/
RSS Feed
How do you onboard a hire onto a codebase you built alone?
In this episode, Derrick Reimer joins Rob to tackle four listener questions. They cover hiring and onboarding your first developer as a bootstrapped founder, then move into the temptation to build features just because AI makes them cheap to ship, getting past social anxiety as a founder, and whether it’s worth trademarking your product name.
Topics we cover:
- (3:59) – How do you hire your first developer?
- (5:14) – Qualities to look for in a first developer hire
- (13:37) – Onboarding a new hire into your codebase with AI
- (16:49) – Reducing hiring risk: pairing, reliability, recruiters
- (22:50) – The temptation to build features just because AI makes it cheap
- (30:43) – Getting over social anxiety as a founder
- (35:25) – Is trademarking your product name worth it?
Links from the show:
- TinySummit | December 5–7, 2026 · JW Marriott, Cancun
- MicroConf US | April 18–20, 2027 · Austin, TX
- Partnerships: sponsors@microconf.com
- Idea to Traction: Stop Building SaaS Nobody Wants (book wait list)
- Rob Walling Newsletter
- Remote First Recruiting
- SavvyCal
- Derrick Reimer | LinkedIn
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
Subscribe & Review: iTunes | Spotify
Rob Walling: Welcome back to another episode of Startups for the Rest of Us. I’m Rob Walling, and in this episode I welcome Derrick Reimer back on the show, and we answer four listener questions. We spend a good chunk of time at the top of the show covering three or four questions around hiring your first developer as a bootstrapped founder. Then we dig into the pitfall of building features requested by customers just because they’re easy to build, because AI makes it easy, and the dangers of doing that. We talk about getting over social anxiety as a founder, because you have to learn to market, sell, and all that. And then at the end, we touch on trademarks. Hope you enjoy this episode. Before we dive in, if you are a founder doing more than a million in ARR, odds are pretty good that you have at least one decision, probably more, in front of you that really matters.
Things like: do you hire a sales rep, or do you hire another engineer? Maybe churn is creeping up. Do you rework your pricing? Do you rebuild onboarding? Do you take the enterprise deal with the custom SLA, or do you walk away? And then you realize there’s almost no one you can talk it through with. Your team’s too close to it. Your friends don’t get it. And so much of the advice online is for people ten steps beyond you, or people just getting started. So that’s exactly why we host Tiny Summit. It’s a small group of founders, all past a million in ARR, getting together for two and a half days in lovely Cancun, Mexico. It’s built around round tables and the kinds of conversations you can’t get anywhere else. It’s December 5th through the 7th of 2026, at one of the top resorts in Cancun.
Some of the folks in the room are part of our SaaS Institute coaching program, our year-round community for founders past a million. Ricardo Lasa of Clicken will be there [VERIFY: “Clicken” – unsure of spelling]. So will JD of Senior Place, Colin of Status Gater [VERIFY: unsure of spelling], Adam Macria of Judoscale [VERIFY: unsure of spelling], and Karen Delaney from Flat Plan [VERIFY: unsure of spelling]. If you want to get in a room with some incredible founders to solve your toughest problems, I hope you’ll join us, because I’m going to be there too. I think it’s going to be small, like fifteen to twenty founders, so it really is a premium retreat. You can get all the details and apply to attend at tinyseed.com/tinysummit. I do think it will sell out, and we are taking applications and being pretty critical about who we accept, so there is an application process I wanted to let you know about. And separately, if you have a product that you want to get in front of serious SaaS founders, we’re opening up sponsorships for MicroConf US in Austin, April 18th through the 20th.
Our last seven events have sold out, and this one will too. So you’re looking at a room full of, say, 250 to 275 bootstrapped founders with real businesses. About 32 to 35% of our attendees are doing at least $100,000 in MRR. Producer Ron is running partnerships this year, and there’s a great range of options, including cross-promotion here on the podcast. You can email him at sponsors@microconf.com. And with that, let’s welcome Derrick Reimer to the show.
Backed by popular demand, it’s Derrick Reimer. How you doing, man?
Derrick Reimer: I’m doing well. How are you?
Rob Walling: I’m good. How does it feel to be the guest that I chose to be on episode 850 of this very show?
Derrick Reimer: That is a nice round number.
Rob Walling: Is that an accolade for you? Yeah, good. I handpicked it because there’s a handful of guests people really, really dig, and they keep asking me to bring back on. You, of course, are one of those. Today we’re going to answer listener questions. We have some really good questions today, and I think we’re going to dig pretty deep into them. The first one is from Michael, and he’s asking about hiring his first developer.
Michael (Listener): Hi Rob, long-time listener here. Thank you so much for your podcast. I founded an accounting SaaS for Swiss freelancers four years ago, and I’m currently at around $10.4K MRR, and I’m thinking about hiring my first developer, and I have so many questions around that. So I thought I’d ask you: first of all, what qualities would you look for in the first developer you hire, so that person can actually take things off my plate, free up my time, and hopefully take ownership of the codebase in the long run? Also, how do you effectively onboard someone onto a codebase you’ve been the sole contributor to? Would you try to create some sort of documentation, or just dive into it and try to teach them on the go? And also, do you have any other tips on how I can de-risk choosing the wrong person and wasting time and money, and making the onboarding process as smooth as possible, so the person can get effective as soon as possible?
Thank you so much for any input. And again, thank you so much for your show. I’ve been really enjoying it for the past four years. Every Tuesday it’s been a big part of my life. Thanks.
Rob Walling: So Derrick, I’m going to kick this to you first. He has several questions, so let’s tackle first: what qualities would you look for in the first developer you hire, so that person can actually take things off your plate, free up your time, and hopefully take ownership of the codebase in the long run?
Derrick Reimer: As I was thinking about this question, I pulled up my most recent job description from when I was hiring my latest full-stack dev, who replaced my first developer for SavvyCal.
Rob Walling: Right, so you’ve kind of done that twice, and then we did it with Drip. So you’ve literally done this three times with SaaS apps. That’s why it’s a good question for both of us.
Derrick Reimer: Yeah, totally. So running through the list of things I was listing, because I sort of use the job description as my spec for the things I’m going to be evaluating against: I guess the first piece is experience. Obviously, if you’re a technical founder handing off control of the codebase, or part of the control of the codebase, to somebody, you want them to have a decent amount of experience, budget permitting. If you’re super early stage, maybe you can’t afford that. With Drip, we ended up training developers because we were budget constrained.
Rob Walling: That’s something I would recommend avoiding, if you can.
Derrick Reimer: Yeah. So I was looking for someone with a minimum of five years of experience as a software developer. It’s kind of an arbitrary number, but senior level, and someone with a full-stack skill set. This was really trying to hone in on someone who is a generalist, who’s comfortable conceptualizing a feature from front end to back end, and not somebody who’s a specialist. When we were later stage at Drip, we started hiring backend engineers and JavaScript developers, people who were hyper-specific in their skill set and could really own part of the stack, but that’s going to work against you if you’re trying to offload any and all development tasks to a number two. I put “thrives working autonomously,” because I think that’s interesting. My previous podcast co-host, Ben Orenstein, founder of Tuple, a pair programming app: a lot of developers enjoy pair programming regularly.
Some people are accustomed to doing it all the time, or just constantly collaborating on features. As the founder, you probably don’t have time to be pair programming all the time on stuff, and bringing in a lone engineer, not everyone is cut out for that flow of working. Some people just really thrive on a team and don’t work so well independently. So I think that’s another important one, assuming you’re just hiring one developer to start. And then, confidence to ship. What I’m trying to get at with this is sort of a tamed perfectionism. You want someone who pays attention to the details and cares a lot about quality, but is also willing to accept better done than perfect, and just get stuff shipped. On larger teams, where there’s maybe less of a sense of urgency or just more hands involved, you can spend weeks on one small task, making it perfect and making sure it checks all the boxes.
When you’re a tiny, startup-phase company, you don’t really have the luxury of being able to do that. So someone who’s very biased toward action.
Rob Walling: I think the other thing I would add, tell me if you think this is still accurate, but there’s something to me about general agreement on the ethos of how you, as the founder, code. Back in the day, you may have been doing TDD, whether you’re test-first or whatever, we wanted tests in the codebase. There were folks who were like, “Nah, I don’t believe in that, don’t want to do that.” I would not have hired them if they weren’t willing to do that. Tests are just one example, but there’s also tabs versus spaces. There are a bunch of things, right? For some people, they’re just super flexible, and they’re willing to go, “Oh, you want tests? Great, I’ll do it. You want tabs? Great, I’ll do it, since that’s the right way to do it anyway.” You didn’t have a reaction to that?
Is that not a thing anymore? Because I thought you were spaces.
Derrick Reimer: Oh, I use spaces. Yeah.
Rob Walling: Yeah, spaces all the way. I just said tabs is the right way to do it, and you had no reaction. You’re not even listening to me, you’re backgrounding me.
I’m nodding along, waiting for the reaction, but whatever. Tabs, spaces, and tests are just examples of this, but there’s something about being in alignment, and having some flexibility and willingness to change. Let’s be honest: if you hire a senior first developer, you’re working with them alongside Cursor, Claude Code, Windsurf, all these tools. I know Windsurf’s old news now, but when these tools came out, there were devs out there who refused to use them. So what do you do then? Do you want that person on your team? There’s some flexibility and willingness needed. It’s fine to have opinions, because they should have opinions if they’re senior, but they need to be willing to go with the flow, let you make the final call. There’s a collaborative nature to it. Do you feel like that’s something you look for?
Derrick Reimer: Yes, for sure. And I think it can be hard to pin down exactly, because on the one hand, you don’t want someone who doesn’t have any opinions or taste about things. But on the flip side, I’ve definitely spoken to developers before who are so opinionated and so strong-willed in their convictions that they get hung up on it. So I think this is something that would come out even more if you did a test project with someone during the hiring process, like, “Let’s work on something together for an afternoon or a few hours,” and see how they react to encountering something that isn’t done the way they would’ve done it, but is the norm established in the codebase. Are they willing to go along with those norms, and maybe recommend shifting pragmatically in a new direction if something is truly better, while also recognizing you can’t stop the world and rewrite the codebase, or fight against established conventions in a way that makes it confusing for anyone coming into the codebase?
So yeah, that’s a tricky one. What you don’t want is to find yourself arguing about small things all the time because opinions are too strong.
Rob Walling: You know the person, we all do, we’ve worked with them, and a lot are developers, some are not, there are people in other parts of the company too. The other one I thought of, whether they’re a developer or not: when hiring at even TinySeed or MicroConf these days, it’s almost a hard pass for me if they’ve only worked at big companies, if they’ve never worked at, let’s say, a sub-50-person company, because TinySeed and MicroConf are 10 people, and in this case we’re talking about a two or three person company. It’d be great if they worked at a 10 or 20 person company, but if someone’s only worked at, say, a Fortune 500 or Fortune 1000, the change of mindset is so dramatic, it’s such a big deal, that it’s something I absolutely screen for. Do you ask folks about that?
Derrick Reimer: Oh, for sure. Similar criteria, where I’m just not willing to entertain it if someone exclusively has big company experience, like you said, because dev teams operate so differently. Even watching Drip grow to a team of, what was it, 20-plus when we left?
Rob Walling: 20, 25, somewhere in there. That was just the engineering and product team.
Derrick Reimer: Yep. Even watching how work gets organized, the pace people work at, it morphs into a different thing. That’s not necessarily a bad experience to have, but exclusively having that can be a culture shock. Some people have a harder time adapting to it, and it can be a lot to reorient someone toward the smaller company mindset, and maybe you don’t have the luxury to do that if you’re hiring your first dev.
Rob Walling: I remember hiring someone, and on their first day they were like, “So what’s the process for da da da?” I was like, “There isn’t one. You ask me. Do you have a form to fill out because you want a new mouse and keyboard?” And I’m like, “No, just buy it on Amazon, tell me the total on PayPal, I’ll Venmo you out of the company account, or come to my computer and put it on the company card.” That’s the process, it’s just a different mindset. So his next question was: how do you effectively onboard someone into a codebase you’ve been the sole contributor to? Do you try to create documentation, or dive in and teach them on the go? How have you handled this? And I’m sure this has changed over the years with AI and all that.
Derrick Reimer: Yeah, I think this has changed almost completely from my first iteration of hiring, pre-AI versus post-AI. Before AI, I recall drafting some documents giving a high-level lay of the land of the codebase, like, these are the major subsystems. I don’t think I put too much in writing, though. It was more like on calls, walking through the codebase together, showing them in the editor where things are and how they fit together at a high level. But these days that’s squarely in the sweet spot of an LLM. It’s so much easier in general to get onboarded into a codebase, because you can fire up an agent and start asking questions about it.
Rob Walling: I was going to ask that, because I haven’t done much with it. I’ve used Claude Code for some small projects, like indexing podcast episodes, but I haven’t tried this. You can just ask it what the major subsystems are? That is incredible.
Derrick Reimer: Yeah.
Rob Walling: It’s like we live in the future. All right, so at this point you’d just ask Claude Code, or your coding tool, and obviously give it an overview. We used to pull people in for an hour at the whiteboard: “Here’s some boxes, here’s some stuff, here’s the general orientation, here’s the servers,” whatever.
Derrick Reimer: Yeah, and you’ll get a kick out of this too. It’ll of course read Git history, so it can look at a file and know this was introduced by Derrick in 2023, read the Git commit comments and the surrounding pull request it was attached to, and read the surrounding tickets from around that time. Its ability to gather context is just insane. It’ll say something like, “This was put in during 2023 as part of a work stream to optimize this part of the slot calculation engine.”
Rob Walling: Right, because that’s always the thing, we’d be like, “Why does this code operate this way?” And we’d say, “Nobody remembers,” or we’d have to dig back through notes. Holy crap, that’s amazing. Remember when you were starting to code Drip, we had a conversation, and I don’t know how we got here, but it was about adding code comments. You used to add comments to code to say what it does, and you said, “I’m not going to do that, because it’s Ruby on Rails, and it’s supposed to be written so simply that you can read it, and comments go out of date.” We had this whole conversation, and I said, “Fine, I believe you.” And with tests, it’s less brittle anyway. Now it would be laughable to write comments in your code.
There’s just no reason to.
Derrick Reimer: Yeah, but it’s funny, even these days, just writing a commit message by hand feels archaic, because these days you’re building with an agent generally, and the agent has so much context, it can summarize so much better what we did and why we did it. It’s crazy how much better the commit history has gotten at capturing context.
Rob Walling: And his last question was, do you have any other tips on how I can minimize the risk of choosing the wrong person, wasting time and money, and making the onboarding process as smooth as possible? I feel like those are two really separate questions. We kind of just answered the onboarding one. How about this: would you pair program an hour or two a day for the first week or two with a new hire?
Derrick Reimer: Yeah, I’ve always done that, especially early on. That’s your time to really infuse the ethos of what we do and how we do it, getting some of those particular patterns we like to follow infused into that person, which is really crucial early on. Some of that can come from an AI agent reading the codebase and trying to discern that, but there’s also the element of building rapport, building “here’s how we work together on things, here’s how we disagree and resolve those disagreements.” There’s a lot of human-level collaboration value in spending time together pairing. So yeah, I’ve always spent a couple of weeks, an hour or two each day, pair programming.
Rob Walling: And in terms of not choosing the wrong person, this is the big risk of hiring anybody, and it’s tough. A couple things come to mind. When I’m looking to hire developers specifically, I think about technical acumen, interpersonal dynamics, which includes, do we get along, are they flexible in their thinking, are they a good team player, there’s a ton of stuff wrapped up in that one. Then the third is reliability, which is true for any employee: do they ship stuff on time, do they do what they say they’re going to do, do they show up to work and not call in sick all the time? There’s a consistency and reliability piece, because I’ve had folks who are great technically in different roles, whether dev, copywriter, or marketer, great technically, great interpersonally, and super flaky.
So you need all three. The one you can’t test is the flakiness, you just have to work with someone, whether that’s a probationary period or whatever. The other two you can test in conversations and pair programming. When you and I started hiring engineers for Drip, remember it was a take-home project? Now that’s laughable, because they’ll do it with AI, which they should, but you can’t rely on that. We switched to pair programming once we really started hiring engineers, because we found it was so much more productive, not just to see the results, but to see how they thought, to see what it was like when they were challenged. You’d usually challenge them with one thing, like, “I’m going to throw them for a loop here and tell them to suddenly use spaces instead of tabs, and see if they completely go postal.”
So those are my thoughts. We’d have one or two conversations, usually two, after an initial HR screening. Then we’d bring them in person, because we were hiring in Minneapolis, but now you do it remote with Tuple or something for, what, two hours of pairing? I don’t remember.
Derrick Reimer: Yeah, something like that. I ended up going maybe three hours on my last one. It went really fast in my recollection, I thought we were going to make so much more progress, and we didn’t make a ton of progress on what we were doing, but it was still a high-value exercise.
Rob Walling: Yeah, here’s the thing. By this point I’m basically like, “Yes, they’ve said all the right things, I like this person, I think they’ll be a good fit for the team, as long as they’re a good coder, they’re in.” This is the last step for me before hiring someone, because you might think two to three hours of pairing, wow, that’s a long time. But most of the time, not all, actually I remember one or two you paired with and you were just like, “No,” and that was great, it saved us a ton of time. But most of the time, by the time they got there, we ended up hiring them.
Derrick Reimer: Yeah, I’ll say using a recruiter was super helpful on this last round of hiring, because ideally you’re promoting it widely to get it in front of a good number of people so the right fit can emerge, but then you have so many applications to wade through, so much sifting and initial screening.
Rob Walling: Especially with AI now, generating applications and all that. I often recommend Remote First Recruiting, Dan and Ian’s recruiting service, I think it’s a flat fee, and a lot of TinySeed companies use them. There are other options out there. I’m curious who you used.
Derrick Reimer: I used them. Yep.
Rob Walling: You used them, okay great. So folks know, they hire around the world, they hire developers, they hire any role at a SaaS company, customer success, sales, marketers, freelancers, all kinds of stuff. So, Remote First Recruiting, if you’re interested. That’s the end of the questions for Michael. Thanks for sending that in, Michael. If you have a question for the show you’d like myself, Derrick, or another guest to answer, head to startupsfortherestofus.com, click “Ask a Question” in the top nav, and that takes you to our video ask. Now, Derrick, have you clicked “Ask a Question” and watched the fancy video I recorded of myself in my very living room, where you eat pizza every other week before D&D?
Derrick Reimer: I have not. No.
Rob Walling: Oh, well, you need to, because it’s cool, it’s just me talking to a camera. I had the same video of myself in a baseball hat, unshaven, no facial hair, that I recorded in 2018, up until about three months ago. I was like, “Ron, we have to fix this, this is catastrophic.” So I recorded a new one. It’s not really that great, nor worth watching, but I wanted to ask. My next question comes from my email list, robwalling.com/subscribe, if you want to receive an essay every week or two. I’m going to keep this anonymous, because I sent an email and often people reply with an anecdote or story about what they’ve done related to it. In this case, the essay was “Why You Shouldn’t Build Everything Customers Ask For.” I was talking about weighing.
It’s actually a conversation you and I had on the show, about product decisions, when do you decide to build something, when do you decide not to. This person responded and said, “I’m normally pretty good at saying no, but I built a feature for a new client recently that took me a lot longer than I thought it would, even with my new AI workflow. It touches a lot of other code and will add a lot of overhead to maintain because of that. That sucks. I like the feature, but it’s quite complicated, and I’m wondering how many customers will get their heads around it well enough to want to use it. Previously I probably would’ve just said no, but I think AI has made me a little overconfident about how much easier it is to write and maintain code now.”
“We’ll see what happens.” I wanted to bring this up because I bet there are people in the audience who’ve done this, and I’m wondering if you’ve made this mistake, and if not, how you’ve kept yourself from making it, because I could see doing this myself.
Derrick Reimer: Oh yeah, I’m nodding along strongly, because I’ve been trying to reflect. My job has completely changed on the product side over the last year, and one of the things that’s changed is how I think about features, how I think about effort level and how much time and money it’s going to take to implement something. The economics have radically changed in many respects. I’ve found it a struggle at times to evaluate whether something is worthwhile to build, because so many things feel so much cheaper now to build. There’s definitely this vibe going on right now, I don’t know if you’ve seen the DHH posts about his operating system on Twitter, where he’s like, “We can fix everything.” That’s sort of his mantra right now, very high on AI productivity, like every problem is solvable.
Don’t worry, this will be the greatest thing for everybody, is sort of the vibe. I think a lot of people are latching onto that, feeling like we can conquer any task now, therefore make every single customer happy. I think that’s still a fallacy. But for sure I’ve felt the temptation. Thinking back over the last few months, trying to come up with an example of me falling into this trap, there was one I could think of: I was talking to a customer, a decent-sized customer for me, who had a somewhat complex, nuanced HubSpot integration they were trying to get working. SavvyCal already integrates with HubSpot, we have a basic integration that matches other players, where you can sync to contacts in HubSpot and record the meeting when someone books.
Or record an entry on the timeline for that contact when they book a meeting. So it’s kind of a basic sync between the two systems. This customer wanted deal creation, and some logic around when someone books through one of 40 different links, it should create a deal and attach it to the right party, and make sure the deal isn’t duplicated if the person books with someone else. There was some complex, nuanced logic in there. I did see it as a potential opportunity to have an even more powerful HubSpot integration we could bill as a differentiator. If you’re doing anything complex with a sales workflow involving HubSpot, SavvyCal could one-up everyone else, potentially. I went so far as to spend a session with an agent mapping out what this would look like if we expanded our integration.
That was a helpful exercise, because on the one hand, yes, this is all doable, an agent could do all the code, and it would take maybe an afternoon plus testing. But going through that exercise made it clear that this was going to radically expand this integration. We’d be calling the API in a lot more ways, and have to handle all those failure modes. Anytime you’re dealing with external integrations, it’s always: what happens if the HTTP request fails? Do you alert? Do you retry? How often? What happens if you ultimately can’t make the call? There are all these things to consider. Sure, agents can work on solutions for all of that, but it’s still radically expanding the surface area of what your product has to do, and you have to maintain all of it.
So ultimately I steered this customer toward Zapier, because you can do all this through Zapier, like you’ve been able to for years, and left it as, maybe if we hear enough demand for this kind of thing, we now have a sketch for how we might build it out. What I found helpful was going through the exercise, because it didn’t actually take that much time to see what this would look like concretely in code.
Rob Walling: Nice, so you caught yourself. I don’t have anything to add, it was a genuine question, since I’m not building a software product day to day, I wanted to hear from someone with boots on the ground.
Derrick Reimer: I’m curious what your thoughts are, to take it from a different angle. I do see a trend toward software products getting more ambitious about what they take on, because it’s so much easier to build. Companies changing their strategy, saying, “We’re going to be more ambitious and try to do more things deliberately.” I’m curious what you think of that trend. Do you think it’s a good thing? Necessary?
Rob Walling: I think it is for the company. If we were running Drip today, would we want to add big subsystems, an e-commerce thing, or an affiliate system, or whatever else that would have been so brutal to build back in the day? There were some, I’ll say, crazy requests we were never going to build, because it would take too much time. CRM was one we frequently got, and we lost some deals to HubSpot because they had the CRM plus the email marketing. For many companies it’s probably the right move. For Drip, if we could’ve built that CRM, remember we had resistance to it, because I was like, “It’s going to take months and months, do we want to focus there?” But if we could’ve built it in a fraction of the time, I think it would have been good for the business.
Now, wouldn’t all our competitors maybe have built it too? So there’s a question of whether it would’ve actually gotten us anywhere. I don’t know. I think the biggest thing, like anything, is knowing your customers, knowing your market, and knowing if it’s actually going to move the needle, or if it’s just throwing a bunch of all-in-one stuff in there and making the software worthless. It depends exactly on what the ambition is, but for most people, having more functionality, especially if you have less technical users who don’t want to change things, don’t want Make or Zapier, and just want to get rid of four tools and do it all in one, I get it. If that’s your customer base, you can chew up more of the space, as long as all the other companies aren’t doing the exact same thing, which maybe they will be.
Derrick Reimer: Or if they are, it might gradually become table stakes for someone in your market too. Now you’re the only one who doesn’t have those features.
