Bootstrap Your SaaS (The Fast Way)(bernhard.hauser.io)
bernhard.hauser.io
Bootstrap Your SaaS (The Fast Way)
https://bernhard.hauser.io/bootstrap-your-saas-the-fast-way/
15 comments
I'm always curious about affiliate programs. I can absolutely believe that someone who can generate $100k of sales for you may do so for 40% but I find it hard to believe that anyone will bring their one or two friends with the same problem as because they get $4 (though I'm happy to be proven wrong on this with data).
Finally, "just get 2000 users" seems like a bit of a hand wavy exercise. Getting even 5 paying customers is in my opinion, no small feat.
Finally, "just get 2000 users" seems like a bit of a hand wavy exercise. Getting even 5 paying customers is in my opinion, no small feat.
Affiliate programs are frequently described as “bring a friend” but this is not how they operate in practice. Entire industries have been built upon maximizing SEO on blogspam, and then driving the traffic through your affiliate links. Think “these are the top 5 best insurance companies” articles.
This strategy makes sense for a large TAM. But if you are attacking quite a small niche. You don’t want half your market on some grandfathered deal that doesn’t make any money. Maybe the niches I think about are too small.
Yep, good point. A considerably large TAM is definintely an important factor of this strategy.
For outsiders like me that didn’t understand this message at first glance, TAM means total addressable market. Basically the number of potential discrete customers of your product.
Learning that helped me understand this message and I think it’s a good point.
Learning that helped me understand this message and I think it’s a good point.
As a bootstrapped founder of a number of companies this financial model hurts my brain. This approach is still a venture type fast growth model with low margins since you're giving away much of the money to the channels and customers. Is there even much left for development?
70-80% commission to AppSumo and up to 40% to affiliates sounds crazy if you want to fund growth from customer revenues. Sure it works if you have venture backing but totally self funded?
70-80% commission to AppSumo and up to 40% to affiliates sounds crazy if you want to fund growth from customer revenues. Sure it works if you have venture backing but totally self funded?
I agree with you on the numbers game here, but what it provides quickly is validation.
Many founders build products and features in vacuum, not knowing whether they are relevant to any kind of customers.
This growth model is not a long-term strategy, but a form of letting people vote with their wallets to build a foundation to further improve from.
Many founders build products and features in vacuum, not knowing whether they are relevant to any kind of customers.
This growth model is not a long-term strategy, but a form of letting people vote with their wallets to build a foundation to further improve from.
Lifetime deals on AppSumo don’t seem to me like a silver bullet for growth. Considering products with free trials, or even those that start as free and continue with a free core, struggle with initial growth.
Lifetime deals are also only compatible with software products that have negligible costs.
Lifetime deals are also only compatible with software products that have negligible costs.
AppSumo users are typically the worst kinds of customer as well, speaking from past experience.
this is why the "bootstrap" world is filled with the same unimaginative products - SAAS starter kits, some "AI" stuff all fighting for the same small pie.
I'm gonna let you know on a secret that's not a secret.
if you bootsrap - you live in the world where you can charge <~$100 a month. the so called 'middle market' doesn't exist.
ideally your market exists within your domain knowledge - i.e you have an edge. not something easily discoverable by anyone. since competition drives profits to 0.
shut up and make money. then make noise when you're at such as stage people can't touch ya e.g the Basecamp guys.
I'm gonna let you know on a secret that's not a secret.
if you bootsrap - you live in the world where you can charge <~$100 a month. the so called 'middle market' doesn't exist.
ideally your market exists within your domain knowledge - i.e you have an edge. not something easily discoverable by anyone. since competition drives profits to 0.
shut up and make money. then make noise when you're at such as stage people can't touch ya e.g the Basecamp guys.
This might work for a (small?) subset of bootstrapped SaaS.
The LTD idea misses one point that could apply to a larger (most?) subset:
Let initial LTD customers be patrons that have insider view and an active role in the product development and roadmap.
Early adopters would love this opportunity, if they buy into your vision. Some might even perceive more value in the product influencer / insider role than the MVP itself, at first.
The LTD idea misses one point that could apply to a larger (most?) subset:
Let initial LTD customers be patrons that have insider view and an active role in the product development and roadmap.
Early adopters would love this opportunity, if they buy into your vision. Some might even perceive more value in the product influencer / insider role than the MVP itself, at first.
Love this. I agree, the more you can get evangelists to root for you and your product, the more valuable each LTD customer becomes.
I've experimented with this approach and here are my two cents. I've built an app meant to be "an advanced prompt editor" for working with LLMs (https://www.quartzite.ai in case anybody is curious).
I've seen that a lot of bootstrapped recommended starting with LTDs and I decided to try this approach. Sure, in the beginning, I got a bit of money, and surely it's easier to convince somebody to pay $50 once (i.e. LTD) compared to $5/month. So right in the first months, I've gotten approximately $1k/month with very little promotion, which is nice.
However, as the user count grew I also started to feel an increase of pressure. The cost of running my app is very low, so cost wasn't the issue, but I felt a bit like a fraud. What would happen if I decided to discontinue the product? Refunding 100 customers would have been painful, but still doable. However, as I kept increasing the user base, so were my concerns about how to handle a worst-case scenario.
