Wealth creation

Discussions
#1

Somebody mentioned this article to me yesterday:
http://paulgraham.com/wealth.html

It’s pretty interesting - has some good nuggets in there. As a bootstrapper, whenever I read PG I feel like I’m being lured to the dark side or something - haha.

His bit on wealth creation and the pie fallacy though was really helpful and actually a bit inspiring for me.

This article was brought up in the context of talking about how we feel about competitors. I don’t pay much attention to my competitors which is as it should be I think. But I still do kind of suffer from the mindset that there’s a finite amount of pie.

So this was a good reminder. Would be interesting to hear other people’s thoughts on the article.

#2

I agree that a growth mindset is what you should aim for but at the same time think about how to make your business defensible. I see a lot of “charge for value” talk in this area of the internet without any consideration for long term sustainability of the business model.

Take Stripe metrics for example. A lot of very nice solutions out there which add tremendous value to people running a Saas, but as this market matures why wouldn’t the ARPU go down drastically? Especially as there are complementary high margin services that can be sold based on knowing the metrics.

Another example is AppointmentReminder. I like how Patrick McKenzie is targeting HIPAA regulated enterprises which protects his earnings due to the high transaction costs in making a sale (which prevents perfect competition so you get monopolistic competition at ‘worst’). But for how long? With solutions like TrueVault his business now is basically Twilio + TrueVault + enterprise sales. I get that the last of those 3 is the most important one, but again, how long until an app breaks through that makes enterprise radically more efficient?

Maybe I just worry too much about those things but I feel this aspect of Saas or entrepreneurship in general is not covered enough here.

#3

Ya I thought that PG’s comments on barrier to entry were pretty interesting. I’m not sure if that’s what you’re commenting on when you talk about making the business defensible.

Not sure I follow the example about stripe analytics.

AppointmentReminder - I think I follow what you’re saying here. Would be interesting to get @patio11’s thoughts on that, but my hunch is that even on a feature level, AR is probably a lot more than Twilio + TrueVault. I think what you find when bootstrapping and paying attention to your customers, is that you build a feature set around your niche’s needs, and that’s most likely going to be unique amongst other competitors.

I’m curious whether you’re coming at this from a practical perspective or more of a theoretical one. Do you currently make a living from SaaS?

#4

I was commenting on your statement that you don’t pay much attention to competitors.

I don’t have a Saas.

#5

Gotcha. So in other words what you’re saying is - you kind of have to pay attention to the competition because if not you won’t be aware of changes in technology that could impact your business in the long term.

I think that it probably comes back to listening to your customers. If you see customers moving to other services, then it probably does make sense to take a close look at the competitor that they’re moving to. Or at least to understand why they’re moving.

But 99% of the time, when bootstrappers are worrying about their competitors, it doesn’t have anything to do with a custom having left, and so it’s not that productive.

#6

Yes. So the indirect competitors are the ones you should look at to see disruption of your business model coming, the direct competition is less interesting to track as you say.

Peter Thiel summarizes this much ore eloquently is his latest book where he warns that not only do you need to generate $x in value, you need to be able to capture y% of that.

Don’t assume the y% for your business will always be as high as it is today, is what I have been trying to say.

#7

Ya I mean I think that as far as larger industry trends go, you will probably find out about them if you’re paying attention generally to the industry. Not necessarily to your competitors.

Like for example in my field, an example of a larger change that could impact (destroy?) email marketing was gmail’s promotion tab.

But things that are truly innovative and disruptive in a field you’ll find out about pretty easily I think.

Whereas for example I used to follow my competitors on twitter and sign up for their email lists so I could keep an eye on them.

I have since unfollowed all of them because it was just distracting.

(Sent from phone)

#8

I have a sudden urge to make that into a T-shirt. :smile:

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#9

Hahahahaha.

"I don’t have a SaaS.

AMA"

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