Rob Walling: Yeah, it’s tough. That’s a good question. The next question is about social anxiety, and I mentioned this in one of my emails too. Someone responded and said, “I’m curious about the anxiety element you mentioned. I’m 29, I’m a software engineer, and I love building my own projects, but I also have social anxiety, which makes customer interviews, marketing, and sales difficult. Obviously that stuff is all absolutely crucial as a founder, which it is, I chuckle because it is, how did you turn your anxiety around?” I’ll go first on this one. For me, it was practice, it just gets better the more you do it. The anxiety I had when I was shipping my first blog post, or recording my first podcast episode, was terrifying. The first time I got on stage I just froze, I was so scared. Now I get on stage and it’s like the 50th or 100th time, probably, at MicroConf events.
I just had to do it over and over, practice. That’s easier said than done, but it’s a thing. Some people take beta blockers, have you heard of this? It’s a pill that can help reduce, I never did that, I probably should have at a certain point. You don’t want to do it every day, at every sales call, but it can help for a bit, I think. The other thing I’ve seen, other suggestions: there was a founder we backed at TinySeed who had real social anxiety, and they’d have someone else join them on calls, someone from their team, and say, “This is a sales call, I’m going to be stressed, I want you to get on and be my wing person so we can do it.” Now, is it expensive, is it a bad use of resources? Maybe. But do you get better at it, and at a certain point not need them? Maybe.
The other thing I could imagine, if it’s really bad, is trying to get a therapist, a book, or a course on it. It depends on whether you learn from books and courses, I do, not everyone does, and I’ve definitely learned from therapists. If I had really bad social anxiety, I’d try to get to the root of it, I bet there’s a root cause, something like, “Oh, it’s from this childhood belief or experience that was really messed up, and this is how everything flows from that.” You can get over it through repetition and numbing yourself to it, in a good way, or through more pointed treatment.
That’s what I would say. Do you have any other thoughts to add?
Derrick Reimer: Yeah, that’s pretty much in line with where I was headed. I’m a naturally reserved, introverted person, so sales calls don’t come naturally to me. I get very in my head about it. If I think about where that anxiety comes from, oftentimes it’s fear of sounding stupid, or messing up, or saying something that ruins my chances of closing a deal. But a lot of that ultimately comes from lack of experience, and there’s a hesitancy to do it because of that lack of experience. Part of it is just getting started and forcing yourself to get the reps in, knowing it’s going to suck until you start to build confidence. The more confidence you build, the less anxiety you feel, because you’ve seen some things, you know how to deal with certain situations.
Specifically on the sales call front, something I’ve been doing, and I’m in general a little skeptical to offer this kind of advice, leaning on an LLM in this way, because I don’t think LLMs are great therapists, I think they reflect back what you want to hear, which is often not what you need to hear. There’s still definitely a place for seeking real advice from a mental health professional for real issues of that nature. But specifically around coaching yourself, or figuring out how to improve sales call performance, I’ve found it super helpful to use a call recorder when I’m doing one, then feed it into Claude or your favorite agent of choice, and ask for objective feedback: what went well, what didn’t go well, what could I do better? They’re actually pretty good at identifying, “You spoke too much,” or “You didn’t speak enough,” or “You should have spent more time on this area.”
Just getting that contextualized advice or feedback about how the call went, when a lot of it is basically reflecting back things where, yeah, if I think about it, that makes a lot of sense, but sometimes it’s hard to evaluate your own performance when you have all this self-doubt wrapped up in it. Getting hyper-contextualized feedback has been super helpful for me in gaining confidence more quickly, I’d say.
Rob Walling: Yeah, that’s great, really good advice. Thanks for that question, hope it was helpful. Our last question of the day is from New Zealand.
Aaron (Listener): Hey Rob, Aaron here from New Zealand. Love the podcast. I’m in a trades business, and I’ve built a pretty awesome trade-specific CRM for myself. It started off as a takeoff and estimating tool, and it morphed into a pretty awesome CRM. My question is around trademarking. I think copyright, from a bit of research, is automatic, but a trademark is quite costly. I’ve got a pretty cool name for the CRM I’ve built, and I was wondering your thoughts on trademarking. Is it worth the big investment upfront, to do it now before somebody sees my pretty cool idea and tries to steal the name? Thanks, mate.
Rob Walling: All right, Derrick, there’s an interesting thing here. Number one, neither of us is a lawyer, so no one should take our legal advice, but we do have thoughts as multi-decade software entrepreneurs. The other interesting thing is, I went to Claude and asked about US trademark law and New Zealand trademark law, and they’re different. That’s a whole interesting thing. But I’ll ask, how many trademarks have you filed for your company names, product names?
Derrick Reimer: I think I’ve attempted to file one, and it got rejected, and I didn’t take it any further.
Rob Walling: Yep, I’ve had that happen a few times. Tried to trademark Drip, and it was like, nope, prior art, too generic, all that. We did get, I think, the trademark for MicroConf and Startups for the Rest of Us. But I’ve tried to file other trademarks and they’ve all gotten rejected. So, in general, here’s the thing: in the US, if you have a unique name, at least the way Claude describes it, you have kind of a use defense, in essence, that if you can prove you used it, and someone later tries to trademark it, you can swoop in, but it’s more expensive and a weaker case than if you’d just filed it. So the question is filing fees, I think in the US it’s $350, somewhere around there. If you use a lawyer, it tends to be one to two thousand dollars, I think, when I’ve done it, maybe $1,500.
And that’s if it’s pretty easy, it depends on how many classes you’re applying for, and so on. So the question is whether that’s worth it to you in the US. Now, in New Zealand, again, according to Claude, but I’m using Opus, Opus 5 high thinking, so I think it’s probably relatively accurate, it specifically said this isn’t legal advice, double-check everything, it said that in Claude. In New Zealand, that use defense doesn’t exist. It’s literally the first person who files, even if you’ve been using it in trade for years, someone else can come along and file it. Crazy, huh? I mean, that sounds not great. I like the idea of copyright by default, I don’t have to submit a book when I publish it, because I put “copyright, all rights reserved,” and that’s when it’s copyrighted.
Now, if I file it with the copyright office, or the PTO, the patent and trademark office, it’s a little better, definitely stronger, but that’s kind of brutal. To me, there’s more reason to file, honestly. In New Zealand, again, looking it up quickly, it looks like if you do it yourself it’s $150 to $200, and if you use a lawyer, it’s about the same, like $500 to $1,500. So I don’t know, that’s it, I can’t make a recommendation on this one, because it really comes down to risk tolerance. The odds of something happening are low, but if it does, that would suck. If someone else trademarked it in New Zealand and you just lost it like that, I’d maybe lean toward doing it, but I’d try to figure out, can I have an AI agent [VERIFY: “Manis” – possibly refers to the AI agent “Manus”] fill out the form?
Honestly, or can I have AI fill it out now that we’re at a place where, I don’t know if I need an attorney, I’ve never tried to do it without one, I’ve always just hired someone, thrown $500 to $1,000 at it, whatever. I’m wondering if it’s less expensive if you could get AI to do it. What do you think?
Derrick Reimer: Yeah, and I think, I’ve tried to use, I don’t know if it’s LegalZoom or Rocket Lawyer or something like that, where it’s kind of a, where you’re not really hiring a lawyer directly, it’s a legal service that gives you a template, and you fill the stuff in.
Rob Walling: Trademark Engine is one, yeah.
Derrick Reimer: Yeah. Maybe I got rejected in the past because I didn’t fill something in quite right. I feel like an LLM would probably have a better shot than me, since I definitely don’t have a lawyer here, at getting the stuff put in the right way, so the patent office likes it. So yeah, I think it’s worth a shot. These days, it’s easy to have the extreme lean-bootstrapper mindset of, “No, it’s not even worth $300 or whatever.” But especially with the reality of New Zealand, if that were true here, I think I’d be more apt to push for it.
Rob Walling: Me as well. And I get these questions, like, should I file an LLC or be a sole proprietorship, when do I do that, when do I form the company, sometimes it’s a liability thing, sometimes it’s, should I have E&O insurance and general liability, and all kinds of other insurance. And then there’s trademarks, copyright, and IP protection. If you talk to an attorney, they’ll tell you to do all of them ten steps before you even think you have a business, do all the things. The insurance person says do all the things too, because bad things can happen, and they’ve seen bad things happen. Those are all true, but you’re also an entrepreneur, and you don’t have much money, so don’t overdo this. That’s the balance we’re trying to strike here.
Cool. Well, Mr. Derrick Reimer, thanks so much for joining me on the show today. You’re Derrick Reimer on X/Twitter, and savvycal.com, if folks want to use the best scheduling and appointment booking tool on the internet, not just meetings, but appointments too. You do that now, right? So people know what appointments are, we’re talking medical offices, and who else schedules appointments?
Derrick Reimer: Lawyers. Yeah, we’ve actually been mostly focused on telemedicine, it’s sort of become our niche. Especially if you’re building custom flows for a telemedicine app, where you don’t want to rely on your EHR, which is super slow and clunky and doesn’t resolve slots very well. SavvyCal can sit in between and unblock your sales funnel for new patients.
Rob Walling: Yeah, that makes a lot of sense. At first, when you told me meetings, which is what we all use SavvyCal for, and then appointments as a different thing, I was like, “Aren’t they the same?” And you’re like, “Oh, my sweet summer child, you have no idea.” Appointments are complicated, there are workflows involved, maybe multiple.
Derrick Reimer: Centralized management, office management, things like that. Yeah.
Rob Walling: Yeah, so that’s it. So, savvycal.com, if you want to check that out. Thanks again for coming on the show.
Derrick Reimer: Yeah, thanks for having me.
Rob Walling: Thanks again to Derrick for coming on the show, and donating an hour of his time to help our worldwide community of tens of thousands of bootstrapped SaaS founders. And thank you for listening this week and every week. As I mentioned, this is episode 850, and sometimes I think, how did I get here? The way I got here was by recording every week since 2010, just showing up. I think that’s probably the way you build anything interesting, doing it over a long period of time, showing up every day, every week, every month, pushing the ball forward, whether you’re writing books, shipping software, shipping a podcast, or something else. Thanks for joining me this week and every week. This is Rob Walling, signing off from episode 850.
Things like: do you hire a sales rep, or do you hire another engineer? Maybe churn is creeping up. Do you rework your pricing? Do you rebuild onboarding? Do you take the enterprise deal with the custom SLA, or do you walk away? And then you realize there’s almost no one you can talk it through with. Your team’s too close to it. Your friends don’t get it. And so much of the advice online is for people ten steps beyond you, or people just getting started. So that’s exactly why we host Tiny Summit. It’s a small group of founders, all past a million in ARR, getting together for two and a half days in lovely Cancun, Mexico. It’s built around round tables and the kinds of conversations you can’t get anywhere else. It’s December 5th through the 7th of 2026, at one of the top resorts in Cancun.
Some of the folks in the room are part of our SaaS Institute coaching program, our year-round community for founders past a million. Ricardo Lasa of Clicken will be there [VERIFY: “Clicken” – unsure of spelling]. So will JD of Senior Place, Colin of Status Gater [VERIFY: unsure of spelling], Adam Macria of Judoscale [VERIFY: unsure of spelling], and Karen Delaney from Flat Plan [VERIFY: unsure of spelling]. If you want to get in a room with some incredible founders to solve your toughest problems, I hope you’ll join us, because I’m going to be there too. I think it’s going to be small, like fifteen to twenty founders, so it really is a premium retreat. You can get all the details and apply to attend at tinyseed.com/tinysummit. I do think it will sell out, and we are taking applications and being pretty critical about who we accept, so there is an application process I wanted to let you know about. And separately, if you have a product that you want to get in front of serious SaaS founders, we’re opening up sponsorships for MicroConf US in Austin, April 18th through the 20th.
Our last seven events have sold out, and this one will too. So you’re looking at a room full of, say, 250 to 275 bootstrapped founders with real businesses. About 32 to 35% of our attendees are doing at least $100,000 in MRR. Producer Ron is running partnerships this year, and there’s a great range of options, including cross-promotion here on the podcast. You can email him at sponsors@microconf.com. And with that, let’s welcome Derrick Reimer to the show.
Backed by popular demand, it’s Derrick Reimer. How you doing, man?
Derrick Reimer: I’m doing well. How are you?
Rob Walling: I’m good. How does it feel to be the guest that I chose to be on episode 850 of this very show?
Derrick Reimer: That is a nice round number.
Rob Walling: Is that an accolade for you? Yeah, good. I handpicked it because there’s a handful of guests people really, really dig, and they keep asking me to bring back on. You, of course, are one of those. Today we’re going to answer listener questions. We have some really good questions today, and I think we’re going to dig pretty deep into them. The first one is from Michael, and he’s asking about hiring his first developer.
Michael (Listener): Hi Rob, long-time listener here. Thank you so much for your podcast. I founded an accounting SaaS for Swiss freelancers four years ago, and I’m currently at around $10.4K MRR, and I’m thinking about hiring my first developer, and I have so many questions around that. So I thought I’d ask you: first of all, what qualities would you look for in the first developer you hire, so that person can actually take things off my plate, free up my time, and hopefully take ownership of the codebase in the long run? Also, how do you effectively onboard someone onto a codebase you’ve been the sole contributor to? Would you try to create some sort of documentation, or just dive into it and try to teach them on the go? And also, do you have any other tips on how I can de-risk choosing the wrong person and wasting time and money, and making the onboarding process as smooth as possible, so the person can get effective as soon as possible?
Thank you so much for any input. And again, thank you so much for your show. I’ve been really enjoying it for the past four years. Every Tuesday it’s been a big part of my life. Thanks.
Rob Walling: So Derrick, I’m going to kick this to you first. He has several questions, so let’s tackle first: what qualities would you look for in the first developer you hire, so that person can actually take things off your plate, free up your time, and hopefully take ownership of the codebase in the long run?
Derrick Reimer: As I was thinking about this question, I pulled up my most recent job description from when I was hiring my latest full-stack dev, who replaced my first developer for SavvyCal.
Rob Walling: Right, so you’ve kind of done that twice, and then we did it with Drip. So you’ve literally done this three times with SaaS apps. That’s why it’s a good question for both of us.
Derrick Reimer: Yeah, totally. So running through the list of things I was listing, because I sort of use the job description as my spec for the things I’m going to be evaluating against: I guess the first piece is experience. Obviously, if you’re a technical founder handing off control of the codebase, or part of the control of the codebase, to somebody, you want them to have a decent amount of experience, budget permitting. If you’re super early stage, maybe you can’t afford that. With Drip, we ended up training developers because we were budget constrained.
Rob Walling: That’s something I would recommend avoiding, if you can.
Derrick Reimer: Yeah. So I was looking for someone with a minimum of five years of experience as a software developer. It’s kind of an arbitrary number, but senior level, and someone with a full-stack skill set. This was really trying to hone in on someone who is a generalist, who’s comfortable conceptualizing a feature from front end to back end, and not somebody who’s a specialist. When we were later stage at Drip, we started hiring backend engineers and JavaScript developers, people who were hyper-specific in their skill set and could really own part of the stack, but that’s going to work against you if you’re trying to offload any and all development tasks to a number two. I put “thrives working autonomously,” because I think that’s interesting. My previous podcast co-host, Ben Orenstein, founder of Tuple, a pair programming app: a lot of developers enjoy pair programming regularly.
Some people are accustomed to doing it all the time, or just constantly collaborating on features. As the founder, you probably don’t have time to be pair programming all the time on stuff, and bringing in a lone engineer, not everyone is cut out for that flow of working. Some people just really thrive on a team and don’t work so well independently. So I think that’s another important one, assuming you’re just hiring one developer to start. And then, confidence to ship. What I’m trying to get at with this is sort of a tamed perfectionism. You want someone who pays attention to the details and cares a lot about quality, but is also willing to accept better done than perfect, and just get stuff shipped. On larger teams, where there’s maybe less of a sense of urgency or just more hands involved, you can spend weeks on one small task, making it perfect and making sure it checks all the boxes.
When you’re a tiny, startup-phase company, you don’t really have the luxury of being able to do that. So someone who’s very biased toward action.
Rob Walling: I think the other thing I would add, tell me if you think this is still accurate, but there’s something to me about general agreement on the ethos of how you, as the founder, code. Back in the day, you may have been doing TDD, whether you’re test-first or whatever, we wanted tests in the codebase. There were folks who were like, “Nah, I don’t believe in that, don’t want to do that.” I would not have hired them if they weren’t willing to do that. Tests are just one example, but there’s also tabs versus spaces. There are a bunch of things, right? For some people, they’re just super flexible, and they’re willing to go, “Oh, you want tests? Great, I’ll do it. You want tabs? Great, I’ll do it, since that’s the right way to do it anyway.” You didn’t have a reaction to that?
Is that not a thing anymore? Because I thought you were spaces.
Derrick Reimer: Oh, I use spaces. Yeah.
Rob Walling: Yeah, spaces all the way. I just said tabs is the right way to do it, and you had no reaction. You’re not even listening to me, you’re backgrounding me.
I’m nodding along, waiting for the reaction, but whatever. Tabs, spaces, and tests are just examples of this, but there’s something about being in alignment, and having some flexibility and willingness to change. Let’s be honest: if you hire a senior first developer, you’re working with them alongside Cursor, Claude Code, Windsurf, all these tools. I know Windsurf’s old news now, but when these tools came out, there were devs out there who refused to use them. So what do you do then? Do you want that person on your team? There’s some flexibility and willingness needed. It’s fine to have opinions, because they should have opinions if they’re senior, but they need to be willing to go with the flow, let you make the final call. There’s a collaborative nature to it. Do you feel like that’s something you look for?
Derrick Reimer: Yes, for sure. And I think it can be hard to pin down exactly, because on the one hand, you don’t want someone who doesn’t have any opinions or taste about things. But on the flip side, I’ve definitely spoken to developers before who are so opinionated and so strong-willed in their convictions that they get hung up on it. So I think this is something that would come out even more if you did a test project with someone during the hiring process, like, “Let’s work on something together for an afternoon or a few hours,” and see how they react to encountering something that isn’t done the way they would’ve done it, but is the norm established in the codebase. Are they willing to go along with those norms, and maybe recommend shifting pragmatically in a new direction if something is truly better, while also recognizing you can’t stop the world and rewrite the codebase, or fight against established conventions in a way that makes it confusing for anyone coming into the codebase?
So yeah, that’s a tricky one. What you don’t want is to find yourself arguing about small things all the time because opinions are too strong.
Rob Walling: You know the person, we all do, we’ve worked with them, and a lot are developers, some are not, there are people in other parts of the company too. The other one I thought of, whether they’re a developer or not: when hiring at even TinySeed or MicroConf these days, it’s almost a hard pass for me if they’ve only worked at big companies, if they’ve never worked at, let’s say, a sub-50-person company, because TinySeed and MicroConf are 10 people, and in this case we’re talking about a two or three person company. It’d be great if they worked at a 10 or 20 person company, but if someone’s only worked at, say, a Fortune 500 or Fortune 1000, the change of mindset is so dramatic, it’s such a big deal, that it’s something I absolutely screen for. Do you ask folks about that?
Derrick Reimer: Oh, for sure. Similar criteria, where I’m just not willing to entertain it if someone exclusively has big company experience, like you said, because dev teams operate so differently. Even watching Drip grow to a team of, what was it, 20-plus when we left?
Rob Walling: 20, 25, somewhere in there. That was just the engineering and product team.
Derrick Reimer: Yep. Even watching how work gets organized, the pace people work at, it morphs into a different thing. That’s not necessarily a bad experience to have, but exclusively having that can be a culture shock. Some people have a harder time adapting to it, and it can be a lot to reorient someone toward the smaller company mindset, and maybe you don’t have the luxury to do that if you’re hiring your first dev.
Rob Walling: I remember hiring someone, and on their first day they were like, “So what’s the process for da da da?” I was like, “There isn’t one. You ask me. Do you have a form to fill out because you want a new mouse and keyboard?” And I’m like, “No, just buy it on Amazon, tell me the total on PayPal, I’ll Venmo you out of the company account, or come to my computer and put it on the company card.” That’s the process, it’s just a different mindset. So his next question was: how do you effectively onboard someone into a codebase you’ve been the sole contributor to? Do you try to create documentation, or dive in and teach them on the go? How have you handled this? And I’m sure this has changed over the years with AI and all that.
Derrick Reimer: Yeah, I think this has changed almost completely from my first iteration of hiring, pre-AI versus post-AI. Before AI, I recall drafting some documents giving a high-level lay of the land of the codebase, like, these are the major subsystems. I don’t think I put too much in writing, though. It was more like on calls, walking through the codebase together, showing them in the editor where things are and how they fit together at a high level. But these days that’s squarely in the sweet spot of an LLM. It’s so much easier in general to get onboarded into a codebase, because you can fire up an agent and start asking questions about it.
Rob Walling: I was going to ask that, because I haven’t done much with it. I’ve used Claude Code for some small projects, like indexing podcast episodes, but I haven’t tried this. You can just ask it what the major subsystems are? That is incredible.
Derrick Reimer: Yeah.
Rob Walling: It’s like we live in the future. All right, so at this point you’d just ask Claude Code, or your coding tool, and obviously give it an overview. We used to pull people in for an hour at the whiteboard: “Here’s some boxes, here’s some stuff, here’s the general orientation, here’s the servers,” whatever.
Derrick Reimer: Yeah, and you’ll get a kick out of this too. It’ll of course read Git history, so it can look at a file and know this was introduced by Derrick in 2023, read the Git commit comments and the surrounding pull request it was attached to, and read the surrounding tickets from around that time. Its ability to gather context is just insane. It’ll say something like, “This was put in during 2023 as part of a work stream to optimize this part of the slot calculation engine.”
Rob Walling: Right, because that’s always the thing, we’d be like, “Why does this code operate this way?” And we’d say, “Nobody remembers,” or we’d have to dig back through notes. Holy crap, that’s amazing. Remember when you were starting to code Drip, we had a conversation, and I don’t know how we got here, but it was about adding code comments. You used to add comments to code to say what it does, and you said, “I’m not going to do that, because it’s Ruby on Rails, and it’s supposed to be written so simply that you can read it, and comments go out of date.” We had this whole conversation, and I said, “Fine, I believe you.” And with tests, it’s less brittle anyway. Now it would be laughable to write comments in your code.
There’s just no reason to.
Derrick Reimer: Yeah, but it’s funny, even these days, just writing a commit message by hand feels archaic, because these days you’re building with an agent generally, and the agent has so much context, it can summarize so much better what we did and why we did it. It’s crazy how much better the commit history has gotten at capturing context.
Rob Walling: And his last question was, do you have any other tips on how I can minimize the risk of choosing the wrong person, wasting time and money, and making the onboarding process as smooth as possible? I feel like those are two really separate questions. We kind of just answered the onboarding one. How about this: would you pair program an hour or two a day for the first week or two with a new hire?
Derrick Reimer: Yeah, I’ve always done that, especially early on. That’s your time to really infuse the ethos of what we do and how we do it, getting some of those particular patterns we like to follow infused into that person, which is really crucial early on. Some of that can come from an AI agent reading the codebase and trying to discern that, but there’s also the element of building rapport, building “here’s how we work together on things, here’s how we disagree and resolve those disagreements.” There’s a lot of human-level collaboration value in spending time together pairing. So yeah, I’ve always spent a couple of weeks, an hour or two each day, pair programming.
Rob Walling: And in terms of not choosing the wrong person, this is the big risk of hiring anybody, and it’s tough. A couple things come to mind. When I’m looking to hire developers specifically, I think about technical acumen, interpersonal dynamics, which includes, do we get along, are they flexible in their thinking, are they a good team player, there’s a ton of stuff wrapped up in that one. Then the third is reliability, which is true for any employee: do they ship stuff on time, do they do what they say they’re going to do, do they show up to work and not call in sick all the time? There’s a consistency and reliability piece, because I’ve had folks who are great technically in different roles, whether dev, copywriter, or marketer, great technically, great interpersonally, and super flaky.
So you need all three. The one you can’t test is the flakiness, you just have to work with someone, whether that’s a probationary period or whatever. The other two you can test in conversations and pair programming. When you and I started hiring engineers for Drip, remember it was a take-home project? Now that’s laughable, because they’ll do it with AI, which they should, but you can’t rely on that. We switched to pair programming once we really started hiring engineers, because we found it was so much more productive, not just to see the results, but to see how they thought, to see what it was like when they were challenged. You’d usually challenge them with one thing, like, “I’m going to throw them for a loop here and tell them to suddenly use spaces instead of tabs, and see if they completely go postal.”
So those are my thoughts. We’d have one or two conversations, usually two, after an initial HR screening. Then we’d bring them in person, because we were hiring in Minneapolis, but now you do it remote with Tuple or something for, what, two hours of pairing? I don’t remember.