Furthermore, offering an LTD for a product that still needs to grow means partially that you are making a promise about the product you want to build. What if you decided in the future you wanted to pivot? Sure, you can disregard your users who bought the LTD thinking they would get a certain product, while you decided to build a different one, but personally I didn't like that idea, and once again this increased my stress level.
So, all in all, I didn't like it too much and decided to switch to a subscription (although fairly low). Nowadays I feel much better with the overall revenue model. A user doesn't like the product? They are free to leave after one month, and nobody has different expectations about that. At the same time, I came to discover some additional benefits compared to an LTD:
- users are more engaged with your product. In a way, with a subscription, they are deciding every month whether your product makes sense for them, and they will be more vocal about what they need and don't, which is very useful feedback as a founder. Plus, churn data can tell you more accurately if you are improving your product or not.
- to my surprise, my conversion rate didn't change (it might even be slightly higher than with LTDs). My guess here is that buying a LTD still involves a bit of trust in the founder/company which, if you don't have a large following on social media, it might be difficult to get upfront. Overall this has been a painful lesson, as I realized that if I started with a subscription right from the beginning, I would have a much greater MRR by now.
- best of all, I see my product growing sustainably now. Every week/month is a little better, and I don't have to worry every month about how to reach a certain target revenue (of course, with LTDs you start from zero every month). Overall, I feel I'm building a product for the long run now and towards being a profitable business (still getting there).
So all in all, I don't know if I would recommend the same approach as the author describes. Sure, I've seen people executing it well and effectively bootstrapping their app in a short time, but my guess is that happens if you have a good base of followers and you can kickstart your marketing channels too. Also, if your product is sustainable as a one-time purchase (e.g. a desktop app, a content piece, etc.) then LTDs are definitely more attractive, but I don't see the point of trying to build a SaaS without having a feedback if your users are really willing to buy a subscription form you.
I've seen that a lot of bootstrapped recommended starting with LTDs and I decided to try this approach. Sure, in the beginning, I got a bit of money, and surely it's easier to convince somebody to pay $50 once (i.e. LTD) compared to $5/month. So right in the first months, I've gotten approximately $1k/month with very little promotion, which is nice.
However, as the user count grew I also started to feel an increase of pressure. The cost of running my app is very low, so cost wasn't the issue, but I felt a bit like a fraud. What would happen if I decided to discontinue the product? Refunding 100 customers would have been painful, but still doable. However, as I kept increasing the user base, so were my concerns about how to handle a worst-case scenario.
Furthermore, offering an LTD for a product that still needs to grow means partially that you are making a promise about the product you want to build. What if you decided in the future you wanted to pivot? Sure, you can disregard your users who bought the LTD thinking they would get a certain product, while you decided to build a different one, but personally I didn't like that idea, and once again this increased my stress level.
So, all in all, I didn't like it too much and decided to switch to a subscription (although fairly low). Nowadays I feel much better with the overall revenue model. A user doesn't like the product? They are free to leave after one month, and nobody has different expectations about that. At the same time, I came to discover some additional benefits compared to an LTD:
- users are more engaged with your product. In a way, with a subscription, they are deciding every month whether your product makes sense for them, and they will be more vocal about what they need and don't, which is very useful feedback as a founder. Plus, churn data can tell you more accurately if you are improving your product or not.
- to my surprise, my conversion rate didn't change (it might even be slightly higher than with LTDs). My guess here is that buying a LTD still involves a bit of trust in the founder/company which, if you don't have a large following on social media, it might be difficult to get upfront. Overall this has been a painful lesson, as I realized that if I started with a subscription right from the beginning, I would have a much greater MRR by now.
- best of all, I see my product growing sustainably now. Every week/month is a little better, and I don't have to worry every month about how to reach a certain target revenue (of course, with LTDs you start from zero every month). Overall, I feel I'm building a product for the long run now and towards being a profitable business (still getting there).
So all in all, I don't know if I would recommend the same approach as the author describes. Sure, I've seen people executing it well and effectively bootstrapping their app in a short time, but my guess is that happens if you have a good base of followers and you can kickstart your marketing channels too. Also, if your product is sustainable as a one-time purchase (e.g. a desktop app, a content piece, etc.) then LTDs are definitely more attractive, but I don't see the point of trying to build a SaaS without having a feedback if your users are really willing to buy a subscription form you.
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What we got out of it, however, is a ton reviews and engagement from paying users (before that, it took us 2 years to get to ~400 paying users and AppSumo got us to almost 3000 in a few weeks).
Launching on AppSumo is great. The whole experience is fantastic and their team is on point.
I just don't think it's worth it if you're only in it for the cash though. You need to consider the strain on systems, the additional costs and the delay in getting the commission.
Basically, you're opening a new restaurant and "GroupOn" is offering to send you 2,000 diners on opening day. You're going to have to order a ton of food, bring out more tables, hire a bunch of waiters. This opening day, if it's successful, can drain your entire funding for the restaurant. And then you have to wait 60 days + end-of-month to get paid the discounted rate from those diners (minus the platform's commission).
If you survive it, you get to have a successful restaurant with many happy diners talking about it.
It is worth it. But not for the money.