more complicated than they have to be.

There’s obviously no right/wrong way to go about things…just try the approach that appeals to you and see if it’s a good fit.


#13

Wow. That’s a pretty bold statement. It kind of bums me out, really. :stuck_out_tongue:


#14

[quote=“earthlingworks, post:12, topic:1286”]
Funny enough, I never considered doing anything other than SaaS because the thought of having to support all these machines/servers/clients in unknown environments scared the crap out of me. To me, the easier route was a SaaS app (where I have a single environment and app to worry about). It’s mostly perspective (and background). [/quote]

See, this is where my thinking usually falls. Just the thought of having to support an on-premise app makes me ill.

I’m kind-of here right now. It has dawned on me that running my consulting biz AND building/launching/marketing a product is probably going to require more go-juice than I have, and that I’m probably going to need a co-founder if I’m going to do it right. But at the same time, just the thought of having a partner makes me ill (notice a pattern?). So…not sure what I’m going to do, now.

Yeah, it’s like we’re a bunch of technically-minded geeks or something… :stuck_out_tongue:


#15

Someone else talked about that a few years back :slight_smile:

To me there is a distinction between a nicely fragmented large market and huge nimble cash laden competitors that you see in a lot of SaaS sectors these days though.

Also Groove is a great example of what I’m talking about. People read that and say hey, he’s doing it that will work for me see! But there are big differences. He’s not your regular bootstrapper.

He’s sold 2 businesses previously, that means he has millions of dollars to put into the business, they have employees from the start. That is not what most people on this board can do. He also has access to investors (don’t know if they’ve taken VC, don’t follow them too much) which again is something most bootstrappers don’t have access to.

So yeah it’s working for him, but if you could start your business with 5 employees that is nothing at all like starting with just you.

It’s the same with me and Snappy which is why we end up discussing this. We can take our substantial HelpSpot revenues and invest in SaaS. We have top notch programmers working on it and the rest of the company in support. That’s a very different thing than the average bootstrapper just getting rolling.

So I think back to when I started and it seems to me that SaaS is inherently more risky. Yes, as @earthlingworks notes for sure it can be done and of course as @patio11 states the recurring revenue if it works is amazing (don’t think I haven’t thought about if HelpSpot would have been SaaS, we might be Zendesk right now as we were out years ahead!), but maybe I also wouldn’t be here. I certainly didn’t have the tech skill back then to do it.

Tools have changed and it’s easier than the old days to get started tech wise and that’s great, but the slow ramp, greatly increased back end tech needed, fierce competition in most niches make it a hard road and I’ve always been one who thinks bootstrappers should optimize for the max chance of success (staying in business) vs revenue or other goals that increase risk.

Then again, given the new landscape maybe that’s simply not possible. Perhaps the safe path to success these days is consulting and if you want to be in product you’ll have to take the more risky road.


#16

We are all about zigging when everyone else is zagging at Perch :slight_smile:

I wrote a post year, thinking about how we are Unfashionably Profitable. When we launched Perch as a download, the world told us we were mad. We just got on with doing our thing and it has worked out pretty well so far!

And screaming squirrels, I was 30 before I realised those things made a noise.


#17

Yeah, I almost mentioned in my post that I didn’t know whether Groove was an outlier or representative of what is possible. Turns out it’s the former! I didn’t look much into their history I admit.

Good article, by the way. Still relevant after so many years.


#18

Personally, I love the SaaS. @patio11 is right about recurring revenue being a game changer.

We’ve only been in business for maybe a year and a half. So last year was our first “real” holiday season. Based on what everyone had said, I expected signups to be pretty low. Instead they were through the roof. The real bloodletting came after New Years. Signups were down and churn was up. But recurring revenue meant we could make payroll and keep the lights on. Even if we were worried that we only had 2% growth that month. Anyway, everything’s back to normal now.

But if I were to start from nothing and launch a new SaaS product, I would expect it to take a year or two to make decent money. That just seems to be how it works unless you get lucky.


#19

@starr , @patio11 , couldn’t agree more about SaaS and recurring revenue.

When I started, it was a simple JRE based .exe desktop software and then later customers kept asking “Can we put it on our intranet/web” and I would sorrily direct them to my competition. When we did the web based re-development we launched it as a self-hostable product and a SaaS product. For the pricing part, we analyzed all our competition and decided to keep a subscription model. The thinking was that we are providing a subsidized payment plan for our customers and we still come out inexpensive in comparison to our competition.

For SaaS, majority of the users use it as a demo/trial area and since the product deals with data, they prefer to take it to their home servers.

-NJ