Derrick Reimer: Yeah, something like that. I ended up going maybe three hours on my last one. It went really fast in my recollection, I thought we were going to make so much more progress, and we didn’t make a ton of progress on what we were doing, but it was still a high-value exercise.
Rob Walling: Yeah, here’s the thing. By this point I’m basically like, “Yes, they’ve said all the right things, I like this person, I think they’ll be a good fit for the team, as long as they’re a good coder, they’re in.” This is the last step for me before hiring someone, because you might think two to three hours of pairing, wow, that’s a long time. But most of the time, not all, actually I remember one or two you paired with and you were just like, “No,” and that was great, it saved us a ton of time. But most of the time, by the time they got there, we ended up hiring them.
Derrick Reimer: Yeah, I’ll say using a recruiter was super helpful on this last round of hiring, because ideally you’re promoting it widely to get it in front of a good number of people so the right fit can emerge, but then you have so many applications to wade through, so much sifting and initial screening.
Rob Walling: Especially with AI now, generating applications and all that. I often recommend Remote First Recruiting, Dan and Ian’s recruiting service, I think it’s a flat fee, and a lot of TinySeed companies use them. There are other options out there. I’m curious who you used.
Derrick Reimer: I used them. Yep.
Rob Walling: You used them, okay great. So folks know, they hire around the world, they hire developers, they hire any role at a SaaS company, customer success, sales, marketers, freelancers, all kinds of stuff. So, Remote First Recruiting, if you’re interested. That’s the end of the questions for Michael. Thanks for sending that in, Michael. If you have a question for the show you’d like myself, Derrick, or another guest to answer, head to startupsfortherestofus.com, click “Ask a Question” in the top nav, and that takes you to our video ask. Now, Derrick, have you clicked “Ask a Question” and watched the fancy video I recorded of myself in my very living room, where you eat pizza every other week before D&D?
Derrick Reimer: I have not. No.
Rob Walling: Oh, well, you need to, because it’s cool, it’s just me talking to a camera. I had the same video of myself in a baseball hat, unshaven, no facial hair, that I recorded in 2018, up until about three months ago. I was like, “Ron, we have to fix this, this is catastrophic.” So I recorded a new one. It’s not really that great, nor worth watching, but I wanted to ask. My next question comes from my email list, robwalling.com/subscribe, if you want to receive an essay every week or two. I’m going to keep this anonymous, because I sent an email and often people reply with an anecdote or story about what they’ve done related to it. In this case, the essay was “Why You Shouldn’t Build Everything Customers Ask For.” I was talking about weighing.
It’s actually a conversation you and I had on the show, about product decisions, when do you decide to build something, when do you decide not to. This person responded and said, “I’m normally pretty good at saying no, but I built a feature for a new client recently that took me a lot longer than I thought it would, even with my new AI workflow. It touches a lot of other code and will add a lot of overhead to maintain because of that. That sucks. I like the feature, but it’s quite complicated, and I’m wondering how many customers will get their heads around it well enough to want to use it. Previously I probably would’ve just said no, but I think AI has made me a little overconfident about how much easier it is to write and maintain code now.”
“We’ll see what happens.” I wanted to bring this up because I bet there are people in the audience who’ve done this, and I’m wondering if you’ve made this mistake, and if not, how you’ve kept yourself from making it, because I could see doing this myself.
Derrick Reimer: Oh yeah, I’m nodding along strongly, because I’ve been trying to reflect. My job has completely changed on the product side over the last year, and one of the things that’s changed is how I think about features, how I think about effort level and how much time and money it’s going to take to implement something. The economics have radically changed in many respects. I’ve found it a struggle at times to evaluate whether something is worthwhile to build, because so many things feel so much cheaper now to build. There’s definitely this vibe going on right now, I don’t know if you’ve seen the DHH posts about his operating system on Twitter, where he’s like, “We can fix everything.” That’s sort of his mantra right now, very high on AI productivity, like every problem is solvable.
Don’t worry, this will be the greatest thing for everybody, is sort of the vibe. I think a lot of people are latching onto that, feeling like we can conquer any task now, therefore make every single customer happy. I think that’s still a fallacy. But for sure I’ve felt the temptation. Thinking back over the last few months, trying to come up with an example of me falling into this trap, there was one I could think of: I was talking to a customer, a decent-sized customer for me, who had a somewhat complex, nuanced HubSpot integration they were trying to get working. SavvyCal already integrates with HubSpot, we have a basic integration that matches other players, where you can sync to contacts in HubSpot and record the meeting when someone books.
Or record an entry on the timeline for that contact when they book a meeting. So it’s kind of a basic sync between the two systems. This customer wanted deal creation, and some logic around when someone books through one of 40 different links, it should create a deal and attach it to the right party, and make sure the deal isn’t duplicated if the person books with someone else. There was some complex, nuanced logic in there. I did see it as a potential opportunity to have an even more powerful HubSpot integration we could bill as a differentiator. If you’re doing anything complex with a sales workflow involving HubSpot, SavvyCal could one-up everyone else, potentially. I went so far as to spend a session with an agent mapping out what this would look like if we expanded our integration.
That was a helpful exercise, because on the one hand, yes, this is all doable, an agent could do all the code, and it would take maybe an afternoon plus testing. But going through that exercise made it clear that this was going to radically expand this integration. We’d be calling the API in a lot more ways, and have to handle all those failure modes. Anytime you’re dealing with external integrations, it’s always: what happens if the HTTP request fails? Do you alert? Do you retry? How often? What happens if you ultimately can’t make the call? There are all these things to consider. Sure, agents can work on solutions for all of that, but it’s still radically expanding the surface area of what your product has to do, and you have to maintain all of it.
So ultimately I steered this customer toward Zapier, because you can do all this through Zapier, like you’ve been able to for years, and left it as, maybe if we hear enough demand for this kind of thing, we now have a sketch for how we might build it out. What I found helpful was going through the exercise, because it didn’t actually take that much time to see what this would look like concretely in code.
Rob Walling: Nice, so you caught yourself. I don’t have anything to add, it was a genuine question, since I’m not building a software product day to day, I wanted to hear from someone with boots on the ground.
Derrick Reimer: I’m curious what your thoughts are, to take it from a different angle. I do see a trend toward software products getting more ambitious about what they take on, because it’s so much easier to build. Companies changing their strategy, saying, “We’re going to be more ambitious and try to do more things deliberately.” I’m curious what you think of that trend. Do you think it’s a good thing? Necessary?
Rob Walling: I think it is for the company. If we were running Drip today, would we want to add big subsystems, an e-commerce thing, or an affiliate system, or whatever else that would have been so brutal to build back in the day? There were some, I’ll say, crazy requests we were never going to build, because it would take too much time. CRM was one we frequently got, and we lost some deals to HubSpot because they had the CRM plus the email marketing. For many companies it’s probably the right move. For Drip, if we could’ve built that CRM, remember we had resistance to it, because I was like, “It’s going to take months and months, do we want to focus there?” But if we could’ve built it in a fraction of the time, I think it would have been good for the business.
Now, wouldn’t all our competitors maybe have built it too? So there’s a question of whether it would’ve actually gotten us anywhere. I don’t know. I think the biggest thing, like anything, is knowing your customers, knowing your market, and knowing if it’s actually going to move the needle, or if it’s just throwing a bunch of all-in-one stuff in there and making the software worthless. It depends exactly on what the ambition is, but for most people, having more functionality, especially if you have less technical users who don’t want to change things, don’t want Make or Zapier, and just want to get rid of four tools and do it all in one, I get it. If that’s your customer base, you can chew up more of the space, as long as all the other companies aren’t doing the exact same thing, which maybe they will be.
Derrick Reimer: Or if they are, it might gradually become table stakes for someone in your market too. Now you’re the only one who doesn’t have those features.
Rob Walling: Yeah, it’s tough. That’s a good question. The next question is about social anxiety, and I mentioned this in one of my emails too. Someone responded and said, “I’m curious about the anxiety element you mentioned. I’m 29, I’m a software engineer, and I love building my own projects, but I also have social anxiety, which makes customer interviews, marketing, and sales difficult. Obviously that stuff is all absolutely crucial as a founder, which it is, I chuckle because it is, how did you turn your anxiety around?” I’ll go first on this one. For me, it was practice, it just gets better the more you do it. The anxiety I had when I was shipping my first blog post, or recording my first podcast episode, was terrifying. The first time I got on stage I just froze, I was so scared. Now I get on stage and it’s like the 50th or 100th time, probably, at MicroConf events.
I just had to do it over and over, practice. That’s easier said than done, but it’s a thing. Some people take beta blockers, have you heard of this? It’s a pill that can help reduce, I never did that, I probably should have at a certain point. You don’t want to do it every day, at every sales call, but it can help for a bit, I think. The other thing I’ve seen, other suggestions: there was a founder we backed at TinySeed who had real social anxiety, and they’d have someone else join them on calls, someone from their team, and say, “This is a sales call, I’m going to be stressed, I want you to get on and be my wing person so we can do it.” Now, is it expensive, is it a bad use of resources? Maybe. But do you get better at it, and at a certain point not need them? Maybe.
The other thing I could imagine, if it’s really bad, is trying to get a therapist, a book, or a course on it. It depends on whether you learn from books and courses, I do, not everyone does, and I’ve definitely learned from therapists. If I had really bad social anxiety, I’d try to get to the root of it, I bet there’s a root cause, something like, “Oh, it’s from this childhood belief or experience that was really messed up, and this is how everything flows from that.” You can get over it through repetition and numbing yourself to it, in a good way, or through more pointed treatment.
That’s what I would say. Do you have any other thoughts to add?
Derrick Reimer: Yeah, that’s pretty much in line with where I was headed. I’m a naturally reserved, introverted person, so sales calls don’t come naturally to me. I get very in my head about it. If I think about where that anxiety comes from, oftentimes it’s fear of sounding stupid, or messing up, or saying something that ruins my chances of closing a deal. But a lot of that ultimately comes from lack of experience, and there’s a hesitancy to do it because of that lack of experience. Part of it is just getting started and forcing yourself to get the reps in, knowing it’s going to suck until you start to build confidence. The more confidence you build, the less anxiety you feel, because you’ve seen some things, you know how to deal with certain situations.
Specifically on the sales call front, something I’ve been doing, and I’m in general a little skeptical to offer this kind of advice, leaning on an LLM in this way, because I don’t think LLMs are great therapists, I think they reflect back what you want to hear, which is often not what you need to hear. There’s still definitely a place for seeking real advice from a mental health professional for real issues of that nature. But specifically around coaching yourself, or figuring out how to improve sales call performance, I’ve found it super helpful to use a call recorder when I’m doing one, then feed it into Claude or your favorite agent of choice, and ask for objective feedback: what went well, what didn’t go well, what could I do better? They’re actually pretty good at identifying, “You spoke too much,” or “You didn’t speak enough,” or “You should have spent more time on this area.”
Just getting that contextualized advice or feedback about how the call went, when a lot of it is basically reflecting back things where, yeah, if I think about it, that makes a lot of sense, but sometimes it’s hard to evaluate your own performance when you have all this self-doubt wrapped up in it. Getting hyper-contextualized feedback has been super helpful for me in gaining confidence more quickly, I’d say.
Rob Walling: Yeah, that’s great, really good advice. Thanks for that question, hope it was helpful. Our last question of the day is from New Zealand.
Aaron (Listener): Hey Rob, Aaron here from New Zealand. Love the podcast. I’m in a trades business, and I’ve built a pretty awesome trade-specific CRM for myself. It started off as a takeoff and estimating tool, and it morphed into a pretty awesome CRM. My question is around trademarking. I think copyright, from a bit of research, is automatic, but a trademark is quite costly. I’ve got a pretty cool name for the CRM I’ve built, and I was wondering your thoughts on trademarking. Is it worth the big investment upfront, to do it now before somebody sees my pretty cool idea and tries to steal the name? Thanks, mate.
Rob Walling: All right, Derrick, there’s an interesting thing here. Number one, neither of us is a lawyer, so no one should take our legal advice, but we do have thoughts as multi-decade software entrepreneurs. The other interesting thing is, I went to Claude and asked about US trademark law and New Zealand trademark law, and they’re different. That’s a whole interesting thing. But I’ll ask, how many trademarks have you filed for your company names, product names?
Derrick Reimer: I think I’ve attempted to file one, and it got rejected, and I didn’t take it any further.
Rob Walling: Yep, I’ve had that happen a few times. Tried to trademark Drip, and it was like, nope, prior art, too generic, all that. We did get, I think, the trademark for MicroConf and Startups for the Rest of Us. But I’ve tried to file other trademarks and they’ve all gotten rejected. So, in general, here’s the thing: in the US, if you have a unique name, at least the way Claude describes it, you have kind of a use defense, in essence, that if you can prove you used it, and someone later tries to trademark it, you can swoop in, but it’s more expensive and a weaker case than if you’d just filed it. So the question is filing fees, I think in the US it’s $350, somewhere around there. If you use a lawyer, it tends to be one to two thousand dollars, I think, when I’ve done it, maybe $1,500.
And that’s if it’s pretty easy, it depends on how many classes you’re applying for, and so on. So the question is whether that’s worth it to you in the US. Now, in New Zealand, again, according to Claude, but I’m using Opus, Opus 5 high thinking, so I think it’s probably relatively accurate, it specifically said this isn’t legal advice, double-check everything, it said that in Claude. In New Zealand, that use defense doesn’t exist. It’s literally the first person who files, even if you’ve been using it in trade for years, someone else can come along and file it. Crazy, huh? I mean, that sounds not great. I like the idea of copyright by default, I don’t have to submit a book when I publish it, because I put “copyright, all rights reserved,” and that’s when it’s copyrighted.
Now, if I file it with the copyright office, or the PTO, the patent and trademark office, it’s a little better, definitely stronger, but that’s kind of brutal. To me, there’s more reason to file, honestly. In New Zealand, again, looking it up quickly, it looks like if you do it yourself it’s $150 to $200, and if you use a lawyer, it’s about the same, like $500 to $1,500. So I don’t know, that’s it, I can’t make a recommendation on this one, because it really comes down to risk tolerance. The odds of something happening are low, but if it does, that would suck. If someone else trademarked it in New Zealand and you just lost it like that, I’d maybe lean toward doing it, but I’d try to figure out, can I have an AI agent [VERIFY: “Manis” – possibly refers to the AI agent “Manus”] fill out the form?
Honestly, or can I have AI fill it out now that we’re at a place where, I don’t know if I need an attorney, I’ve never tried to do it without one, I’ve always just hired someone, thrown $500 to $1,000 at it, whatever. I’m wondering if it’s less expensive if you could get AI to do it. What do you think?
Derrick Reimer: Yeah, and I think, I’ve tried to use, I don’t know if it’s LegalZoom or Rocket Lawyer or something like that, where it’s kind of a, where you’re not really hiring a lawyer directly, it’s a legal service that gives you a template, and you fill the stuff in.
Rob Walling: Trademark Engine is one, yeah.
Derrick Reimer: Yeah. Maybe I got rejected in the past because I didn’t fill something in quite right. I feel like an LLM would probably have a better shot than me, since I definitely don’t have a lawyer here, at getting the stuff put in the right way, so the patent office likes it. So yeah, I think it’s worth a shot. These days, it’s easy to have the extreme lean-bootstrapper mindset of, “No, it’s not even worth $300 or whatever.” But especially with the reality of New Zealand, if that were true here, I think I’d be more apt to push for it.
Rob Walling: Me as well. And I get these questions, like, should I file an LLC or be a sole proprietorship, when do I do that, when do I form the company, sometimes it’s a liability thing, sometimes it’s, should I have E&O insurance and general liability, and all kinds of other insurance. And then there’s trademarks, copyright, and IP protection. If you talk to an attorney, they’ll tell you to do all of them ten steps before you even think you have a business, do all the things. The insurance person says do all the things too, because bad things can happen, and they’ve seen bad things happen. Those are all true, but you’re also an entrepreneur, and you don’t have much money, so don’t overdo this. That’s the balance we’re trying to strike here.
Cool. Well, Mr. Derrick Reimer, thanks so much for joining me on the show today. You’re Derrick Reimer on X/Twitter, and savvycal.com, if folks want to use the best scheduling and appointment booking tool on the internet, not just meetings, but appointments too. You do that now, right? So people know what appointments are, we’re talking medical offices, and who else schedules appointments?
Derrick Reimer: Lawyers. Yeah, we’ve actually been mostly focused on telemedicine, it’s sort of become our niche. Especially if you’re building custom flows for a telemedicine app, where you don’t want to rely on your EHR, which is super slow and clunky and doesn’t resolve slots very well. SavvyCal can sit in between and unblock your sales funnel for new patients.
Rob Walling: Yeah, that makes a lot of sense. At first, when you told me meetings, which is what we all use SavvyCal for, and then appointments as a different thing, I was like, “Aren’t they the same?” And you’re like, “Oh, my sweet summer child, you have no idea.” Appointments are complicated, there are workflows involved, maybe multiple.
Derrick Reimer: Centralized management, office management, things like that. Yeah.
Rob Walling: Yeah, so that’s it. So, savvycal.com, if you want to check that out. Thanks again for coming on the show.
Derrick Reimer: Yeah, thanks for having me.
Rob Walling: Thanks again to Derrick for coming on the show, and donating an hour of his time to help our worldwide community of tens of thousands of bootstrapped SaaS founders. And thank you for listening this week and every week. As I mentioned, this is episode 850, and sometimes I think, how did I get here? The way I got here was by recording every week since 2010, just showing up. I think that’s probably the way you build anything interesting, doing it over a long period of time, showing up every day, every week, every month, pushing the ball forward, whether you’re writing books, shipping software, shipping a podcast, or something else. Thanks for joining me this week and every week. This is Rob Walling, signing off from episode 850.
Episode 849 | Legal Threats, AI as Platform Risk, Building Confidence, and More Listener Questions (Rob Solo)
/
RSS Feed
Ever gotten a vague cease and desist from a competitor and wondered if you actually did something wrong?
This week I tackle four listener questions: how seriously to take competitor terms of service threats, whether AI is really a platform risk (or just a feature risk), how to build confidence and get past the fear of reaching out to prospects, and when a non-founder employee should walk away from a company that’s missing founder activation energy.
Want to get your question answered? Submit your question for an upcoming episode.
Episode Sponsor:
You’ve found traction and product-market fit. But do you have a repeatable way to find your next 100 or 1,000 customers?
If you hire a typical growth agency, you’ll get a retainer and a calendar. Designli does growth engineering: they build the system that finds the channels that pay you back.
Every campaign is a hypothesis with a number on it, and a point where they stop. Beat your CAC ceiling and the channel gets more budget. Miss it and they shut it off that week and move the money.
A GTM engineer works inside your business half- or full-time, not split across ten accounts. You pay for their time and nothing else, no percentage of your ad spend.
It starts with an Impact Week. They audit everything you’re running and test one thing: can you trace a single click to a paying customer? Most companies can’t, so their growth is luck they can’t repeat. You leave with a findings report and a 90-day go-to-market plan built around your buyers and your numbers.
Go from spending to compounding: designli.co/Growth
Topics we cover:
- (01:05) – Are terms of service threats legitimate?
- (04:25) – No attorney-client privilege with LLMs
- (06:39) – AI as platform risk explained
- (08:21) – Will AI subsume your features?
- (10:55) – Will AI costs drop over time?
- (14:22) – Mitigating LLM downtime risk
- (16:06) – Structuring an enterprise pilot program
- (17:56) – Building confidence despite social anxiety
- (23:05) – When to quit as a non-founder
Links from the show:
- Idea to Traction: Stop Building SaaS Nobody Wants (book wait list)
- Rob Walling Newsletter
- TinySeed Portfolio
- TinySeed Accelerator
- Rob Walling YouTube Channel
- MicroConf
- The SaaS Playbook
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
Subscribe & Review: iTunes | Spotify
Rob Walling: Welcome back to another episode of Startups for the Rest of Us. I’m your host, Rob Walling. And in this episode, I tackle a handful of listener questions on topics ranging from how often are terms of service threats legitimate, AI as platform risk, how to focus, and when to throw in the towel. Before I dive into those questions, my new book, Idea to Traction, comes out in just a month or two. You can get on the wait list now and you’ll receive my nine to five audit, which is a resource we put together to help folks find SaaS ideas at their day job. And you’ll get an invite to a live Q&A that I’m hosting on October 13th. It’s all about early stage SaaS. Ideatotractionbook.com if you want to find out how to stop building SaaS that nobody wants in the age of AI. Let’s dive into my first question.
This is from Anonymous.
Hi, Rob. Thank you for the excellent podcast. And I was at MicroConf just recently and it was such a great time. I have a question about dealing with competitors and how you relate to that in your overall philosophy of relating to competitors. Also specifically, I’ve had one competitor over something really small, threaten a very vague terms of service issue. I mean, it felt like a legal threat or something like this, and I didn’t know what to think of it. There was another sort of issue with another competitor that didn’t feel really significant, but it felt like they were trying to maybe get in my head. Is threatening something about terms of service, something that is common in SaaS? Do you think I actually did something wrong? Do you have experience of this? Do other people have experience with this in terms of vague terms of service threats?
And how often should you really listen to them or should you just ignore them? Thank you, Rob, for the excellent podcast and your generosity.
Rob Walling: Well, thanks for that question, anonymous. I mean, this is one that I’ll say it’s both easy and it’s hard to answer. So what’s hard to answer is did you do something wrong? And that I don’t know. If you’ve had two competitors threaten you with something, that is unusual. The normal number of terms of service threats that most SaaS companies, especially kind of early stage, receive is zero. That’s the most common number. However, the second most common number is one. And I say this a little tongue in cheek, but I’m invested in 241 SaaS companies and I’ve seen. How many have I seen in the last 10 years, let’s say, of these types? And it’s not always terms of service, right? I’m just talking about C’s and D’s, cease and desists from competitors, or I don’t like your alternative-to or your versus page, right? You did Drip versus Mailchimp.
This is hypothetical because this never happened, but you did Drip versus Mailchimp and you said things that are not true about Mailchimp. Again, that didn’t happen, but it’s just an example so you understand. So I have seen maybe 12 of those, literally 15 in the past 10 years. And so what that shows you is at least across my portfolio I’m invested in, it is far less than one per company. Now, if you’ve received two similar things, that makes me think you might be walking on the more aggressive side of this or maybe you’ve done something wrong or illegal or illicit or that people think is unethical. I don’t know without knowing the specifics. So that’s kind of my short answer is are they common? Not that common, but more common than you might think. I mean, geez, lawsuits are more common than you might think.
Getting hacked is more common than you might think. Co-founders imploding, employees stealing from me. There’s all these things that due to the law of large numbers, I have seen multiple examples of all the things that I’ve just mentioned. So the advice that I give founders when they face this is to evaluate whether they think they have done something wrong. To talk to a lawyer is number one, but I get it, that’s expensive. If you’re doing a few hundred dollars a month and you’ve received two of these and you don’t want to pay a lawyer $700 or $800 an hour to evaluate this, I get it that maybe a conversation, this is not legal advice, but maybe a conversation with ChatGPT and/or Claude at the most expensive, the highest deep thinking mode of your LLM of choice, feeding in what they’ve sent you, what you have put on your website, what’s actually happening and trying to get an opinion.
Now I will say this, be very cautious. I’ve heard that there is no attorney-client privilege between you and an LLM. And so if later it does become a lawsuit and in discovery they subpoena your LLM chat, your conversations, they can pull those into discovery much like they’re an email or a private message. And so anything you say in there can and may be used against you in a court of law. I mean, that’s legit. So this is where I’m saying you got to kind of be careful with this. Take the risk into your own hands as to how you talk about that. But realistically, if you can afford an attorney, you should talk to an attorney, although they’re usually going to say, “Well, it’s not worth litigating. If someone sues you, it’s going to be very, very expensive for both sides. They probably don’t want to sue you either.
So A, do you think you did something wrong? B, is it worth standing up to them and saying, No, I’m not going to change it and just responding with agree to disagree type thing. Or is it something that’s not that hard to change? I have known folks change their versus pages very subtly to try to get around these types of complaints. I have known some founders who ignore C&D or not necessarily C&D threats from lawyers, but when it’s an angry email from a founder, how serious is that? When you get something from an attorney, that’s like the next level up, right? A huffy letter from an attorney is like, oh, they spent some money and some time to get an attorney to draft something to put into your inbox. So the question is how often should you listen to them? I don’t know. It depends because it depends on what the threats are.
And if you’re receiving multiple of them, it might be time to ask yourself, have I walked on the wrong side of this line? Am I being a bit too aggressive with my marketing or what I’m claiming on my website? I could never tell someone to ignore them. I don’t even tell my own founders you should ignore it. I tend to ask them how likely do you think they are, they being your competitor, are to move forward with something and are you comfortable with the risk of doing nothing or of either of saying no or doing nothing and then getting a letter from an attorney and having to deal with that down the line? So no one size fits all answer here, but thanks for your question.
Kyle Schmidt: Hey Rob, my name’s Kyle Schmidt, the founder of FieldLogic Labs and developed a FloorSync project management app for residential new home construction and remodelers to manage their flooring projects. I just wanted to say first of all, thank you for everything that you and your team put out there for new SaaS founders who are jumping into the deep end with no floaties or the experienced ones. I happen to be the first, deep end no floaties, and I have just learned so much and it’s been such an immense help. So thank you for that. My question is about AI as platform risk. I hear you guys talk about platform risk a lot and with so many things deeply integrating AI, native AI apps, is that a platform risk in itself? What happens if AI crashes? What if it gets too tightly regulated, if they raise rates on it so your usage for your users goes through the roof and it just becomes too costly?
So is that a real platform risk and how do you mitigate that? And then secondly, what do you think about a pilot program? I just proposed one to my employer today. It’s a limited pilot program, limited number of seats, 90 days. They pay full freight for the first 90 days just off of the regular rate card for enterprise clients. And if they agree to sign an annual contract at the end and roll it out with the whole organization, then the cost that they paid for the pilot program then gets credited towards that. So essentially the pilot program becomes free so it minimizes risk for them as well and gets me some real good solid feedback. Thanks. I’m looking forward to hearing your responses.
Rob Walling; Well, first of all, thanks Kyle for the kind words. I really do appreciate it. I love helping new folks get into this, right? It’s like we were all new at SaaS once. We were all new at software and entrepreneurship. And so I definitely appreciate your sentiment because that’s what I love to hear is that new folks are starting businesses and hopefully changing their lives through entrepreneurship. Then Kyle asked about AI as platform risk. I was thinking when I saw the subject line of this, I was thinking, oh, AI is platform risk in the sense that AI will subsume your feature set, meaning that your customers will just be able to do whatever your software does because LLMs get better or some type of AI gets better. I think that is a real concern for a lot of SaaS apps. I think if it’s not, it should be.
There are already many, many SaaS apps. What could we guess? Do we think five, 10% of SaaS apps, 15%? Depends on if we count little utilities or like indie hacker side projects, because I think those are just decimated, right? AI can do a lot of what a little conversion app or obviously chat with your PDF or anything like that. I think those are gone. But if we look at the broader SaaS space, let’s say there’s 50, 60,000 legitimate SaaS companies in the world, 99 plus percent of them are B2B, what percentage do we think AI has already caused a dramatic shift, meaning AI can do most of what that app can do? Something like let’s say generating ad copy or generating ad creatives, something that you used to have software to do that type of stuff is really taking it out. So yeah, I wouldn’t be surprised if it’s like 10%, and this is a vague ballpark guess on my part, but what will it be over the next couple years?
Will it continue to increase? I think so. The question is at what rate? I shouldn’t say continue to increase. Will it continue to chew through parts of the SaaS ecosystem? And I do think that will be the case. The question is at what pace that will be? And that’s why being a system of record, having data that no one else does, there’s these several moats. Einar and I talked about them on the podcast a few months ago and we are doing a deep dive. Einar actually is doing a deep dive into other moats that keep you safe from AI. So that’s what I thought Kyle was going to ask about, but in fact, he asked more about the platform risk of building on top of it, like what if it goes down? What if they raise their rates? What if it gets regulated? These are perfectly legitimate concerns and the fact that AI is being given to us below cost right now, and I forget what the estimates are.
I saw something the other day and it was like we’re paying 20% of the cost of AI. So if we pay 200 bucks a month, it’s like a thousand, maybe even $1,500 worth of credits. That’s the cost to whoever, Anthropic or OpenAI or Google, what have you. And so the question is, but will that get cheaper? If we go back 30 years and you said hard disk space or thumb drives, remember those things, they’re only going to get cheaper. Imagine a world where the cost goes to zero, the cost of those goes to zero. It was hard to even imagine that, but that’s kind of what’s happened. And then remember bandwidth on the internet, there are all these resources that are expensive processes, CPU processing power. You look back at old renderings, like trying to make Pixar movies back in the 90s was really hard because the computers just weren’t that fast.
They weren’t that resourced and it’s easier today both with the tooling, but also just the hardware has gotten so much better. And so the question I have is, do we assume that the cost of AI credits is over time going to go to zero? And what does that curve look like? If there’s a massive crash in AI funding, because there’s been obviously a ton of venture and just a ton of money in general, debt and everything going into AI because it is the current gold rush, right? It’s the land grab. And so all the money floods into it, therefore they can subsidize to get us all hooked on using AI and many of us are. I have a tough time imagining making it through a day of work or even honestly a day of cooking. I go to sous vide some steak and yeah, I know I could go to Google and type it in, but it’s just so easy and so shockingly accurate.
I’ve only been led astray maybe once by even ChatGPT, like the personal chat, which isn’t even that resourced on cooking times and recipes and this and that. It’s shockingly more efficient than searching Google and clicking through and wading through how in 1876, your great-great grandmother came up with this recipe and then scrolling down through 26 ads. But all that to say, the subsidy has gotten most of us, many of us hooked on AI. And the question is, will it become less expensive, meaning actual cost of it, before there is a big AI funding crash and the LLM providers and the foundational model providers are forced to raise their prices to cover their costs? Because if there’s no more funding available, that’s when they have to say, “All right, I’m charging you at least break even unless they just have infinite money in the bank, we’re going to charge you that $1,500 or $1,000 for your $200 of credits.” A lot of people will drop off if that happens.
The question is, will it become less expensive by that time, before that time? It’s like, “Well, maybe it doesn’t go from 200 to 1500. Maybe it goes from 200 to 400 or 500 and they can run along at cost for a bit.” I don’t know the answer to that, and I’m sure folks are pontificating about it, but that is something I’d be thinking about to Kyle’s question. The odds of it being regulated and you not being able to use it in your app, that’s a risk tolerance thing, but to me that feels highly unlikely. I think if it was going to be regulated to not be able to be used in B2B SaaS apps, that would have already happened. I think if you’re exporting that technology overseas, there’s going to be a bunch of stuff, but that doesn’t seem like a big concern to me.
And then what if it goes down? Well, it does go down. Anthropic’s API goes down or slows down or does kooky things. How often? I don’t know. A couple times a month at least. I mean, it’s pretty frequent. And so if you’re mission critical and you are. I’m going to make a joke here, but if you are a medical device that keeps people alive or you’re navigating aircraft over heavily populated areas, well, then you probably have a backup. You probably have two foundational models that you can switch between. But if you are software for designing and managing flooring projects, yeah, I mean, a day of downtime would be catastrophic, but can you handle a few hours? It’s just a matter of mitigation, right? Is that a risk? Yes, it is. You have to ask yourself the likelihood of that risk, and then if there’s any ways you can mitigate it by having a backup provider in essence.
So I hear what you’re saying, and these are likely concerns. Platform risk of foundational models and LLMs and such is a real concern, but the way you’re looking at it of the reliance on it, I think is actually less what I’d be concerned about, but more what I’d be concerned about is either my customers just using AI to replace me or my competitors maybe who has. If I’m just a little piece of it, I’m just a flooring project. Well, what about the system of record the construction firm uses that does all their billing and all their invoicing and kind of is their business system? Couldn’t that company just build flooring software or a flooring module into their software because AI makes it so fast to do it? Those I think are concerns I’d be much more likely to think about and address. And then lastly, regarding your pilot program, I mean, I think you’ve set it up pretty well.
I don’t know that I have any notes for you. 90 days, they pay for it upfront. You credit it against an annual contract. Well done. I think this is a great example of the ways that you can do an enterprise pilot program and make it worth it for both parties, for all the parties that are involved. So bravo and thanks for writing in, Kyle. If you found some traction and product market fit, but you don’t have a repeatable way to find your next hundred or thousand customers, you should check out today’s sponsor, Designli. Here’s their CEO, Keith Shields.
Keith Shields: Thanks, Rob. Most growth agencies you’ll speak with sell you a retainer and a calendar. Designli does growth engineering. We build you a system that finds the channels that pay you back. Every campaign we run is a hypothesis with a number attached to it. We set the goal up front and the point at which we stop. If a channel brings in customers under your customer acquisition cost ceiling, we pour more budget into it. If it doesn’t, we shut it off that week and move the money to what’s working. That’s how growth compounds instead of just costing you. A few months in, your spend is concentrated into the channels that actually attract customers and you have the numbers to prove it, not a theory about it. One of our go-to-market engineers works half-time or full-time inside your business, not split across 10 accounts. You pay for their time and nothing else.
There’s no percentage of your ad spend or anything like this on top. We’ll start with an impact week. We look at everything you’re running now and test one thing. Can you follow a single click all the way to a paying customer? Most companies can’t, which means the growth they do get is luck they can’t repeat. You’ll finish the Impact Week with a findings report and a 90 day go-to-market plan built around your buyers and your numbers. To get started, head to designli.co/growth. That’s D-E-S-I-G-N-L-I.co/growth.
Rob Walling: My next question is a response to an email that I sent to my list, robwalling.com/emails. If you want to be on my mostly weekly newsletter where I’m sending out essays covering stuff that I don’t cover here or on YouTube, and I ask in one of the emails, “Hey, what’s the biggest thing you’re struggling with?” And the respondent said, “The number one problem I’m facing is I don’t have confidence. As a software engineer, I’m passionate about building products, but I struggle with social interaction, which is currently holding me back. I believe I’m addressing a real problem, I assume with his software, but I’m hesitant to reach out to potential users to validate it.” So a couple things here. If you want to get better and get over your fear of social interactions, I want to talk about that. If you don’t and you just want to build a small business where you don’t have to reach out to people, stair step and do a step one business and just learn how to market it quietly.
Back in the day when I had a full-time day job and a young child, and I also struggled with social interaction and was intimidated by everything in the world because that’s how I was raised, I learned how to market and write copy and sell software without having to have one-on-one conversations and without having to “bother people.” And that was part of my early stair stepping, and now I am not concerned about any of those things, that I have the confidence now that if I was building another SaaS app, and frankly, by the time I was building Drip, when I was at step three, I had the confidence, I had the experience, and I had some money, and I just had a lot more of a tailwind behind me to be able to really execute on an ambitious app. So one way to build confidence is to have small wins along the way, and that’s one of the things that stair stepping gets you.
If you don’t want to stair step and you want to get over this fear of talking to people, the only way to do it is to do it, right? I talked in the last couple episodes, because there’s been a lot of listener questions around this type of topic, I talked about how I would learn a new topic, learn sales, I think it was outbound sales, cold calling. It was cold calling. Similarly, how would I learn to try to get through this? Well, I would hire a therapist specifically or coach to specifically help me with this. If I hired a coach, maybe I would even have them on some of the calls. It sounds crazy, but first you crawl, then you walk, and then you run, and so you have to take small steps for this. I would also personally use an LLM to, at a minimum, help me with outreach.
If I don’t want to bother people, I’m going to tell the LLM, “Hey, I’m an engineer. I think my software solves a problem, but I really am not great at social interaction. Can you help me draft emails to these people to help me reach out to them?” And then, “Oh my gosh, I booked a call. Can you help me with what I should cover? What are my scripts? What are my bullet points?” The more you prepare, and honestly, even practicing in advance, you can record yourself, you can do it in front of a mirror, you can just do it while you drive, but you say these things out loud and it gets you in the practice. It trains your body not to panic. I talked a couple episodes ago about nervous system regulation. That’s kind of what happens when we have these social anxieties, is your nervous system has this fight, flight or freeze response.
Usually it’s freeze. A lot of us have that in these moments. And training your nervous system requires repetition and the reality, the realization that, oh, I am actually safe and I’m not being chased across the savanna by an elephant or a leopard or a hippo or something that is otherwise threatening and trying to kill me. So if you believe that you are addressing a real problem with your software and that you actually have a solution, that you are going to be helping people, taking that to heart and building up the thought in your mind and the confidence of like, “No, this will actually help other people.” It’s the only way that I’m able to say nice things about the stuff we do at MicroConf, TinySeed, on my YouTube channel or my books or this podcast, frankly. I have a really, really tough time feeling like I’m bragging when I say TinySeed is a world-class B2B SaaS accelerator.
It’s one of the best in the world, but I really, really believe that. This was something that took years and years for me to get through. And then once I realized, no, I actually believe it, and if I don’t believe that, I probably shouldn’t be running it. I believe my books are some of the best for bootstrap and mostly bootstrap SaaS founders, some of the best in the world. If I didn’t believe that, I wouldn’t write them. I wouldn’t publish them. As awkward as it is for me to say that sentence, that hey, I think they are really, really good and people should buy them and read them, I had also had to learn to get through that mental. Really, it’s a speed bump, right? It’s a speed bump that is not a roadblock, it feels like one, but with practice and with some outside help, again, coach, a therapist, a friend, a co-founder, a person in your mastermind if they’re willing to do some one-on-one accountability, that’s I think what you probably need if you want to get past it.
And as I said, if you don’t really want to work on it, then I think stair stepping might be a better approach for you. And my last question of the day is about when to throw in the towel. I’m going to keep this asker anonymous, but he did email questions@startupsfortherestofus.com. If you have a question for the show, for me or a guest, you can email it there or you can head to startupsfortherestofus.com, go into the top nav, click ask a question and audio and video, go to the top of the stack. I believe I’m down to just over 20 questions right now. Anonymous says, “Hey, Rob, I’m a CTO at a small bootstrapped B2B SaaS startup in Europe in the sustainability space, CO2 emission calculators, et cetera. We have some recurring revenue, but we’re still reaching for true product market fit. It feels more like we’re delivering bespoke services work rather than a scalable product.
I’m not a co-founder, but I’ve been here nearly three years with equity and fair monetary compensation. My question is about when to quit as a non-founder.” Ooh, this is interesting. “Our structure is a bit unusual. The original founder still works only part-time for the startup because he needs his day job to survive financially. He’s hired a full-time CEO who is based in a different country, which creates some communication challenges as the rest of the team is co-located. We have five employees plus me all working from the same office. How do you think about when to quit for a non-founder with equity in this kind of situation where slow traction might be partly a structural/founder availability problem versus purely a product problem? And how do you distinguish between this needs more time versus the fundamental conditions for success aren’t in place?” This took a turn. With these questions, I typically just read the subject line, and in this case I did.
I read the subject line and I assumed it would be a, “Hey, when should I throw in the towel on my startup?” And I have some thoughts around that broad topic. This is so different. Bottom line, when I read this, I think if the founder is not willing to go full-time on their own idea to raise the money to make it work or to save up money to get into a situation where they can go full-time, and yet there are five employees and a remote CEO, this makes no sense to me. How are there five employees? There should be money for the founder. To me, this is a vote of no confidence. We do not fund companies at TinySeed if the founder is not willing to go full-time. When we interview founders about their idea, if they say, “Now there’s two co-founders and one’s not willing to go full-time,” we take it into consideration, of course.
We try to give people the benefit of the doubt, but the honest answer is in this situation, this sounds like the founder just isn’t that committed to it. So why would I, as an employee with some equity, be more committed to it than the founder? And I’m sure I know that there are some circumstances that could be thrown in of like, “Well, he has a high cost of living. He’s taking care of his wife and kid. I can only imagine maybe he has special needs kids, maybe his wife has health issues, maybe his…” I’m just making assumptions that there are reasons for this, but the bottom line is the optics are not good. And if this were an actual. I mean, the reason he can’t raise investment is because no one will invest in this company because the founder himself doesn’t believe in the company, but expects other people to do it.
But without founder activation energy, how can this company ever succeed? I haven’t seen a company be started by a founder and then part-time focused and just have it magically find product market fit. Team members, employees are not founders unless they’re founder level, right? If they’re a founder-level thinker and they are willing, they need the motivation. It’s never going to happen. I was going to say they need the motivation then to go on and find product market fit. It doesn’t happen. I see founders who start it and go full-time and don’t find product market fit because it’s so hard and it takes so much energy and it’s so muddy and you have to try all the things, you have to take big risks and you have to go with gut and make hard decisions with incomplete information. And I can’t imagine someone you hire who doesn’t have the upside that you do as the founder is going to do this.
So I’m coming off pretty hot on this. I mean, I always say it’s a hot take, but it’s just my take. If I were in your shoes, I would get the out. There’s no way I would be investing time in this company. I would either go start my own if I wanted to be in the space, I’d get a job at a different company. I can’t imagine the founder hiring a CEO who’s based in a different country. This sounds like a disaster. This sounds like a big mess the way you describe it. And so that’s where I land on this. It’s easier to say it from the outside, but it’s honestly easier to be honest from my perspective, right? Because I don’t have any skin in the game. And the situation you describe, if you were to say like, “Hey, would you invest in this or would you come on board with this company as say a co-founder?” Because if you offer me the employee number one or number five spot, I’m not taking it because I don’t want to be an employee, but I do start things.
So I’m a founder. Would I come on as a co-founder? Absolutely not. Not if the other founder is going to hire these other folks to run the company while he’s not willing to get in there and find product market fit. I’ve just never seen it. I’ve never seen employees, and even if they’re super smart, project level, maybe even owner level thinkers, it’s just not going to happen. It’s too hard. So if I were in your shoes, that’s how I would be thinking about this. I think the slow traction is structural. I think it’s founder availability. And the product problem, whether it’s a product problem or not, it doesn’t matter because the product’s not going to get better if the founder doesn’t get in there and bring their activation energy to make this work. So thanks for that question. I hope it was helpful. And that’s going to wrap us up for today.
Thank you for joining me this week and every week. This is Rob Walling signing off from episode 849.
This is from Anonymous.
Hi, Rob. Thank you for the excellent podcast. And I was at MicroConf just recently and it was such a great time. I have a question about dealing with competitors and how you relate to that in your overall philosophy of relating to competitors. Also specifically, I’ve had one competitor over something really small, threaten a very vague terms of service issue. I mean, it felt like a legal threat or something like this, and I didn’t know what to think of it. There was another sort of issue with another competitor that didn’t feel really significant, but it felt like they were trying to maybe get in my head. Is threatening something about terms of service, something that is common in SaaS? Do you think I actually did something wrong? Do you have experience of this? Do other people have experience with this in terms of vague terms of service threats?
And how often should you really listen to them or should you just ignore them? Thank you, Rob, for the excellent podcast and your generosity.
Rob Walling: Well, thanks for that question, anonymous. I mean, this is one that I’ll say it’s both easy and it’s hard to answer. So what’s hard to answer is did you do something wrong? And that I don’t know. If you’ve had two competitors threaten you with something, that is unusual. The normal number of terms of service threats that most SaaS companies, especially kind of early stage, receive is zero. That’s the most common number. However, the second most common number is one. And I say this a little tongue in cheek, but I’m invested in 241 SaaS companies and I’ve seen. How many have I seen in the last 10 years, let’s say, of these types? And it’s not always terms of service, right? I’m just talking about C’s and D’s, cease and desists from competitors, or I don’t like your alternative-to or your versus page, right? You did Drip versus Mailchimp.
This is hypothetical because this never happened, but you did Drip versus Mailchimp and you said things that are not true about Mailchimp. Again, that didn’t happen, but it’s just an example so you understand. So I have seen maybe 12 of those, literally 15 in the past 10 years. And so what that shows you is at least across my portfolio I’m invested in, it is far less than one per company. Now, if you’ve received two similar things, that makes me think you might be walking on the more aggressive side of this or maybe you’ve done something wrong or illegal or illicit or that people think is unethical. I don’t know without knowing the specifics. So that’s kind of my short answer is are they common? Not that common, but more common than you might think. I mean, geez, lawsuits are more common than you might think.
Getting hacked is more common than you might think. Co-founders imploding, employees stealing from me. There’s all these things that due to the law of large numbers, I have seen multiple examples of all the things that I’ve just mentioned. So the advice that I give founders when they face this is to evaluate whether they think they have done something wrong. To talk to a lawyer is number one, but I get it, that’s expensive. If you’re doing a few hundred dollars a month and you’ve received two of these and you don’t want to pay a lawyer $700 or $800 an hour to evaluate this, I get it that maybe a conversation, this is not legal advice, but maybe a conversation with ChatGPT and/or Claude at the most expensive, the highest deep thinking mode of your LLM of choice, feeding in what they’ve sent you, what you have put on your website, what’s actually happening and trying to get an opinion.
Now I will say this, be very cautious. I’ve heard that there is no attorney-client privilege between you and an LLM. And so if later it does become a lawsuit and in discovery they subpoena your LLM chat, your conversations, they can pull those into discovery much like they’re an email or a private message. And so anything you say in there can and may be used against you in a court of law. I mean, that’s legit. So this is where I’m saying you got to kind of be careful with this. Take the risk into your own hands as to how you talk about that. But realistically, if you can afford an attorney, you should talk to an attorney, although they’re usually going to say, “Well, it’s not worth litigating. If someone sues you, it’s going to be very, very expensive for both sides. They probably don’t want to sue you either.
So A, do you think you did something wrong? B, is it worth standing up to them and saying, No, I’m not going to change it and just responding with agree to disagree type thing. Or is it something that’s not that hard to change? I have known folks change their versus pages very subtly to try to get around these types of complaints. I have known some founders who ignore C&D or not necessarily C&D threats from lawyers, but when it’s an angry email from a founder, how serious is that? When you get something from an attorney, that’s like the next level up, right? A huffy letter from an attorney is like, oh, they spent some money and some time to get an attorney to draft something to put into your inbox. So the question is how often should you listen to them? I don’t know. It depends because it depends on what the threats are.
And if you’re receiving multiple of them, it might be time to ask yourself, have I walked on the wrong side of this line? Am I being a bit too aggressive with my marketing or what I’m claiming on my website? I could never tell someone to ignore them. I don’t even tell my own founders you should ignore it. I tend to ask them how likely do you think they are, they being your competitor, are to move forward with something and are you comfortable with the risk of doing nothing or of either of saying no or doing nothing and then getting a letter from an attorney and having to deal with that down the line? So no one size fits all answer here, but thanks for your question.
Kyle Schmidt: Hey Rob, my name’s Kyle Schmidt, the founder of FieldLogic Labs and developed a FloorSync project management app for residential new home construction and remodelers to manage their flooring projects. I just wanted to say first of all, thank you for everything that you and your team put out there for new SaaS founders who are jumping into the deep end with no floaties or the experienced ones. I happen to be the first, deep end no floaties, and I have just learned so much and it’s been such an immense help. So thank you for that. My question is about AI as platform risk. I hear you guys talk about platform risk a lot and with so many things deeply integrating AI, native AI apps, is that a platform risk in itself? What happens if AI crashes? What if it gets too tightly regulated, if they raise rates on it so your usage for your users goes through the roof and it just becomes too costly?
So is that a real platform risk and how do you mitigate that? And then secondly, what do you think about a pilot program? I just proposed one to my employer today. It’s a limited pilot program, limited number of seats, 90 days. They pay full freight for the first 90 days just off of the regular rate card for enterprise clients. And if they agree to sign an annual contract at the end and roll it out with the whole organization, then the cost that they paid for the pilot program then gets credited towards that. So essentially the pilot program becomes free so it minimizes risk for them as well and gets me some real good solid feedback. Thanks. I’m looking forward to hearing your responses.
Rob Walling; Well, first of all, thanks Kyle for the kind words. I really do appreciate it. I love helping new folks get into this, right? It’s like we were all new at SaaS once. We were all new at software and entrepreneurship. And so I definitely appreciate your sentiment because that’s what I love to hear is that new folks are starting businesses and hopefully changing their lives through entrepreneurship. Then Kyle asked about AI as platform risk. I was thinking when I saw the subject line of this, I was thinking, oh, AI is platform risk in the sense that AI will subsume your feature set, meaning that your customers will just be able to do whatever your software does because LLMs get better or some type of AI gets better. I think that is a real concern for a lot of SaaS apps. I think if it’s not, it should be.
There are already many, many SaaS apps. What could we guess? Do we think five, 10% of SaaS apps, 15%? Depends on if we count little utilities or like indie hacker side projects, because I think those are just decimated, right? AI can do a lot of what a little conversion app or obviously chat with your PDF or anything like that. I think those are gone. But if we look at the broader SaaS space, let’s say there’s 50, 60,000 legitimate SaaS companies in the world, 99 plus percent of them are B2B, what percentage do we think AI has already caused a dramatic shift, meaning AI can do most of what that app can do? Something like let’s say generating ad copy or generating ad creatives, something that you used to have software to do that type of stuff is really taking it out. So yeah, I wouldn’t be surprised if it’s like 10%, and this is a vague ballpark guess on my part, but what will it be over the next couple years?
Will it continue to increase? I think so. The question is at what rate? I shouldn’t say continue to increase. Will it continue to chew through parts of the SaaS ecosystem? And I do think that will be the case. The question is at what pace that will be? And that’s why being a system of record, having data that no one else does, there’s these several moats. Einar and I talked about them on the podcast a few months ago and we are doing a deep dive. Einar actually is doing a deep dive into other moats that keep you safe from AI. So that’s what I thought Kyle was going to ask about, but in fact, he asked more about the platform risk of building on top of it, like what if it goes down? What if they raise their rates? What if it gets regulated? These are perfectly legitimate concerns and the fact that AI is being given to us below cost right now, and I forget what the estimates are.
I saw something the other day and it was like we’re paying 20% of the cost of AI. So if we pay 200 bucks a month, it’s like a thousand, maybe even $1,500 worth of credits. That’s the cost to whoever, Anthropic or OpenAI or Google, what have you. And so the question is, but will that get cheaper? If we go back 30 years and you said hard disk space or thumb drives, remember those things, they’re only going to get cheaper. Imagine a world where the cost goes to zero, the cost of those goes to zero. It was hard to even imagine that, but that’s kind of what’s happened. And then remember bandwidth on the internet, there are all these resources that are expensive processes, CPU processing power. You look back at old renderings, like trying to make Pixar movies back in the 90s was really hard because the computers just weren’t that fast.
They weren’t that resourced and it’s easier today both with the tooling, but also just the hardware has gotten so much better. And so the question I have is, do we assume that the cost of AI credits is over time going to go to zero? And what does that curve look like? If there’s a massive crash in AI funding, because there’s been obviously a ton of venture and just a ton of money in general, debt and everything going into AI because it is the current gold rush, right? It’s the land grab. And so all the money floods into it, therefore they can subsidize to get us all hooked on using AI and many of us are. I have a tough time imagining making it through a day of work or even honestly a day of cooking. I go to sous vide some steak and yeah, I know I could go to Google and type it in, but it’s just so easy and so shockingly accurate.
I’ve only been led astray maybe once by even ChatGPT, like the personal chat, which isn’t even that resourced on cooking times and recipes and this and that. It’s shockingly more efficient than searching Google and clicking through and wading through how in 1876, your great-great grandmother came up with this recipe and then scrolling down through 26 ads. But all that to say, the subsidy has gotten most of us, many of us hooked on AI. And the question is, will it become less expensive, meaning actual cost of it, before there is a big AI funding crash and the LLM providers and the foundational model providers are forced to raise their prices to cover their costs? Because if there’s no more funding available, that’s when they have to say, “All right, I’m charging you at least break even unless they just have infinite money in the bank, we’re going to charge you that $1,500 or $1,000 for your $200 of credits.” A lot of people will drop off if that happens.
The question is, will it become less expensive by that time, before that time? It’s like, “Well, maybe it doesn’t go from 200 to 1500. Maybe it goes from 200 to 400 or 500 and they can run along at cost for a bit.” I don’t know the answer to that, and I’m sure folks are pontificating about it, but that is something I’d be thinking about to Kyle’s question. The odds of it being regulated and you not being able to use it in your app, that’s a risk tolerance thing, but to me that feels highly unlikely. I think if it was going to be regulated to not be able to be used in B2B SaaS apps, that would have already happened. I think if you’re exporting that technology overseas, there’s going to be a bunch of stuff, but that doesn’t seem like a big concern to me.
And then what if it goes down? Well, it does go down. Anthropic’s API goes down or slows down or does kooky things. How often? I don’t know. A couple times a month at least. I mean, it’s pretty frequent. And so if you’re mission critical and you are. I’m going to make a joke here, but if you are a medical device that keeps people alive or you’re navigating aircraft over heavily populated areas, well, then you probably have a backup. You probably have two foundational models that you can switch between. But if you are software for designing and managing flooring projects, yeah, I mean, a day of downtime would be catastrophic, but can you handle a few hours? It’s just a matter of mitigation, right? Is that a risk? Yes, it is. You have to ask yourself the likelihood of that risk, and then if there’s any ways you can mitigate it by having a backup provider in essence.
So I hear what you’re saying, and these are likely concerns. Platform risk of foundational models and LLMs and such is a real concern, but the way you’re looking at it of the reliance on it, I think is actually less what I’d be concerned about, but more what I’d be concerned about is either my customers just using AI to replace me or my competitors maybe who has. If I’m just a little piece of it, I’m just a flooring project. Well, what about the system of record the construction firm uses that does all their billing and all their invoicing and kind of is their business system? Couldn’t that company just build flooring software or a flooring module into their software because AI makes it so fast to do it? Those I think are concerns I’d be much more likely to think about and address. And then lastly, regarding your pilot program, I mean, I think you’ve set it up pretty well.
I don’t know that I have any notes for you. 90 days, they pay for it upfront. You credit it against an annual contract. Well done. I think this is a great example of the ways that you can do an enterprise pilot program and make it worth it for both parties, for all the parties that are involved. So bravo and thanks for writing in, Kyle. If you found some traction and product market fit, but you don’t have a repeatable way to find your next hundred or thousand customers, you should check out today’s sponsor, Designli. Here’s their CEO, Keith Shields.
Keith Shields: Thanks, Rob. Most growth agencies you’ll speak with sell you a retainer and a calendar. Designli does growth engineering. We build you a system that finds the channels that pay you back. Every campaign we run is a hypothesis with a number attached to it. We set the goal up front and the point at which we stop. If a channel brings in customers under your customer acquisition cost ceiling, we pour more budget into it. If it doesn’t, we shut it off that week and move the money to what’s working. That’s how growth compounds instead of just costing you. A few months in, your spend is concentrated into the channels that actually attract customers and you have the numbers to prove it, not a theory about it. One of our go-to-market engineers works half-time or full-time inside your business, not split across 10 accounts. You pay for their time and nothing else.
There’s no percentage of your ad spend or anything like this on top. We’ll start with an impact week. We look at everything you’re running now and test one thing. Can you follow a single click all the way to a paying customer? Most companies can’t, which means the growth they do get is luck they can’t repeat. You’ll finish the Impact Week with a findings report and a 90 day go-to-market plan built around your buyers and your numbers. To get started, head to designli.co/growth. That’s D-E-S-I-G-N-L-I.co/growth.
Rob Walling: My next question is a response to an email that I sent to my list, robwalling.com/emails. If you want to be on my mostly weekly newsletter where I’m sending out essays covering stuff that I don’t cover here or on YouTube, and I ask in one of the emails, “Hey, what’s the biggest thing you’re struggling with?” And the respondent said, “The number one problem I’m facing is I don’t have confidence. As a software engineer, I’m passionate about building products, but I struggle with social interaction, which is currently holding me back. I believe I’m addressing a real problem, I assume with his software, but I’m hesitant to reach out to potential users to validate it.” So a couple things here. If you want to get better and get over your fear of social interactions, I want to talk about that. If you don’t and you just want to build a small business where you don’t have to reach out to people, stair step and do a step one business and just learn how to market it quietly.
Back in the day when I had a full-time day job and a young child, and I also struggled with social interaction and was intimidated by everything in the world because that’s how I was raised, I learned how to market and write copy and sell software without having to have one-on-one conversations and without having to “bother people.” And that was part of my early stair stepping, and now I am not concerned about any of those things, that I have the confidence now that if I was building another SaaS app, and frankly, by the time I was building Drip, when I was at step three, I had the confidence, I had the experience, and I had some money, and I just had a lot more of a tailwind behind me to be able to really execute on an ambitious app. So one way to build confidence is to have small wins along the way, and that’s one of the things that stair stepping gets you.
If you don’t want to stair step and you want to get over this fear of talking to people, the only way to do it is to do it, right? I talked in the last couple episodes, because there’s been a lot of listener questions around this type of topic, I talked about how I would learn a new topic, learn sales, I think it was outbound sales, cold calling. It was cold calling. Similarly, how would I learn to try to get through this? Well, I would hire a therapist specifically or coach to specifically help me with this. If I hired a coach, maybe I would even have them on some of the calls. It sounds crazy, but first you crawl, then you walk, and then you run, and so you have to take small steps for this. I would also personally use an LLM to, at a minimum, help me with outreach.
If I don’t want to bother people, I’m going to tell the LLM, “Hey, I’m an engineer. I think my software solves a problem, but I really am not great at social interaction. Can you help me draft emails to these people to help me reach out to them?” And then, “Oh my gosh, I booked a call. Can you help me with what I should cover? What are my scripts? What are my bullet points?” The more you prepare, and honestly, even practicing in advance, you can record yourself, you can do it in front of a mirror, you can just do it while you drive, but you say these things out loud and it gets you in the practice. It trains your body not to panic. I talked a couple episodes ago about nervous system regulation. That’s kind of what happens when we have these social anxieties, is your nervous system has this fight, flight or freeze response.
Usually it’s freeze. A lot of us have that in these moments. And training your nervous system requires repetition and the reality, the realization that, oh, I am actually safe and I’m not being chased across the savanna by an elephant or a leopard or a hippo or something that is otherwise threatening and trying to kill me. So if you believe that you are addressing a real problem with your software and that you actually have a solution, that you are going to be helping people, taking that to heart and building up the thought in your mind and the confidence of like, “No, this will actually help other people.” It’s the only way that I’m able to say nice things about the stuff we do at MicroConf, TinySeed, on my YouTube channel or my books or this podcast, frankly. I have a really, really tough time feeling like I’m bragging when I say TinySeed is a world-class B2B SaaS accelerator.
It’s one of the best in the world, but I really, really believe that. This was something that took years and years for me to get through. And then once I realized, no, I actually believe it, and if I don’t believe that, I probably shouldn’t be running it. I believe my books are some of the best for bootstrap and mostly bootstrap SaaS founders, some of the best in the world. If I didn’t believe that, I wouldn’t write them. I wouldn’t publish them. As awkward as it is for me to say that sentence, that hey, I think they are really, really good and people should buy them and read them, I had also had to learn to get through that mental. Really, it’s a speed bump, right? It’s a speed bump that is not a roadblock, it feels like one, but with practice and with some outside help, again, coach, a therapist, a friend, a co-founder, a person in your mastermind if they’re willing to do some one-on-one accountability, that’s I think what you probably need if you want to get past it.
And as I said, if you don’t really want to work on it, then I think stair stepping might be a better approach for you. And my last question of the day is about when to throw in the towel. I’m going to keep this asker anonymous, but he did email questions@startupsfortherestofus.com. If you have a question for the show, for me or a guest, you can email it there or you can head to startupsfortherestofus.com, go into the top nav, click ask a question and audio and video, go to the top of the stack. I believe I’m down to just over 20 questions right now. Anonymous says, “Hey, Rob, I’m a CTO at a small bootstrapped B2B SaaS startup in Europe in the sustainability space, CO2 emission calculators, et cetera. We have some recurring revenue, but we’re still reaching for true product market fit. It feels more like we’re delivering bespoke services work rather than a scalable product.
I’m not a co-founder, but I’ve been here nearly three years with equity and fair monetary compensation. My question is about when to quit as a non-founder.” Ooh, this is interesting. “Our structure is a bit unusual. The original founder still works only part-time for the startup because he needs his day job to survive financially. He’s hired a full-time CEO who is based in a different country, which creates some communication challenges as the rest of the team is co-located. We have five employees plus me all working from the same office. How do you think about when to quit for a non-founder with equity in this kind of situation where slow traction might be partly a structural/founder availability problem versus purely a product problem? And how do you distinguish between this needs more time versus the fundamental conditions for success aren’t in place?” This took a turn. With these questions, I typically just read the subject line, and in this case I did.
I read the subject line and I assumed it would be a, “Hey, when should I throw in the towel on my startup?” And I have some thoughts around that broad topic. This is so different. Bottom line, when I read this, I think if the founder is not willing to go full-time on their own idea to raise the money to make it work or to save up money to get into a situation where they can go full-time, and yet there are five employees and a remote CEO, this makes no sense to me. How are there five employees? There should be money for the founder. To me, this is a vote of no confidence. We do not fund companies at TinySeed if the founder is not willing to go full-time. When we interview founders about their idea, if they say, “Now there’s two co-founders and one’s not willing to go full-time,” we take it into consideration, of course.
We try to give people the benefit of the doubt, but the honest answer is in this situation, this sounds like the founder just isn’t that committed to it. So why would I, as an employee with some equity, be more committed to it than the founder? And I’m sure I know that there are some circumstances that could be thrown in of like, “Well, he has a high cost of living. He’s taking care of his wife and kid. I can only imagine maybe he has special needs kids, maybe his wife has health issues, maybe his…” I’m just making assumptions that there are reasons for this, but the bottom line is the optics are not good. And if this were an actual. I mean, the reason he can’t raise investment is because no one will invest in this company because the founder himself doesn’t believe in the company, but expects other people to do it.
But without founder activation energy, how can this company ever succeed? I haven’t seen a company be started by a founder and then part-time focused and just have it magically find product market fit. Team members, employees are not founders unless they’re founder level, right? If they’re a founder-level thinker and they are willing, they need the motivation. It’s never going to happen. I was going to say they need the motivation then to go on and find product market fit. It doesn’t happen. I see founders who start it and go full-time and don’t find product market fit because it’s so hard and it takes so much energy and it’s so muddy and you have to try all the things, you have to take big risks and you have to go with gut and make hard decisions with incomplete information. And I can’t imagine someone you hire who doesn’t have the upside that you do as the founder is going to do this.
So I’m coming off pretty hot on this. I mean, I always say it’s a hot take, but it’s just my take. If I were in your shoes, I would get the out. There’s no way I would be investing time in this company. I would either go start my own if I wanted to be in the space, I’d get a job at a different company. I can’t imagine the founder hiring a CEO who’s based in a different country. This sounds like a disaster. This sounds like a big mess the way you describe it. And so that’s where I land on this. It’s easier to say it from the outside, but it’s honestly easier to be honest from my perspective, right? Because I don’t have any skin in the game. And the situation you describe, if you were to say like, “Hey, would you invest in this or would you come on board with this company as say a co-founder?” Because if you offer me the employee number one or number five spot, I’m not taking it because I don’t want to be an employee, but I do start things.
So I’m a founder. Would I come on as a co-founder? Absolutely not. Not if the other founder is going to hire these other folks to run the company while he’s not willing to get in there and find product market fit. I’ve just never seen it. I’ve never seen employees, and even if they’re super smart, project level, maybe even owner level thinkers, it’s just not going to happen. It’s too hard. So if I were in your shoes, that’s how I would be thinking about this. I think the slow traction is structural. I think it’s founder availability. And the product problem, whether it’s a product problem or not, it doesn’t matter because the product’s not going to get better if the founder doesn’t get in there and bring their activation energy to make this work. So thanks for that question. I hope it was helpful. And that’s going to wrap us up for today.
Thank you for joining me this week and every week. This is Rob Walling signing off from episode 849.
Episode 848 | What Liquid Death Can Teach Us About B2B SaaS (Rob Solo)
/
RSS Feed
Does validation still matter when AI has made building software almost free?
In this solo episode, Rob breaks down the origin story of Liquid Death, the canned water company now valued at over a billion dollars, and pulls out the mental models that apply directly to B2B SaaS. He covers why ideas come from being in the arena, how founder Mike Cessario validated the concept with a fake product before manufacturing anything, and why “I just want to build” is usually an excuse worth dropping.
Topics we cover:
- (1:05) – Where the Liquid Death idea came from
- (4:12) – Mike Cessario’s punk and advertising background
- (5:22) – The backstage Monster tour water insight
- (7:18) – Ideas come from being in the arena
- (8:02) – Why “give me 10 ideas” doesn’t work
- (9:35) – Putting in the reps to build skills
- (11:23) – Why validation still matters with AI
- (12:11) – How Cessario validated with a fake product
- (15:46) – The repeatable framework behind it all
- (18:07) – Learning from outliers and the bootstrapper’s gift
Links from the show:
- MicroConf US | April 18–20, 2027 · Austin, TX
- Idea to Traction: Stop Building SaaS Nobody Wants (book wait list)
- Michael Girdley YouTube Channel
- Liquid Death
- Mike Cessario | LinkedIn
- The SaaS Playbook
- TinySeed
- The Lean Startup by Eric Ries
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
Subscribe & Review: iTunes | Spotify
Rob Walling: You’re listening to Startups for the Rest of Us. I’m your host, Rob Walling. And in this episode, I’m going to talk through lessons that we can learn about where startup ideas actually come from and why validation still matters even when building has become incredibly cheap. Before we dive into the episode, I’m looking forward to catching up with everybody in Iceland, September 21st through the 23rd. And as expected, MicroConf in Iceland has sold out. This is like our seventh event in a row, I believe, that we’ve sold out. Producer Sonya has set up a wait list in case someone drops out and you decide you want to buy a ticket. Head to microconfeurope.com to get on that wait list. It’s going to be a fun time. And if you missed this MicroConf and you want to go to the next one, you should head to microconf.com/us to grab a ticket to our Austin event happening next April.
That of course will sell out as well.
So one of the YouTube channels I subscribe to is by Michael Girdley. And he started the channel doing videos about big business failures. So airlines that failed, chain restaurants and such. And oftentimes you’ll find it’s once private equity gets involved, which is a whole other conversation. But in a recent video, he was talking about Liquid Death, which is a canned water company. And he talked through the origins of it and where the founder actually got the business idea from and how the founder validated this idea. And I love this example because it isn’t SaaS, it’s water. The two most common questions I get from early stage founders or aspiring founders is I don’t have any startup ideas, or I can’t decide which idea to pursue. So those are two of them. And to the first one, I usually say, well, here is a framework, seven different ways to come up with startup ideas.
Look at how you spend money at your day job. Look at the problem of a friend or relative, et cetera. And I give examples of these. I have these in my new book, Idea to traction. I’ve given away this framework probably on this podcast. I’ve definitely done it on my YouTube channel. I give folks ideas for how they can come up with startup ideas. And usually it’s starting with a problem that someone has. Inevitably, I get this question of, well, I don’t have a day job and I’ve never had one and I don’t have any experience. And basically, I just want ideas to be given to me, or I want to do a quick Google search and have ideas just appear in my feed. Or I want to just go on Reddit and find a business idea. And it feels a lot like the, I don’t actually want to do any work and I want to find a really great business idea that no one else has discovered.
That’s often what I hear. But it’s the idea of, I don’t have any industry experience. I don’t have the day job to pull from. And usually my answer is, well, then go get a day job. Don’t make the excuse that you haven’t gone and put in the work to get some industry experience and to get some exposure to problems day-to-day so that you know how a company works. And that you will inevitably see problems that you run into at the day job. And you will inevitably see how they spend money at your day job that you think, boy, that’s really a waste. This software sucks. Maybe I should replace it. And to the second question I get, which is, I don’t know which idea to pursue. I usually say, well, do some validation, do some research, put up a landing page, have customer conversations. It’s the same thing that I’ve been saying for a long time and it holds up.
And you don’t have to do validation exactly the way I say it. You don’t have to do the 22/00 framework. You don’t have to use the 5:00 PM framework, but do something. Don’t just sit there in analysis paralysis flittering between 10 or 12 different ideas, and don’t try to build 10 things and see what sticks because none of them are going to stick. Surprise, none of them are going to magically take off and you’re not going to learn anything if one of them does. So that’s what the story’s about. It’s about A, what if I don’t have any industry experience? And B, how do I decide if an idea is worth pursuing? So the founder of Liquid Death is Mike Cessario, and I hope I’m pronouncing that right. He was a designer and an advertising creative who’d spent about a decade working in advertising before starting Liquid Death.
He’d also grown up in the punk and hardcore and metal scene. And he played guitar in bands. So myself, I played the guitar. I was in a couple of punk bands. Oh my geez, about 25. Well, one of them was in the ’90s, that ages me, but 25 years ago, I think I played my last show. Is that right? 24 years ago. Yeah, it was fun. I have super grainy footage of it recorded on literally a handicam that recorded to tape, to these micro tapes. And I swear the resolution’s 480 by something, but it’s a fun one. So anyways, rolling back in 2009, Mike Cessario was working at an agency in Denver and friends who were playing the Warped Tour invited him backstage. And so the Warped Tour, if you don’t know, was it. Oh man, it was such a great tour. I don’t know if it was still good in 2009, but I used to go in the 1990s and early 2000s and just a big collection of really good punk bands.
And it was hardcore and metal as well, but I went for the punk. That’s where I’ve seen Blink-182 a couple times there. NOFX. Green Day. I saw Green Day a couple times. I don’t know, a bunch of great bands. And so they invited him backstage and he saw something. There were stacks of Monster energy cans everywhere. And it looked like the musicians on stage were pounding Monsters. It was like a hundred degree heat. And they’re pounding Monsters. And he’s like, “How the hell are they drinking that much energy drink without just imploding?” And the thing was, they weren’t, because Monster had created special cans of their water. They called it Tour Water for sponsored musicians. So it looked like a Monster Energy can, but there was water in them because Monster understood that bands didn’t want a bottle of water out on stage. And they also knew that bands weren’t going to be drinking energy drinks all day in that heat, but the cans of Monster look cool.
So Cessario thinks, why doesn’t anyone just market water like this? Why do you have to be a sponsored band to get this? And the challenge, of course, is healthy products are boring, especially if you’re in this counterculture, right? The punk metal hardcore scene. Beer is considered cool. For better or worse, it is. Alcohol, energy drinks, they get the cool branding. So this observation became what would ultimately become Liquid Death, which is now a company that does hundreds of millions a year in revenue. And the most recent valuation that I can find is $1.4 billion in their March 2024 funding round. Now obviously, these are just headline numbers and we all know how those can be inflated, but $333 million in sales in 2024, which is what I have numbers for, is still really impressive and a fast trajectory. It’s so hard to build consumer products like this, and these products with physical goods that have to be shipped.
And so a lesson I take from this is that ideas come from being in the arena or from being around the arena. You can say, well, he didn’t have a job at Warped Tour, but for him to get backstage, he had some type of network. Maybe it was through his job. Because back to the emails I get from aspiring founders saying, “I don’t have any industry experience. I don’t have a network. I don’t have any particular skills. Everything I list is like, well, I don’t have that. I don’t have that.” And it’s like, how do I find a great startup idea? Well, go get some fucking industry experience. Go build a network. Go develop some skills. Work for someone for a couple years. You don’t get a magic pass to not put in the work and not gain some experience just because you want to be an entrepreneur.
There’s this idea I think some aspiring founders have that you should be able to go to Reddit or ChatGPT and type in, give me 10 great SaaS ideas I can build this weekend that no one else will build that will work. And somehow these are going to drop out of the heavens into their lap. And frankly, that’s just generally not how it works. When we’ve surveyed entrepreneurs who have businesses with revenue, SaaS businesses, it’s only 3% of them that say they’ve found their idea through online research and forums. It is three out of a hundred, 30 out of a thousand, 300 out of. You get the idea. It’s just almost zero. It’s approximately zero. So don’t think that that’s going to happen. You do have to have some type of luck or network or a day job. I will tell you, I worked for nine years after college before I was finally able to quit my day job.
Nine years. See, I worked construction for like two and a half of that. So I wasn’t launching anything because I didn’t know how to code. And at that time, you had to know how to code. I wouldn’t build your stuff for you. And so counting the time where I actually started, I learned how to really update my skills in coding nights and weekends from the library at first. And then I bought books and then I eventually got a job coding. So once I kind of knew how to code well enough to build websites, well, then it was maybe like two or three years until I was launching my own stuff. And frankly, almost all those early ideas were terrible because I didn’t yet have much history of solving actual business problems. I was trying to mimic the big B2C venture funded style businesses, but I was trying to bootstrap them because I didn’t know how to raise money and probably couldn’t have.
I needed reps. I needed to put in the repetitions. So imagine you’re a musician and you say, “I don’t know how to play the guitar. I don’t know any musicians. I’ve never played in a band, but how do I headline a festival?” And it’s like, “Well, you don’t. The first step is you learn the instrument. You learn how to play. And then you play crappy gigs. And then you meet musicians. You do open mic nights. You write some songs. They’re not going to be very good.” My early songs were not great. You practice, put in the reps, and eventually you might get to the point, if you put in enough years, that you get to quit the day job or headline the festival. So the idea here is that this founder, Cessario, Mike Cessario, was in the right place at the right time, not because of pure luck.
He had spent years working in advertising, playing music, hanging around that scene and learning how brands work. This opportunity didn’t magically appear in his living room. He was doing something, developing expertise and paying attention. So that’s the first piece. And that’s around being in the arena or doing something. And I’ve said this over and over. Doing stuff in public creates opportunity. Building things in public creates opportunity. And it doesn’t necessarily one-to-one link to it, but it is. If you start blogging, if you start launching things, if you start a podcast, if you start launching software products, if you get out there and start doing things, you’ll get the reps in. And if you work a day job, whether you like it or not, I mean, I liked some of my day jobs, didn’t like most of them, but you learn things. And be deliberate about learning from that job, about where they spend money, about where the gaps are, about all the problems that could be solved with software.
So the second part of this story might be an even better lesson for a lot of entrepreneurs. I hear all the time, “I just want to build. Validation doesn’t really work anymore. AI makes software so cheap to build, you might as well just build it instead of validating.” Or, who actually validates things before they launch them? Well, me for one. And I validated or invalidated ideas before putting a bunch of time into them. My books, MicroConf, multiple SaaS ideas, TinySeed. And in addition to me, and I talked about this a couple episodes ago, most of the second time founders and third time founders, the serial entrepreneurs I see, they do more research and more validation before they select an idea rather than when they were first time and kind of flailing. So validation doesn’t have to be exactly what The Lean Startup says, and it doesn’t have to be exactly what’s in my books or my podcasts or my YouTubes, but it is just the idea that you do some research and you put some thought into this.
And some maybe conversations or testing of the idea or the assumption that what you want to build is valuable before spending the time to not only build it, but to launch it, market it, get behind it, push your way behind it. It’s a way to avoid spending months or potentially years building stuff nobody wants. So guess what Mike Cessario did before he started manufacturing Liquid Death? He validated it. The Liquid Death MVP was basically a fake product. He knew something important that if he walked into someone’s office like an investor and he said, “I’m going to sell water in a tall boy can with a skull on it. I’m going to call it Liquid Death. And I’m going to tell people this tagline is murder your thirst.” He was going to have a tough time raising money. And frankly, I’d imagine he didn’t know if this was going to work.
Even if he thought it was a great idea, he didn’t know. And he was going to put his weight behind it and years of effort trying to raise capital. It’s a lot to ask. And he didn’t have the overconfidence to be like, “This idea is genius and the world needs it.” So instead of going asking for money and instead of manufacturing the water, he manufactured the marketing. So he collaborated with a few people and he created the whole brand, the design of it. He mocked up what the cans would look like. There was no production line, right? There was no inventory. They didn’t even have actual cans. And they made a video ad for a product that essentially didn’t exist yet. And they put it on Facebook. So the video cost about $1,500 to produce. And according to the VP of Creative of Liquid Death, there was a relatively small amount of money spent promoting it.
So within about four months, the video had 3 million views. It had garnered them somewhere between 50 and 80,000 Facebook followers, depending on Mike Cessario’s telling of the story. Obviously memory and stuff. He remembers different numbers, but it was a lot, tens of thousands. At one point, their Facebook following was larger than Aquafina’s. And comments ranged from, “This is the greatest thing I’ve ever seen. Where can I buy?” to, “This is the dumbest fucking thing I’ve ever seen,” which is also validation. But here’s where it gets interesting. They started receiving messages from 7-Eleven franchisees asking how they could carry it. And a New York beverage distributor contacted them and asked them to speak with sales. So there was no sales because they didn’t have any cans. So they had generated demand. And it’s really interesting that that is some validation that people are at least interested.
Does it guarantee it would become a successful beverage company? No, because you can’t get to 100% validation until you build something and sell it. But did he go from 5% confidence to 50%? 60, 40, some number bigger than 5%? He did. And at that point, he had something to then go show investors. And obviously bootstrapping a water company would be really hard. So in this case, I do fully understand why he raised it. So then he went and raised money and he raised 150 grand from friends and family to get the first production run going. And then he raised institutional capital after that. So I don’t know, 1.6 million and 2.25, whatever. It doesn’t really matter how much they raised. It’s just that they raised enough to then manufacture and then sell. And doing hundreds of millions a year in a CPG, a consumer packaged good, is really, really impressive because breaking into that is tough.
And it’s water in a can. The point of this is not copy Liquid Death. I’m not saying every SaaS founder should make a fake viral video. And I’m not saying that you need millions of views in order to develop. It’s none of that. I’m certainly not saying you need to raise venture capital. Those are the details. But the mental models are what I want you to pay attention to. What did Cessario do? Well, he developed some expertise, some network. He noticed a problem. He formed a hypothesis. He did not jump on and just start building and shipping things wildly and randomly. He found a cheap way to test it. He observed actual market behavior, gathered evidence, and then he invested more resources. So that’s almost exactly the framework that I talk about. It’s what I’ve used to build software companies, launch books, start MicroConf, start TinySeed.
And it’s what I talk about in The SaaS Playbook. I mean, it’s what The Lean Startup talks about. This is not novel new information, but people still don’t want to do it because they want to build. They want to make. And even though this is a different industry, it’s the same underlying process. The thing I’m tired of is I’m tired of excuses. But I don’t have an audience, but I don’t have your network, but I don’t have industry experience. I don’t know how to validate. I just want to build. And it’s like, how about instead of building product, you build your network. Get your experience. Learn the skill. Figure out the cheapest, credible way to test your hypothesis, which is that people need this software, this idea that you have in your head. And you can follow the 22/00, The Lean Startup, whatever it is, because that’s a nice guideline.
If you had no knowledge of this, then that’s great. If you have your own knowledge and you’ve seen the way someone’s done it, great, do that. But don’t make excuses of why you can’t do this because there are principles, there are mental models and loose guidelines that will dramatically improve your odds. And I see them working in B2B SaaS and you can see them working if you’re going to launch a conference or an accelerator or write a book. And apparently you can see them being applied to things like canned water. And I never would have thought of that example if I had not been watching Michael Girdley’s YouTube channel. But I’m glad I did because I enjoy looking outside my own disciplines and taking lessons from other entrepreneurs. And even not entrepreneurs, right? Taking lessons from musicians like The Beatles, from artists like Picasso, you’ve heard me integrate.
Genius performers like Bruce Lee or Michael Jordan, Wayne Gretzky. I’ve talked about these folks on this podcast in the past. I love learning lessons from people who are so good at what they do, that they are complete outliers in terms of their performance because I think each of us in our quest for personal growth and business success, I think each of us can learn from these folks who had the commitment and put in the time to become great. Not just great, but some of the greatest in the world. And even if you don’t become one of the greatest in the world, that doesn’t matter. That’s the beauty of entrepreneurship, especially of bootstrapping. You don’t even need to be in the top 10,000 SaaS apps in the world to have a completely life changing outcome, whether you sell, whether you just take profits. The idea that to make millions or even to make a living as a professional athlete, how many NBA players are there?
There’s professional basketball players in the US. There’s like 400 and something, 440, 450. Those odds are brutal. Those odds are brutal to get there. How many legitimate SaaS apps are there in the world? 50,000 at least. And if we include all the little hobby projects or all, I don’t even mean hobby, but projects that are making five grand a month, 10 grand a month that aren’t included in that. Could there be another 10,000, 50,000? Yeah. It’s not millions by the way. Most people are shocked to hear this, but it’s a lot. And you don’t need to be in the top 1% of the 1% like you do to be a professional athlete or to be a professional musician or to be one of these kind of other outlier industries, even to start the next canned water company or bottled water or whatever. It would be tough.
Odds are against you. But you’re a bootstrapper and you’re in software where you can build and iterate quickly. And you have the luxury of being able to do this nights and weekends without asking anyone for permission. That is a beautiful thing. So don’t fuck it up by making excuses that you don’t have a network, you don’t have an audience, you don’t have any experience and you don’t want to validate. You’ve been handed a gift, which is the ability to launch something at almost zero cost except for your time without anyone else’s permission. And there is prior art. When I thought about building startups, software startups in the 1990s, there were zero books, zero magazines, zero blogs, podcasts didn’t exist. There was nothing that was written on this topic. There was no one talking about trying to bootstrap. There weren’t even people really talking about venture capital.
I mean, there were some magazines and stuff, but it was just assumed you were just going to go big and everything’s a huge endeavor and you sell a 30 year company in your first round. And it was just not great. The information asymmetry made it really tough. And then in the early 2000s, as folks like Joel Spolsky started talking about bootstrapping and then it was Basecamp. And then it was like me and Patrick McKenzie and Peldi were talking about it in the ’05 to say ’07 timeframe. This is where we were all learning. And there was not really prior art. There was very, very little. You exist at a time where, yes, I know it’s more competitive. I know more people are launching things. I know the tools today allow you to build faster, but it was hard back then too. It was hard back then.
There was no social media. So how are you going to market your product? Well, you had these different approaches and hosting took place usually on a bare metal server and it was very expensive and blah, blah, blah. There are headwinds at any given time that you want to build your business. And so making excuses today or figuring out a way to justify not doing the thing that most successful entrepreneurs do, which is to get some experience, get the idea or the problem from that experience or their network or one of the other seven ways that I’ve talked about. And then coming up with a hypothesis and actually challenging that instead of just going off building and launching is something I feel like you owe to yourself to do. So I hope you enjoyed that story of how we can learn from someone launching a consumer product and how it can make us better B2B entrepreneurs.
Thank you for listening this week and every week. This is Rob Walling signing off from episode 848.
That of course will sell out as well.
So one of the YouTube channels I subscribe to is by Michael Girdley. And he started the channel doing videos about big business failures. So airlines that failed, chain restaurants and such. And oftentimes you’ll find it’s once private equity gets involved, which is a whole other conversation. But in a recent video, he was talking about Liquid Death, which is a canned water company. And he talked through the origins of it and where the founder actually got the business idea from and how the founder validated this idea. And I love this example because it isn’t SaaS, it’s water. The two most common questions I get from early stage founders or aspiring founders is I don’t have any startup ideas, or I can’t decide which idea to pursue. So those are two of them. And to the first one, I usually say, well, here is a framework, seven different ways to come up with startup ideas.
Look at how you spend money at your day job. Look at the problem of a friend or relative, et cetera. And I give examples of these. I have these in my new book, Idea to traction. I’ve given away this framework probably on this podcast. I’ve definitely done it on my YouTube channel. I give folks ideas for how they can come up with startup ideas. And usually it’s starting with a problem that someone has. Inevitably, I get this question of, well, I don’t have a day job and I’ve never had one and I don’t have any experience. And basically, I just want ideas to be given to me, or I want to do a quick Google search and have ideas just appear in my feed. Or I want to just go on Reddit and find a business idea. And it feels a lot like the, I don’t actually want to do any work and I want to find a really great business idea that no one else has discovered.
That’s often what I hear. But it’s the idea of, I don’t have any industry experience. I don’t have the day job to pull from. And usually my answer is, well, then go get a day job. Don’t make the excuse that you haven’t gone and put in the work to get some industry experience and to get some exposure to problems day-to-day so that you know how a company works. And that you will inevitably see problems that you run into at the day job. And you will inevitably see how they spend money at your day job that you think, boy, that’s really a waste. This software sucks. Maybe I should replace it. And to the second question I get, which is, I don’t know which idea to pursue. I usually say, well, do some validation, do some research, put up a landing page, have customer conversations. It’s the same thing that I’ve been saying for a long time and it holds up.
And you don’t have to do validation exactly the way I say it. You don’t have to do the 22/00 framework. You don’t have to use the 5:00 PM framework, but do something. Don’t just sit there in analysis paralysis flittering between 10 or 12 different ideas, and don’t try to build 10 things and see what sticks because none of them are going to stick. Surprise, none of them are going to magically take off and you’re not going to learn anything if one of them does. So that’s what the story’s about. It’s about A, what if I don’t have any industry experience? And B, how do I decide if an idea is worth pursuing? So the founder of Liquid Death is Mike Cessario, and I hope I’m pronouncing that right. He was a designer and an advertising creative who’d spent about a decade working in advertising before starting Liquid Death.
He’d also grown up in the punk and hardcore and metal scene. And he played guitar in bands. So myself, I played the guitar. I was in a couple of punk bands. Oh my geez, about 25. Well, one of them was in the ’90s, that ages me, but 25 years ago, I think I played my last show. Is that right? 24 years ago. Yeah, it was fun. I have super grainy footage of it recorded on literally a handicam that recorded to tape, to these micro tapes. And I swear the resolution’s 480 by something, but it’s a fun one. So anyways, rolling back in 2009, Mike Cessario was working at an agency in Denver and friends who were playing the Warped Tour invited him backstage. And so the Warped Tour, if you don’t know, was it. Oh man, it was such a great tour. I don’t know if it was still good in 2009, but I used to go in the 1990s and early 2000s and just a big collection of really good punk bands.
And it was hardcore and metal as well, but I went for the punk. That’s where I’ve seen Blink-182 a couple times there. NOFX. Green Day. I saw Green Day a couple times. I don’t know, a bunch of great bands. And so they invited him backstage and he saw something. There were stacks of Monster energy cans everywhere. And it looked like the musicians on stage were pounding Monsters. It was like a hundred degree heat. And they’re pounding Monsters. And he’s like, “How the hell are they drinking that much energy drink without just imploding?” And the thing was, they weren’t, because Monster had created special cans of their water. They called it Tour Water for sponsored musicians. So it looked like a Monster Energy can, but there was water in them because Monster understood that bands didn’t want a bottle of water out on stage. And they also knew that bands weren’t going to be drinking energy drinks all day in that heat, but the cans of Monster look cool.
So Cessario thinks, why doesn’t anyone just market water like this? Why do you have to be a sponsored band to get this? And the challenge, of course, is healthy products are boring, especially if you’re in this counterculture, right? The punk metal hardcore scene. Beer is considered cool. For better or worse, it is. Alcohol, energy drinks, they get the cool branding. So this observation became what would ultimately become Liquid Death, which is now a company that does hundreds of millions a year in revenue. And the most recent valuation that I can find is $1.4 billion in their March 2024 funding round. Now obviously, these are just headline numbers and we all know how those can be inflated, but $333 million in sales in 2024, which is what I have numbers for, is still really impressive and a fast trajectory. It’s so hard to build consumer products like this, and these products with physical goods that have to be shipped.
And so a lesson I take from this is that ideas come from being in the arena or from being around the arena. You can say, well, he didn’t have a job at Warped Tour, but for him to get backstage, he had some type of network. Maybe it was through his job. Because back to the emails I get from aspiring founders saying, “I don’t have any industry experience. I don’t have a network. I don’t have any particular skills. Everything I list is like, well, I don’t have that. I don’t have that.” And it’s like, how do I find a great startup idea? Well, go get some fucking industry experience. Go build a network. Go develop some skills. Work for someone for a couple years. You don’t get a magic pass to not put in the work and not gain some experience just because you want to be an entrepreneur.
There’s this idea I think some aspiring founders have that you should be able to go to Reddit or ChatGPT and type in, give me 10 great SaaS ideas I can build this weekend that no one else will build that will work. And somehow these are going to drop out of the heavens into their lap. And frankly, that’s just generally not how it works. When we’ve surveyed entrepreneurs who have businesses with revenue, SaaS businesses, it’s only 3% of them that say they’ve found their idea through online research and forums. It is three out of a hundred, 30 out of a thousand, 300 out of. You get the idea. It’s just almost zero. It’s approximately zero. So don’t think that that’s going to happen. You do have to have some type of luck or network or a day job. I will tell you, I worked for nine years after college before I was finally able to quit my day job.
Nine years. See, I worked construction for like two and a half of that. So I wasn’t launching anything because I didn’t know how to code. And at that time, you had to know how to code. I wouldn’t build your stuff for you. And so counting the time where I actually started, I learned how to really update my skills in coding nights and weekends from the library at first. And then I bought books and then I eventually got a job coding. So once I kind of knew how to code well enough to build websites, well, then it was maybe like two or three years until I was launching my own stuff. And frankly, almost all those early ideas were terrible because I didn’t yet have much history of solving actual business problems. I was trying to mimic the big B2C venture funded style businesses, but I was trying to bootstrap them because I didn’t know how to raise money and probably couldn’t have.
I needed reps. I needed to put in the repetitions. So imagine you’re a musician and you say, “I don’t know how to play the guitar. I don’t know any musicians. I’ve never played in a band, but how do I headline a festival?” And it’s like, “Well, you don’t. The first step is you learn the instrument. You learn how to play. And then you play crappy gigs. And then you meet musicians. You do open mic nights. You write some songs. They’re not going to be very good.” My early songs were not great. You practice, put in the reps, and eventually you might get to the point, if you put in enough years, that you get to quit the day job or headline the festival. So the idea here is that this founder, Cessario, Mike Cessario, was in the right place at the right time, not because of pure luck.
He had spent years working in advertising, playing music, hanging around that scene and learning how brands work. This opportunity didn’t magically appear in his living room. He was doing something, developing expertise and paying attention. So that’s the first piece. And that’s around being in the arena or doing something. And I’ve said this over and over. Doing stuff in public creates opportunity. Building things in public creates opportunity. And it doesn’t necessarily one-to-one link to it, but it is. If you start blogging, if you start launching things, if you start a podcast, if you start launching software products, if you get out there and start doing things, you’ll get the reps in. And if you work a day job, whether you like it or not, I mean, I liked some of my day jobs, didn’t like most of them, but you learn things. And be deliberate about learning from that job, about where they spend money, about where the gaps are, about all the problems that could be solved with software.
So the second part of this story might be an even better lesson for a lot of entrepreneurs. I hear all the time, “I just want to build. Validation doesn’t really work anymore. AI makes software so cheap to build, you might as well just build it instead of validating.” Or, who actually validates things before they launch them? Well, me for one. And I validated or invalidated ideas before putting a bunch of time into them. My books, MicroConf, multiple SaaS ideas, TinySeed. And in addition to me, and I talked about this a couple episodes ago, most of the second time founders and third time founders, the serial entrepreneurs I see, they do more research and more validation before they select an idea rather than when they were first time and kind of flailing. So validation doesn’t have to be exactly what The Lean Startup says, and it doesn’t have to be exactly what’s in my books or my podcasts or my YouTubes, but it is just the idea that you do some research and you put some thought into this.
And some maybe conversations or testing of the idea or the assumption that what you want to build is valuable before spending the time to not only build it, but to launch it, market it, get behind it, push your way behind it. It’s a way to avoid spending months or potentially years building stuff nobody wants. So guess what Mike Cessario did before he started manufacturing Liquid Death? He validated it. The Liquid Death MVP was basically a fake product. He knew something important that if he walked into someone’s office like an investor and he said, “I’m going to sell water in a tall boy can with a skull on it. I’m going to call it Liquid Death. And I’m going to tell people this tagline is murder your thirst.” He was going to have a tough time raising money. And frankly, I’d imagine he didn’t know if this was going to work.
Even if he thought it was a great idea, he didn’t know. And he was going to put his weight behind it and years of effort trying to raise capital. It’s a lot to ask. And he didn’t have the overconfidence to be like, “This idea is genius and the world needs it.” So instead of going asking for money and instead of manufacturing the water, he manufactured the marketing. So he collaborated with a few people and he created the whole brand, the design of it. He mocked up what the cans would look like. There was no production line, right? There was no inventory. They didn’t even have actual cans. And they made a video ad for a product that essentially didn’t exist yet. And they put it on Facebook. So the video cost about $1,500 to produce. And according to the VP of Creative of Liquid Death, there was a relatively small amount of money spent promoting it.
So within about four months, the video had 3 million views. It had garnered them somewhere between 50 and 80,000 Facebook followers, depending on Mike Cessario’s telling of the story. Obviously memory and stuff. He remembers different numbers, but it was a lot, tens of thousands. At one point, their Facebook following was larger than Aquafina’s. And comments ranged from, “This is the greatest thing I’ve ever seen. Where can I buy?” to, “This is the dumbest fucking thing I’ve ever seen,” which is also validation. But here’s where it gets interesting. They started receiving messages from 7-Eleven franchisees asking how they could carry it. And a New York beverage distributor contacted them and asked them to speak with sales. So there was no sales because they didn’t have any cans. So they had generated demand. And it’s really interesting that that is some validation that people are at least interested.
Does it guarantee it would become a successful beverage company? No, because you can’t get to 100% validation until you build something and sell it. But did he go from 5% confidence to 50%? 60, 40, some number bigger than 5%? He did. And at that point, he had something to then go show investors. And obviously bootstrapping a water company would be really hard. So in this case, I do fully understand why he raised it. So then he went and raised money and he raised 150 grand from friends and family to get the first production run going. And then he raised institutional capital after that. So I don’t know, 1.6 million and 2.25, whatever. It doesn’t really matter how much they raised. It’s just that they raised enough to then manufacture and then sell. And doing hundreds of millions a year in a CPG, a consumer packaged good, is really, really impressive because breaking into that is tough.
And it’s water in a can. The point of this is not copy Liquid Death. I’m not saying every SaaS founder should make a fake viral video. And I’m not saying that you need millions of views in order to develop. It’s none of that. I’m certainly not saying you need to raise venture capital. Those are the details. But the mental models are what I want you to pay attention to. What did Cessario do? Well, he developed some expertise, some network. He noticed a problem. He formed a hypothesis. He did not jump on and just start building and shipping things wildly and randomly. He found a cheap way to test it. He observed actual market behavior, gathered evidence, and then he invested more resources. So that’s almost exactly the framework that I talk about. It’s what I’ve used to build software companies, launch books, start MicroConf, start TinySeed.
And it’s what I talk about in The SaaS Playbook. I mean, it’s what The Lean Startup talks about. This is not novel new information, but people still don’t want to do it because they want to build. They want to make. And even though this is a different industry, it’s the same underlying process. The thing I’m tired of is I’m tired of excuses. But I don’t have an audience, but I don’t have your network, but I don’t have industry experience. I don’t know how to validate. I just want to build. And it’s like, how about instead of building product, you build your network. Get your experience. Learn the skill. Figure out the cheapest, credible way to test your hypothesis, which is that people need this software, this idea that you have in your head. And you can follow the 22/00, The Lean Startup, whatever it is, because that’s a nice guideline.
If you had no knowledge of this, then that’s great. If you have your own knowledge and you’ve seen the way someone’s done it, great, do that. But don’t make excuses of why you can’t do this because there are principles, there are mental models and loose guidelines that will dramatically improve your odds. And I see them working in B2B SaaS and you can see them working if you’re going to launch a conference or an accelerator or write a book. And apparently you can see them being applied to things like canned water. And I never would have thought of that example if I had not been watching Michael Girdley’s YouTube channel. But I’m glad I did because I enjoy looking outside my own disciplines and taking lessons from other entrepreneurs. And even not entrepreneurs, right? Taking lessons from musicians like The Beatles, from artists like Picasso, you’ve heard me integrate.
Genius performers like Bruce Lee or Michael Jordan, Wayne Gretzky. I’ve talked about these folks on this podcast in the past. I love learning lessons from people who are so good at what they do, that they are complete outliers in terms of their performance because I think each of us in our quest for personal growth and business success, I think each of us can learn from these folks who had the commitment and put in the time to become great. Not just great, but some of the greatest in the world. And even if you don’t become one of the greatest in the world, that doesn’t matter. That’s the beauty of entrepreneurship, especially of bootstrapping. You don’t even need to be in the top 10,000 SaaS apps in the world to have a completely life changing outcome, whether you sell, whether you just take profits. The idea that to make millions or even to make a living as a professional athlete, how many NBA players are there?
There’s professional basketball players in the US. There’s like 400 and something, 440, 450. Those odds are brutal. Those odds are brutal to get there. How many legitimate SaaS apps are there in the world? 50,000 at least. And if we include all the little hobby projects or all, I don’t even mean hobby, but projects that are making five grand a month, 10 grand a month that aren’t included in that. Could there be another 10,000, 50,000? Yeah. It’s not millions by the way. Most people are shocked to hear this, but it’s a lot. And you don’t need to be in the top 1% of the 1% like you do to be a professional athlete or to be a professional musician or to be one of these kind of other outlier industries, even to start the next canned water company or bottled water or whatever. It would be tough.
Odds are against you. But you’re a bootstrapper and you’re in software where you can build and iterate quickly. And you have the luxury of being able to do this nights and weekends without asking anyone for permission. That is a beautiful thing. So don’t fuck it up by making excuses that you don’t have a network, you don’t have an audience, you don’t have any experience and you don’t want to validate. You’ve been handed a gift, which is the ability to launch something at almost zero cost except for your time without anyone else’s permission. And there is prior art. When I thought about building startups, software startups in the 1990s, there were zero books, zero magazines, zero blogs, podcasts didn’t exist. There was nothing that was written on this topic. There was no one talking about trying to bootstrap. There weren’t even people really talking about venture capital.
I mean, there were some magazines and stuff, but it was just assumed you were just going to go big and everything’s a huge endeavor and you sell a 30 year company in your first round. And it was just not great. The information asymmetry made it really tough. And then in the early 2000s, as folks like Joel Spolsky started talking about bootstrapping and then it was Basecamp. And then it was like me and Patrick McKenzie and Peldi were talking about it in the ’05 to say ’07 timeframe. This is where we were all learning. And there was not really prior art. There was very, very little. You exist at a time where, yes, I know it’s more competitive. I know more people are launching things. I know the tools today allow you to build faster, but it was hard back then too. It was hard back then.
There was no social media. So how are you going to market your product? Well, you had these different approaches and hosting took place usually on a bare metal server and it was very expensive and blah, blah, blah. There are headwinds at any given time that you want to build your business. And so making excuses today or figuring out a way to justify not doing the thing that most successful entrepreneurs do, which is to get some experience, get the idea or the problem from that experience or their network or one of the other seven ways that I’ve talked about. And then coming up with a hypothesis and actually challenging that instead of just going off building and launching is something I feel like you owe to yourself to do. So I hope you enjoyed that story of how we can learn from someone launching a consumer product and how it can make us better B2B entrepreneurs.
Thank you for listening this week and every week. This is Rob Walling signing off from episode 848.
Episode 847 | What Second Time Founders Do Differently, Pricing AI Agents, and More Listener Questions (Rob Solo)
/
RSS Feed
Would you spend a year on distribution for a product that doesn’t exist yet?
In this solo episode, Rob answers listener questions about how second and third-time founders think differently, from filtering a dozen good ideas down to one, to why distribution and validation matter more the second time around. He also digs into how to sell and price AI agents, and whether a long enterprise sales cycle is worth the wait for a bootstrapper.
Want to get your question answered? Submit your question for an upcoming episode.
Topics we cover:
- (2:54) – Selecting an idea after an exit
- (5:26) – Using spreadsheets and advisors to filter
- (8:52) – Founder retreats for big decisions
- (10:01) – How to sell an AI agent
- (12:32) – Pricing agents on value replaced
- (17:13) – What later-stage founders care about
- (18:59) – Distribution and validation for repeat founders
- (23:12) – Long enterprise sales cycles
- (26:33) – Optimizing for learning speed
Links from the show:
- MicroConf Europe┃Reykjavik, Iceland · Sept 21–23, 2026
- TinySeed Accelerator | Join our email list – Applications open in September 2026
- Idea to Traction: Stop Building SaaS Nobody Wants (book wait list)
- The SaaS Playbook
- Rob Walling Newsletter
- Zen Founder Guide to Founder Retreats by Dr. Sherry Walling
- Episode 681 | Why Launching a Second Product is Usually a Bad Idea
- SignWell (Ruben Gamez)
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
Subscribe & Review: iTunes | Spotify
Rob Walling: Welcome back to another episode of Startups for the Rest of Us. I’m Rob Walling, and in this episode, I’m going to be answering your listener questions. It’s the dog days of summer right now. Most people aren’t around. I’m having trouble scheduling people for interviews and to join me on the pod. So I’m doing another solo episode today, but look forward to some upcoming interviews and co-hosted Q&A sessions here in the next couple months. Things always tend to ramp back up in the fall. Speaking of the fall, it’s only four weeks until MicroConf Europe. That’s in Iceland, September 21st through the 23rd. We are sold out, but producer Sonya has added a couple more tickets. This is the last chance to get yours, microconfeurope.com, if you want to attend and see a phenomenal list of speakers, incredible outdoor excursions, including the chance to check out the northern lights if the weather cooperates.
But let me be clear, there’s no guarantee of that. I am just very hopeful and crossing my fingers. Microconfeurope.com if you want to hang out with me and 170 of your favorite bootstrapped founder friends.
Let’s dive into my first listener question. Actually, I’m going to take a few text questions today. They’re about starting your second startup. One is about launching an AI agent, which I’m curious to weigh in on. And someone asking about caring about third and fourth startups, the things you think about differently. So they are in effect later stage questions, but I think everyone can benefit from them. And then I have a couple audio questions as well. If you want to send a question in, it looks like I’m down to 22 total questions right now, which is the lowest level in a very long time. I’ve spent this summer kind of cleaning them out. But if you go to startupsfortherestofus.com, click “ask a question” in the top nav, you can submit audio or video, which goes to the top of the stack, or submit a text question and I will get to it when I can.
And of course, priority always goes to questions that are a bit later stage. As I’ve mentioned on the show, a great source of questions for me these days are the emails that I’m sending to my email list. And I’ve been trying to send a weekly email, and had for about probably like four months straight. And then in finishing my new book, I did get a bit behind on that, but have been about every other week for the past couple of weeks. And I plan to ramp that back up here. So robwalling.com/emails if you’re interested in receiving new thoughts and essays from me that don’t appear on this show. And several people respond and give me feedback, input, questions, thoughts, and I love answering them here on the podcast. I can give so much more of a thorough answer on this show than I can typing text out into an email inbox.
So an anonymous reader wrote, “My current biggest challenge is idea selection.” So typically when I get questions like this, and I get this a lot, it’s often, almost always, frankly, from first time entrepreneurs. They just can’t figure out how to select an idea. And I get that question so often, I don’t tend to answer it much anymore. I point them to resources that I’ve already created on this topic, like my upcoming book, Idea to Traction. I also have some YouTube videos on it. But this reader has a different experience. He says, “I have around a dozen, which I believe to be good ideas, but I’m having trouble prioritizing which one to pursue wholeheartedly. The embarrassing thing is I’m a successful founder with an exit under my belt, and I’m also an advisor to a bunch of startups. I should be able to quickly move out of the idea stage.”
Oh, I know this feeling. “Yet in some ways it’s more difficult now because I apply more stringent qualifiers on my ideas than I did before I had my exit. Things like meaning and impact and personal enjoyment rather than simply profit and growth. My next success feels like it needs to be bigger and better than the previous success, which creates a lot of unnecessary pressure. How have you dealt with this? Thanks for everything you do for the startup ecosystem.” I love this question because it is almost inevitable if you have an exit. Whether you sell for half a million dollars or $20 million, if you’re going to start another startup, it is a different calculus. And of course, people can say, well, first world problems, right? You have all this money and now you have to have meaning and impact from your startup. First world problems are still problems, and there are still things that you have to muddle through, and you don’t want to make the wrong decision and regret it down the line.
I will say that I think it does depend on if you sell for a nice chunk of change versus never-have-to-work-again money. Because if you never have to work again, I think it becomes really hard to want to do the grind again. I think you index heavily on meaning, impact, personal enjoyment, and it can be a real struggle to get motivated to put in the work like you did before. I have talked to, no joke, dozens of founders who’ve been in this situation. I was in this situation myself a couple times. It’s an interesting position to be in. The biggest thing that I would say is, given the position you’re in where you’re an advisor, you obviously have a network of people. Maybe you had prior investors, prior co-founders, maybe you have just confidants, folks who’ve been alongside you on your journey. I would turn to them and ask for advice.
And I think the way I would frame it, if you have a dozen good ideas, I would try to narrow that a bit. And I might put them all in a spreadsheet. I mean, it depends on how spreadsheety you are, but for stuff like this, is there a meaning scale, an impact scale, a personal enjoyment scale? Is there a likelihood of success scale? Invent four, five, six columns and figure out, is meaning on a one to 10 scale, does that make sense? Or is it just a binary? Is it, it has enough meaning or it doesn’t? You can invent this. You can make this up as much as you want, and you can weight these things such that they produce a single number, right? They multiply together or whatever and give you a single number on the right hand side. Now, I would not make that decision based solely on that single number, but can you go from 12 ideas maybe to six using that?
Like the bottom six or the bottom handful? Maybe. That’s what I’d be looking for right now, is ways to filter out ideas that I don’t think fit where I want to go. And usually the way I do this is by a little bit of gut instinct. I will crank up a spreadsheet like this. I will talk to advisors, friends I know who know me well, whom I trust, been in mastermind groups, a coach if you have one. So it’s this mix of internal and external feedback. And I think for me, the viability of the business and the size, like you said, it needs to be bigger and better than the previous success. That totally makes sense to me. I have felt that. When I sold HitTail, or I guess I kind of put it on autopilot, I hadn’t sold it yet, I wanted Drip to be 10 times the size of HitTail.
And after selling Drip, I wasn’t going to do another SaaS app that got as big as Drip again. TinySeed, well, I guess we could say it’s 10 times the size in terms of, I don’t know. We raised a lot of funding. We’ve raised almost $60 million. So by some measures, I think TinySeed is, I guess it’s just different. It just impacts a lot more people in a deeper way than building a piece of software. So for me, it’s very rewarding. I do. I like these metrics you’ve thrown out. I get a lot of meaning from TinySeed. I have a lot of impact and personal enjoyment from TinySeed. And in fact, the profit that I get, the earnings I get from TinySeed are significantly less than I made when I was building Drip. But that number is less important to me right in this moment. Now we are building something that I think is bigger and better and it’s more impactful, but I totally get that.
And I would not undervalue that. I think your gut instinct, your gut feeling on this is pretty solid. And I think it’s just a matter of trying to filter and narrow on your own and then trying to get folks who know you well and who have some knowledge of the startup space, not to necessarily evaluate the ideas, because I think you have the vision for that, but it’s to help you evaluate which of these is a fit for you. I remember questions that Ruben Gamez asked me where he said, “Do you really want to serve that customer base?” And I hadn’t thought of that. And that particular customer base was, it was an app that I didn’t start, but I was like, “I don’t know that I have an affinity to work with,” insert whatever industry it was here. And he’s like, “Do you want to work on that for five or 10 years and serve those customers?” And I was like, “You know what?
I’m not sure that I do.” So it’s things like that that I just wouldn’t have thought of on my own. So getting a trusted friend or two involved can be helpful, as well as doing a founder retreat. I haven’t talked about founder retreats on this show for years because frankly, I haven’t gone on one probably since before COVID. But you can look up the Zen Founder Guide to Founder Retreats. It is a book by my wife, Dr. Sherry Walling. It’s an ebook. I think it’s, I don’t know, $20, $25. And it’s a really cool guide, like a really thorough and intelligent guide to getting away for a couple days. Even if you have kids, you go solo somewhere and you just basically spend a very quiet couple days, two, three days on your own thinking through these types of decisions. I think this is a great use case for going on a founder retreat and really thinking these through.
And maybe that gets you down to your top three or your top five. And then you go to, again, friends and advisors and such for it. But I hear you. I think your pain is very real. And even though it seems like a first world problem, it’s a big deal when you’re deciding what to do next. My next question is from Daniel Heuman. He has written into the podcast many times with great questions. He runs intelligentediting.com. And Daniel writes, “We’ve listened to episode 681.” Yeah, so this is an older question. “Why launching a second product is usually a bad idea.” That’s where Ruben Gamez and I talked through why it’s usually a bad idea. And Daniel says, “Despite everything that episode says, we have an idea for an AI agent that would make sense for us as a new B2B product. As I researched how to potentially sell that, everything sounds like selling B2B SaaS.”
Yeah, it kind of is. “What do you see as the key differences, if any, if the product is an AI agent?” I like this question because SaaS apocalypse is what I keep saying. Yeah, I get it. Some SaaS apps are going to, I’ve said on the show, I think it’s 10 to 20% of SaaS apps are going to eat it. They’re going to have real trouble. And it’s some specific categories and things that AI can specifically just replace, or people will build themselves or whatever. But AI agents, how else would we think about selling them? You’re going to sell them a lot like a B2B product. And so for example, doesn’t it make sense if TinySeed is funding B2B SaaS and someone applies with kind of an agentic business that we would fund it? Well, of course it does, because it’s subscription software where software provides most of the value.
It’s still by definition, or at least my definition, it’s still SaaS. But obviously there’s a couple hurdles maybe. Number one is a lot of folks are promising that AI can do everything, and that you have this agent that can just make all the decisions and you don’t even need this employee in this role anymore. So an example, maybe as a receptionist, someone answering the phone. Or if you say you’re going to have an agentic SDR, right? Someone who is doing cold outbound on LinkedIn and Twitter or via email or even cold calling? Doing outbound and you’re going to replace the SDRs. You can promise that. And the odds are it’ll be 80 or 90% of that. And that’s not enough. So I think a big thing is to figure out what can you promise? What can you stand behind? Because you can make the sale, but with subscription software, people can cancel your app in a month or two, and that’s churn.
So I think that’s one thing, is to be careful with what it can actually do rather than what you think it can, or what you wish it could do. That’s one thing. The next thing is I would price it differently because B2B SaaS requires a human to log in and do things. So if you’re charging $100 a month per seat for your SaaS, I would consider if an agent could come in and do 80%, 90% of the job of a human, isn’t that worth a thousand, $2,000 a month? I think so. Could it be value based on the salary of the person, the receptionist or the SDR that you’re eliminating? Could it be a portion of that? I do think so. Now, a rule of thumb that can be broken is often if you can save someone a million dollars a year, then you charge one tenth of that, 100,000 a year.
So if you’re going to eliminate the salary of an SDR that would make what, 80 to 100,000 a year, just throw out a number, then would I think of charging 8,000 to $10,000 a year? Yeah, probably it’s a reasonable place to start. Maybe it’s twice that. Maybe it’s half that. Maybe it depends. Because are you really replacing them if you’re only doing 80 to 90%? It’s more like, does it take a team of five down to a team of one that’s then monitoring and exception handling the agents? Yeah. You get the idea here. Okay, 10,000 is 10%, but I think 80% is good. Maybe I’m charging eight grand, whatever. I mean, we’re talking rounding errors here, but that’s how I’d be thinking about it, is what is the value that you are actually replacing? Because B2B SaaS for years, if not decades, has been replacing humans.
And B2B agents are going to be doing, or if they’re not already, are going to be doing the same thing. But again, the big thing is, if I was going to launch an agent, to me, I want the brand and the reputation that this thing actually works. I want people to say, “Holy shit, I’ve never seen an agent this good,” rather than, “Wow, yeah, it kind of gets you most of the way there, but you still have to babysit it and you still have to do a bunch of manual and you still have to do…” Because that’s what I see and hear with so much of the AI hype. When you actually double click in all the bullshit that we see on X/Twitter or LinkedIn, people talking about, “I have agents running my whole business.” Have you actually looked at their marketing and looked at their copy and looked at the cold emails that are going out?
They’re not good. They’re solidly mediocre. I’ve had this rant in the past that unless the AI is tuned and optimized to be exceptional, it’s going to be very average. And if average produces the results that you’re selling, fine. But if not, it’s a problem because people are going to skip. And this is one reason we see AI software with these outrageous churn rates of 20 to 40% per month, because the promise is there. And then you dip your toe in and it doesn’t actually work. So that’s the biggest thing I think I’d be thinking about. In the end, I think agents, if they work, are amazing. And I would not shy away personally from building an agentic business. And in fact, today, if I had software, Einar Vollset and I were talking the other day and he was saying, “Hey, if you have software that right now has a seat and there’s an operator, like an individual contributor doing a thing, it is very logical for me to think about how can I build an agent to replace that operator or replace half of their job or 80 or 90% of their role and then charge 10, 20 times what I’m currently charging per seat for that agent to just do it.” And if you build that and if you get some traction, you should apply to the TinySeed Accelerator.
That’s tinyseed.com/apply to hear about our next application period. So thanks for that question, Daniel. I answered it kind of broadly. If anyone has more questions about AI agents, this is the Wild West. And I have yet to see what I would consider a definitive call on all this. I think people are feeling it out, but it really does feel like B2B AI agents are sold just like B2B SaaS. And B2B AI agents are priced very similar to B2B SaaS. I don’t mean the pricing is the same, but the philosophy. If you go read The SaaS Playbook and look at how I talk about pricing based on value and having a value metric and et cetera, et cetera, I would apply all of that to AI agents. I would just expect that potentially the AI agent could be priced a lot higher than just the SaaS.
And finally, of course, you have to keep in mind that if you have an AI agent, they could be very expensive and they could hit your profit margin. There’s a chance that you can charge 10 times for an AI agent and it makes you the same amount of net margin, of net profit, as your SaaS seat did. So that’s just another thing to keep in mind. Thanks again for that question, Daniel. My next question came into our email, questions@startupsfortherestofus.com. And Alexi from clicklyapp.com asks, “What does a founder care about during a third, fourth, or fifth startup?” And Alexi writes, “In the last episode, you mentioned that founders care about different things in their third, fourth or fifth startup than they did at the beginning. And also you care about other things doing the 800th episode of the podcast than what you cared about 16 years ago.
So what do you care about now? What does a founder of their third, fourth, or fifth startup care about? Thank you. I appreciate you and your guests sharing your wisdom on the podcast.” It’s a good question. A bit of this was answered in the first question. He’s only on his second startup, but I think it holds. It’s like you start to care less just about the money and the outcome, and you start caring a little more about enjoying your life. You can only grind for so long. And some people, I mean, there are some anomalies, right? There’s Hiten Shah and there’s David Cancel. And I guess Jason Cohen, I think, has had three startups, which is three big ones. And that’s tough. I say it’s tough. It’s a lot of work. There’s not a lot of folks I know who do three, four, five.
That’s why serial entrepreneur is actually such an impressive moniker when you really mean it. But all that said, second, third, and fourth, I think you, depending on what your earlier outcomes were, you just care less about, it’s not that you care less about the money, but that’s not the main driving factor. If you have had a successful exit or you made enough money that it kind of doesn’t matter anymore. And most people are less willing to do the early grind. And that’s obvious. You might be a little later in life, even if you’ve sold your first one in your 20s, now you’re in your 30s, maybe you’re married, maybe you have a kid, maybe you’re in your 40s and you’re kind of like, “Eh, I want to slow down a little bit and enjoy life a little more.” These are the types of things you start thinking about.
So you start factoring that into your decision and become much more picky about what it is that you want to invest your time in. Another thing you care about is, look at what Ruben Gamez did with SignWell, which was his second successful app after Bidsketch. He started with distribution. 18 months before he launched SignWell, he built a website and started doing SEO. With Drip, which depending on how you count, I think, what would we say? It’s my fourth. Yeah, it’s my fourth company. And I think it was eight months before we launched. I had a website up. I was running ads. I was building that launch list. I cared much more about validation and interest and being more certain that this was a decent idea. Did a lot of keyword research, had customer conversations. I did all the stuff that I talk about on the show that I put in the book, Idea to traction, that’s coming out in a couple months.
I think second time, third time founders care a lot more about distribution and making sure that they’re building something that people want. You can never get to 100% with validation, not until you build it. And the story of Drip is just that, right? We launched and got to eight, 9K MRR, which was pretty good, right? But I was miserable. I was unhappy with it. And that’s another thing is, as a, what, third, fourth time founder, I was super annoyed with the fact that Drip plateaued at that number. But if I was a first time founder, I’d have been overjoyed. Be like, “Yeah, I can quit the day job.” So that’s the difference of just your aspirations increase. And my aspirations didn’t increase just to do it. Number one, I wanted a bigger financial outcome than I had seen in the past. But number two, I wanted to learn.
And in order to learn, you have to do some new things. And building an app that’s the same size as the last one, for me, wasn’t that interesting because I wasn’t going to learn new things. So that’s another thing I think that folks think about. And so it’s not just distribution you think about, but it’s like, how can I be more careful and not just have to luck my way into this? I don’t know of any successful founders who are on their second, third, fourth effort that build 10 things and see what sticks. I know literally zero. That is an approach for someone who I would say just doesn’t know any better. When you see someone coming back for their second, third, fourth, fifth effort, they know a little more and they have a usually better gut feel, a little more intuition about it. They do a little more conversating, a little more researching, a little more validation.
Yeah, it’s the pattern I see. And finally, one part of Alexi’s question was, what do I care about doing the 800th episode of the podcast? What do I care about today that I didn’t care about 16 years ago? For me, I did care about learning the whole time. These days for me, it’s impact. I’ll say I weighed money a lot more important than impact 16 years ago because I needed money. And I had a goal of, A, supporting the family. And then it was having enough money that I never had to work again and having that freedom. I was going for freedom. So I have that now. So what do you look at next? There’s a little bit of legacy that I think about. Part of that is writing books. I’ve written four books in the last 10 years after having written, I guess, two in the prior six years.
So you can do the math. Yeah. And I guess I’d say I’ve written three books in the past four or five years. The SaaS Playbook, Exit Strategy, and Idea to traction. So books are part of that because books just last a long time. They’re so not ephemeral. And then this podcast, the reason that I doubled down on it, and it was in 2018, 2019, and really upped the production value, tried to improve just the quality and the focus of it. And honestly shared more of my honest opinions on here starting around that time, put more of myself into the show. That was a turning point for me because I valued continuing to do the show because I think the show itself is a legacy. It’s an artifact that will live on even if someday I retire from all of this. I think it can be an interesting resource for folks.
So thanks for that question, Alexi. I hope that was helpful. My last question of the day is an audio question from Andrew.
Andrew: Hey, Rob. Love the podcast. Been listening a long time. So I’ve been looking to build a company focused on hospitals, specifically clinical laboratories. I think there’s a clear regulatory and workflow pain point there that I can address. My background is, I’m a physician that works in this field. The challenge I’m wrestling with is that the hospital sales cycles are long and the budgets move slowly. So it’s going to take a while to realize any kind of revenue or validate product market fit. I work with another healthcare startup and I can see that it takes them anywhere from 12 to 18 months to close a deal. And so I guess my question is, from your experience, is it worth pursuing this path despite the slow adoption cycle if the problem, space, and need are strong? Or is it smarter to apply the same skill set to another vertical with similar regulatory compliance needs, but faster sales?
So if you were in my position, how would you evaluate whether to stay focused on healthcare or pivot towards another vertical? Anyways, thanks.
Rob Walling: So thanks for this question. Yeah, we have TinySeed companies, and they’re MicroConf companies as well, that sell into healthcare or just sell where they have 12 to 18 month sales cycles. I’ve seen them make it work. So it’s not a hard no. I wouldn’t do it myself. I wouldn’t enjoy it. I find having these long, drawn out sales cycles with big enterprises exhausting. And unless I also had customers that will buy on a quicker sales cycle, and I don’t know what that looks like here, if that’s even possible, but unless I had that, I would just get demotivated with the business. To do something like this, you either need to raise funding, you need to have enough money in the bank that you’re kind of burning your own runway personally. And that’s a really tough sell for me on this. Or you’re doing it nights and weekends.
My choice probably, well, I mean, I guess raise funding or nights and weekends, but if you haven’t closed a deal, it’s very, very hard to raise funding unless you have a great network or a prior exit. So my answer is, would I do it? No. It just wouldn’t be fun for me unless I had deals that can close every month, two, three months, to keep that motivation going. Because without MRR going up, I mean, I just imagine MRR or ARR being basically zero for 12 to 18 months. And then you get this huge jump. We’d sold a quarter million dollar a year contract. Wow, 250K ARR. Then you have another six month wait because you’re working on multiple deals at a time. But another six month wait to jump again, it’s like, ah, that’s not the business I want to build. I don’t enjoy those types of businesses.
However, have I seen incredible businesses built that way? I have. Are there some within TinySeed that do exactly this? There are. And those founders are different than I am. They, I guess, get their motivation from something else. They’re willing to grind and do it because the opportunity is there. So I’m not saying don’t do it. I’m saying part of your question is, if you were in my position, if I was, based on me, I wouldn’t do it. But I think there’s a couple ways to think about this. As I said, are there customers in the space who are able to make decisions faster? Or do you start this as a slow roll and you get five, six, seven conversations going such that in that 12 to 18 month timeframe, you start closing some of them? I guess you’re going to need to do that anyways because it’s a sales funnel, and what are you going to close out of five, six, seven?
You’re only going to close a couple, right? So yeah, if given the choice, I would be thinking about a vertical where something closes sooner because the problem with this is if you truly have a new product with no sales, you want to optimize your learning speed. And if you’re waiting 12 months to learn, ain’t nobody got time for that. You have better things to do with your life than spend 12 to 18 months only to learn that nobody wants to buy your software, or your software doesn’t solve a problem worth solving at that price point, so it’s not viable. You want to be learning constantly. So that’s really the question I’d be asking is, if the sales cycle’s that long, is there a way to learn quicker than some big enterprise sales cycle? Is there an MVP possibility? Is there a way for you personally, or for you to hire someone who goes and does the task?
This is like the MVP, right? The human automation I talk about. Can AI do it? I don’t know, probably not in healthcare. But you get the idea. I think it’s dangerous for a bootstrapper to have a feedback loop that’s this long because you’re just going to waste years of your life. I can’t imagine taking, that’s such a risk. The opportunity cost of this is significant. So I would either be looking for smaller customers or a vertical where there are customers that can make a decision quicker. But that’s just my opinion. I could be wrong. So thanks for that question. And thank you for listening to this and every episode of Startups for the Rest of Us. The back catalog is deep, folks. If you haven’t gone back and listened, go back a hundred episodes and pick a few out that you remember or that maybe you don’t remember.
I’ve been listening back to some of the episodes to refresh my memory. And honestly, sometimes there are frameworks or ideas I come up with on the show spontaneously that I just don’t remember. And I realize, oh, I should pull that into a book or I should write an essay about it, robwalling.com/emails. So if you feel like you want more Startups for the Rest of Us in your life, it’s pretty easy to go back 100, 200 episodes and pick a few, or you can go to the greatest hits on the website in the top navigation. So thanks so much for listening this week and every week. This is Rob Walling signing off from episode 847.
But let me be clear, there’s no guarantee of that. I am just very hopeful and crossing my fingers. Microconfeurope.com if you want to hang out with me and 170 of your favorite bootstrapped founder friends.
Let’s dive into my first listener question. Actually, I’m going to take a few text questions today. They’re about starting your second startup. One is about launching an AI agent, which I’m curious to weigh in on. And someone asking about caring about third and fourth startups, the things you think about differently. So they are in effect later stage questions, but I think everyone can benefit from them. And then I have a couple audio questions as well. If you want to send a question in, it looks like I’m down to 22 total questions right now, which is the lowest level in a very long time. I’ve spent this summer kind of cleaning them out. But if you go to startupsfortherestofus.com, click “ask a question” in the top nav, you can submit audio or video, which goes to the top of the stack, or submit a text question and I will get to it when I can.
And of course, priority always goes to questions that are a bit later stage. As I’ve mentioned on the show, a great source of questions for me these days are the emails that I’m sending to my email list. And I’ve been trying to send a weekly email, and had for about probably like four months straight. And then in finishing my new book, I did get a bit behind on that, but have been about every other week for the past couple of weeks. And I plan to ramp that back up here. So robwalling.com/emails if you’re interested in receiving new thoughts and essays from me that don’t appear on this show. And several people respond and give me feedback, input, questions, thoughts, and I love answering them here on the podcast. I can give so much more of a thorough answer on this show than I can typing text out into an email inbox.
So an anonymous reader wrote, “My current biggest challenge is idea selection.” So typically when I get questions like this, and I get this a lot, it’s often, almost always, frankly, from first time entrepreneurs. They just can’t figure out how to select an idea. And I get that question so often, I don’t tend to answer it much anymore. I point them to resources that I’ve already created on this topic, like my upcoming book, Idea to Traction. I also have some YouTube videos on it. But this reader has a different experience. He says, “I have around a dozen, which I believe to be good ideas, but I’m having trouble prioritizing which one to pursue wholeheartedly. The embarrassing thing is I’m a successful founder with an exit under my belt, and I’m also an advisor to a bunch of startups. I should be able to quickly move out of the idea stage.”
Oh, I know this feeling. “Yet in some ways it’s more difficult now because I apply more stringent qualifiers on my ideas than I did before I had my exit. Things like meaning and impact and personal enjoyment rather than simply profit and growth. My next success feels like it needs to be bigger and better than the previous success, which creates a lot of unnecessary pressure. How have you dealt with this? Thanks for everything you do for the startup ecosystem.” I love this question because it is almost inevitable if you have an exit. Whether you sell for half a million dollars or $20 million, if you’re going to start another startup, it is a different calculus. And of course, people can say, well, first world problems, right? You have all this money and now you have to have meaning and impact from your startup. First world problems are still problems, and there are still things that you have to muddle through, and you don’t want to make the wrong decision and regret it down the line.
I will say that I think it does depend on if you sell for a nice chunk of change versus never-have-to-work-again money. Because if you never have to work again, I think it becomes really hard to want to do the grind again. I think you index heavily on meaning, impact, personal enjoyment, and it can be a real struggle to get motivated to put in the work like you did before. I have talked to, no joke, dozens of founders who’ve been in this situation. I was in this situation myself a couple times. It’s an interesting position to be in. The biggest thing that I would say is, given the position you’re in where you’re an advisor, you obviously have a network of people. Maybe you had prior investors, prior co-founders, maybe you have just confidants, folks who’ve been alongside you on your journey. I would turn to them and ask for advice.
And I think the way I would frame it, if you have a dozen good ideas, I would try to narrow that a bit. And I might put them all in a spreadsheet. I mean, it depends on how spreadsheety you are, but for stuff like this, is there a meaning scale, an impact scale, a personal enjoyment scale? Is there a likelihood of success scale? Invent four, five, six columns and figure out, is meaning on a one to 10 scale, does that make sense? Or is it just a binary? Is it, it has enough meaning or it doesn’t? You can invent this. You can make this up as much as you want, and you can weight these things such that they produce a single number, right? They multiply together or whatever and give you a single number on the right hand side. Now, I would not make that decision based solely on that single number, but can you go from 12 ideas maybe to six using that?
Like the bottom six or the bottom handful? Maybe. That’s what I’d be looking for right now, is ways to filter out ideas that I don’t think fit where I want to go. And usually the way I do this is by a little bit of gut instinct. I will crank up a spreadsheet like this. I will talk to advisors, friends I know who know me well, whom I trust, been in mastermind groups, a coach if you have one. So it’s this mix of internal and external feedback. And I think for me, the viability of the business and the size, like you said, it needs to be bigger and better than the previous success. That totally makes sense to me. I have felt that. When I sold HitTail, or I guess I kind of put it on autopilot, I hadn’t sold it yet, I wanted Drip to be 10 times the size of HitTail.
And after selling Drip, I wasn’t going to do another SaaS app that got as big as Drip again. TinySeed, well, I guess we could say it’s 10 times the size in terms of, I don’t know. We raised a lot of funding. We’ve raised almost $60 million. So by some measures, I think TinySeed is, I guess it’s just different. It just impacts a lot more people in a deeper way than building a piece of software. So for me, it’s very rewarding. I do. I like these metrics you’ve thrown out. I get a lot of meaning from TinySeed. I have a lot of impact and personal enjoyment from TinySeed. And in fact, the profit that I get, the earnings I get from TinySeed are significantly less than I made when I was building Drip. But that number is less important to me right in this moment. Now we are building something that I think is bigger and better and it’s more impactful, but I totally get that.
And I would not undervalue that. I think your gut instinct, your gut feeling on this is pretty solid. And I think it’s just a matter of trying to filter and narrow on your own and then trying to get folks who know you well and who have some knowledge of the startup space, not to necessarily evaluate the ideas, because I think you have the vision for that, but it’s to help you evaluate which of these is a fit for you. I remember questions that Ruben Gamez asked me where he said, “Do you really want to serve that customer base?” And I hadn’t thought of that. And that particular customer base was, it was an app that I didn’t start, but I was like, “I don’t know that I have an affinity to work with,” insert whatever industry it was here. And he’s like, “Do you want to work on that for five or 10 years and serve those customers?” And I was like, “You know what?
I’m not sure that I do.” So it’s things like that that I just wouldn’t have thought of on my own. So getting a trusted friend or two involved can be helpful, as well as doing a founder retreat. I haven’t talked about founder retreats on this show for years because frankly, I haven’t gone on one probably since before COVID. But you can look up the Zen Founder Guide to Founder Retreats. It is a book by my wife, Dr. Sherry Walling. It’s an ebook. I think it’s, I don’t know, $20, $25. And it’s a really cool guide, like a really thorough and intelligent guide to getting away for a couple days. Even if you have kids, you go solo somewhere and you just basically spend a very quiet couple days, two, three days on your own thinking through these types of decisions. I think this is a great use case for going on a founder retreat and really thinking these through.
And maybe that gets you down to your top three or your top five. And then you go to, again, friends and advisors and such for it. But I hear you. I think your pain is very real. And even though it seems like a first world problem, it’s a big deal when you’re deciding what to do next. My next question is from Daniel Heuman. He has written into the podcast many times with great questions. He runs intelligentediting.com. And Daniel writes, “We’ve listened to episode 681.” Yeah, so this is an older question. “Why launching a second product is usually a bad idea.” That’s where Ruben Gamez and I talked through why it’s usually a bad idea. And Daniel says, “Despite everything that episode says, we have an idea for an AI agent that would make sense for us as a new B2B product. As I researched how to potentially sell that, everything sounds like selling B2B SaaS.”
Yeah, it kind of is. “What do you see as the key differences, if any, if the product is an AI agent?” I like this question because SaaS apocalypse is what I keep saying. Yeah, I get it. Some SaaS apps are going to, I’ve said on the show, I think it’s 10 to 20% of SaaS apps are going to eat it. They’re going to have real trouble. And it’s some specific categories and things that AI can specifically just replace, or people will build themselves or whatever. But AI agents, how else would we think about selling them? You’re going to sell them a lot like a B2B product. And so for example, doesn’t it make sense if TinySeed is funding B2B SaaS and someone applies with kind of an agentic business that we would fund it? Well, of course it does, because it’s subscription software where software provides most of the value.
It’s still by definition, or at least my definition, it’s still SaaS. But obviously there’s a couple hurdles maybe. Number one is a lot of folks are promising that AI can do everything, and that you have this agent that can just make all the decisions and you don’t even need this employee in this role anymore. So an example, maybe as a receptionist, someone answering the phone. Or if you say you’re going to have an agentic SDR, right? Someone who is doing cold outbound on LinkedIn and Twitter or via email or even cold calling? Doing outbound and you’re going to replace the SDRs. You can promise that. And the odds are it’ll be 80 or 90% of that. And that’s not enough. So I think a big thing is to figure out what can you promise? What can you stand behind? Because you can make the sale, but with subscription software, people can cancel your app in a month or two, and that’s churn.
So I think that’s one thing, is to be careful with what it can actually do rather than what you think it can, or what you wish it could do. That’s one thing. The next thing is I would price it differently because B2B SaaS requires a human to log in and do things. So if you’re charging $100 a month per seat for your SaaS, I would consider if an agent could come in and do 80%, 90% of the job of a human, isn’t that worth a thousand, $2,000 a month? I think so. Could it be value based on the salary of the person, the receptionist or the SDR that you’re eliminating? Could it be a portion of that? I do think so. Now, a rule of thumb that can be broken is often if you can save someone a million dollars a year, then you charge one tenth of that, 100,000 a year.
So if you’re going to eliminate the salary of an SDR that would make what, 80 to 100,000 a year, just throw out a number, then would I think of charging 8,000 to $10,000 a year? Yeah, probably it’s a reasonable place to start. Maybe it’s twice that. Maybe it’s half that. Maybe it depends. Because are you really replacing them if you’re only doing 80 to 90%? It’s more like, does it take a team of five down to a team of one that’s then monitoring and exception handling the agents? Yeah. You get the idea here. Okay, 10,000 is 10%, but I think 80% is good. Maybe I’m charging eight grand, whatever. I mean, we’re talking rounding errors here, but that’s how I’d be thinking about it, is what is the value that you are actually replacing? Because B2B SaaS for years, if not decades, has been replacing humans.
And B2B agents are going to be doing, or if they’re not already, are going to be doing the same thing. But again, the big thing is, if I was going to launch an agent, to me, I want the brand and the reputation that this thing actually works. I want people to say, “Holy shit, I’ve never seen an agent this good,” rather than, “Wow, yeah, it kind of gets you most of the way there, but you still have to babysit it and you still have to do a bunch of manual and you still have to do…” Because that’s what I see and hear with so much of the AI hype. When you actually double click in all the bullshit that we see on X/Twitter or LinkedIn, people talking about, “I have agents running my whole business.” Have you actually looked at their marketing and looked at their copy and looked at the cold emails that are going out?
They’re not good. They’re solidly mediocre. I’ve had this rant in the past that unless the AI is tuned and optimized to be exceptional, it’s going to be very average. And if average produces the results that you’re selling, fine. But if not, it’s a problem because people are going to skip. And this is one reason we see AI software with these outrageous churn rates of 20 to 40% per month, because the promise is there. And then you dip your toe in and it doesn’t actually work. So that’s the biggest thing I think I’d be thinking about. In the end, I think agents, if they work, are amazing. And I would not shy away personally from building an agentic business. And in fact, today, if I had software, Einar Vollset and I were talking the other day and he was saying, “Hey, if you have software that right now has a seat and there’s an operator, like an individual contributor doing a thing, it is very logical for me to think about how can I build an agent to replace that operator or replace half of their job or 80 or 90% of their role and then charge 10, 20 times what I’m currently charging per seat for that agent to just do it.” And if you build that and if you get some traction, you should apply to the TinySeed Accelerator.
That’s tinyseed.com/apply to hear about our next application period. So thanks for that question, Daniel. I answered it kind of broadly. If anyone has more questions about AI agents, this is the Wild West. And I have yet to see what I would consider a definitive call on all this. I think people are feeling it out, but it really does feel like B2B AI agents are sold just like B2B SaaS. And B2B AI agents are priced very similar to B2B SaaS. I don’t mean the pricing is the same, but the philosophy. If you go read The SaaS Playbook and look at how I talk about pricing based on value and having a value metric and et cetera, et cetera, I would apply all of that to AI agents. I would just expect that potentially the AI agent could be priced a lot higher than just the SaaS.
And finally, of course, you have to keep in mind that if you have an AI agent, they could be very expensive and they could hit your profit margin. There’s a chance that you can charge 10 times for an AI agent and it makes you the same amount of net margin, of net profit, as your SaaS seat did. So that’s just another thing to keep in mind. Thanks again for that question, Daniel. My next question came into our email, questions@startupsfortherestofus.com. And Alexi from clicklyapp.com asks, “What does a founder care about during a third, fourth, or fifth startup?” And Alexi writes, “In the last episode, you mentioned that founders care about different things in their third, fourth or fifth startup than they did at the beginning. And also you care about other things doing the 800th episode of the podcast than what you cared about 16 years ago.
So what do you care about now? What does a founder of their third, fourth, or fifth startup care about? Thank you. I appreciate you and your guests sharing your wisdom on the podcast.” It’s a good question. A bit of this was answered in the first question. He’s only on his second startup, but I think it holds. It’s like you start to care less just about the money and the outcome, and you start caring a little more about enjoying your life. You can only grind for so long. And some people, I mean, there are some anomalies, right? There’s Hiten Shah and there’s David Cancel. And I guess Jason Cohen, I think, has had three startups, which is three big ones. And that’s tough. I say it’s tough. It’s a lot of work. There’s not a lot of folks I know who do three, four, five.
That’s why serial entrepreneur is actually such an impressive moniker when you really mean it. But all that said, second, third, and fourth, I think you, depending on what your earlier outcomes were, you just care less about, it’s not that you care less about the money, but that’s not the main driving factor. If you have had a successful exit or you made enough money that it kind of doesn’t matter anymore. And most people are less willing to do the early grind. And that’s obvious. You might be a little later in life, even if you’ve sold your first one in your 20s, now you’re in your 30s, maybe you’re married, maybe you have a kid, maybe you’re in your 40s and you’re kind of like, “Eh, I want to slow down a little bit and enjoy life a little more.” These are the types of things you start thinking about.
So you start factoring that into your decision and become much more picky about what it is that you want to invest your time in. Another thing you care about is, look at what Ruben Gamez did with SignWell, which was his second successful app after Bidsketch. He started with distribution. 18 months before he launched SignWell, he built a website and started doing SEO. With Drip, which depending on how you count, I think, what would we say? It’s my fourth. Yeah, it’s my fourth company. And I think it was eight months before we launched. I had a website up. I was running ads. I was building that launch list. I cared much more about validation and interest and being more certain that this was a decent idea. Did a lot of keyword research, had customer conversations. I did all the stuff that I talk about on the show that I put in the book, Idea to traction, that’s coming out in a couple months.
I think second time, third time founders care a lot more about distribution and making sure that they’re building something that people want. You can never get to 100% with validation, not until you build it. And the story of Drip is just that, right? We launched and got to eight, 9K MRR, which was pretty good, right? But I was miserable. I was unhappy with it. And that’s another thing is, as a, what, third, fourth time founder, I was super annoyed with the fact that Drip plateaued at that number. But if I was a first time founder, I’d have been overjoyed. Be like, “Yeah, I can quit the day job.” So that’s the difference of just your aspirations increase. And my aspirations didn’t increase just to do it. Number one, I wanted a bigger financial outcome than I had seen in the past. But number two, I wanted to learn.
And in order to learn, you have to do some new things. And building an app that’s the same size as the last one, for me, wasn’t that interesting because I wasn’t going to learn new things. So that’s another thing I think that folks think about. And so it’s not just distribution you think about, but it’s like, how can I be more careful and not just have to luck my way into this? I don’t know of any successful founders who are on their second, third, fourth effort that build 10 things and see what sticks. I know literally zero. That is an approach for someone who I would say just doesn’t know any better. When you see someone coming back for their second, third, fourth, fifth effort, they know a little more and they have a usually better gut feel, a little more intuition about it. They do a little more conversating, a little more researching, a little more validation.
Yeah, it’s the pattern I see. And finally, one part of Alexi’s question was, what do I care about doing the 800th episode of the podcast? What do I care about today that I didn’t care about 16 years ago? For me, I did care about learning the whole time. These days for me, it’s impact. I’ll say I weighed money a lot more important than impact 16 years ago because I needed money. And I had a goal of, A, supporting the family. And then it was having enough money that I never had to work again and having that freedom. I was going for freedom. So I have that now. So what do you look at next? There’s a little bit of legacy that I think about. Part of that is writing books. I’ve written four books in the last 10 years after having written, I guess, two in the prior six years.
So you can do the math. Yeah. And I guess I’d say I’ve written three books in the past four or five years. The SaaS Playbook, Exit Strategy, and Idea to traction. So books are part of that because books just last a long time. They’re so not ephemeral. And then this podcast, the reason that I doubled down on it, and it was in 2018, 2019, and really upped the production value, tried to improve just the quality and the focus of it. And honestly shared more of my honest opinions on here starting around that time, put more of myself into the show. That was a turning point for me because I valued continuing to do the show because I think the show itself is a legacy. It’s an artifact that will live on even if someday I retire from all of this. I think it can be an interesting resource for folks.
So thanks for that question, Alexi. I hope that was helpful. My last question of the day is an audio question from Andrew.
Andrew: Hey, Rob. Love the podcast. Been listening a long time. So I’ve been looking to build a company focused on hospitals, specifically clinical laboratories. I think there’s a clear regulatory and workflow pain point there that I can address. My background is, I’m a physician that works in this field. The challenge I’m wrestling with is that the hospital sales cycles are long and the budgets move slowly. So it’s going to take a while to realize any kind of revenue or validate product market fit. I work with another healthcare startup and I can see that it takes them anywhere from 12 to 18 months to close a deal. And so I guess my question is, from your experience, is it worth pursuing this path despite the slow adoption cycle if the problem, space, and need are strong? Or is it smarter to apply the same skill set to another vertical with similar regulatory compliance needs, but faster sales?
So if you were in my position, how would you evaluate whether to stay focused on healthcare or pivot towards another vertical? Anyways, thanks.
Rob Walling: So thanks for this question. Yeah, we have TinySeed companies, and they’re MicroConf companies as well, that sell into healthcare or just sell where they have 12 to 18 month sales cycles. I’ve seen them make it work. So it’s not a hard no. I wouldn’t do it myself. I wouldn’t enjoy it. I find having these long, drawn out sales cycles with big enterprises exhausting. And unless I also had customers that will buy on a quicker sales cycle, and I don’t know what that looks like here, if that’s even possible, but unless I had that, I would just get demotivated with the business. To do something like this, you either need to raise funding, you need to have enough money in the bank that you’re kind of burning your own runway personally. And that’s a really tough sell for me on this. Or you’re doing it nights and weekends.
My choice probably, well, I mean, I guess raise funding or nights and weekends, but if you haven’t closed a deal, it’s very, very hard to raise funding unless you have a great network or a prior exit. So my answer is, would I do it? No. It just wouldn’t be fun for me unless I had deals that can close every month, two, three months, to keep that motivation going. Because without MRR going up, I mean, I just imagine MRR or ARR being basically zero for 12 to 18 months. And then you get this huge jump. We’d sold a quarter million dollar a year contract. Wow, 250K ARR. Then you have another six month wait because you’re working on multiple deals at a time. But another six month wait to jump again, it’s like, ah, that’s not the business I want to build. I don’t enjoy those types of businesses.
However, have I seen incredible businesses built that way? I have. Are there some within TinySeed that do exactly this? There are. And those founders are different than I am. They, I guess, get their motivation from something else. They’re willing to grind and do it because the opportunity is there. So I’m not saying don’t do it. I’m saying part of your question is, if you were in my position, if I was, based on me, I wouldn’t do it. But I think there’s a couple ways to think about this. As I said, are there customers in the space who are able to make decisions faster? Or do you start this as a slow roll and you get five, six, seven conversations going such that in that 12 to 18 month timeframe, you start closing some of them? I guess you’re going to need to do that anyways because it’s a sales funnel, and what are you going to close out of five, six, seven?
You’re only going to close a couple, right? So yeah, if given the choice, I would be thinking about a vertical where something closes sooner because the problem with this is if you truly have a new product with no sales, you want to optimize your learning speed. And if you’re waiting 12 months to learn, ain’t nobody got time for that. You have better things to do with your life than spend 12 to 18 months only to learn that nobody wants to buy your software, or your software doesn’t solve a problem worth solving at that price point, so it’s not viable. You want to be learning constantly. So that’s really the question I’d be asking is, if the sales cycle’s that long, is there a way to learn quicker than some big enterprise sales cycle? Is there an MVP possibility? Is there a way for you personally, or for you to hire someone who goes and does the task?
This is like the MVP, right? The human automation I talk about. Can AI do it? I don’t know, probably not in healthcare. But you get the idea. I think it’s dangerous for a bootstrapper to have a feedback loop that’s this long because you’re just going to waste years of your life. I can’t imagine taking, that’s such a risk. The opportunity cost of this is significant. So I would either be looking for smaller customers or a vertical where there are customers that can make a decision quicker. But that’s just my opinion. I could be wrong. So thanks for that question. And thank you for listening to this and every episode of Startups for the Rest of Us. The back catalog is deep, folks. If you haven’t gone back and listened, go back a hundred episodes and pick a few out that you remember or that maybe you don’t remember.
I’ve been listening back to some of the episodes to refresh my memory. And honestly, sometimes there are frameworks or ideas I come up with on the show spontaneously that I just don’t remember. And I realize, oh, I should pull that into a book or I should write an essay about it, robwalling.com/emails. So if you feel like you want more Startups for the Rest of Us in your life, it’s pretty easy to go back 100, 200 episodes and pick a few, or you can go to the greatest hits on the website in the top navigation. So thanks so much for listening this week and every week. This is Rob Walling signing off from episode 847.
Episode 846 | Snail Mail, Cold Calling, Regulating Your Nervous System, and More Listener Questions (Rob Solo)
/
RSS Feed
Is your nervous system sabotaging your best decisions?
In this episode, Rob mixes a solo adventure with listener questions. He answers a reader who asks why he still shows up to write, record, and build, then digs into regulating your nervous system when you have to do something that scares you. He wraps with two listener questions on direct snail mail outreach and on cold calling in an industry you know nothing about.
Want to get your question answered? Submit your question for an upcoming episode.
Topics we cover:
- (04:41) – Why does Rob still write, record, and build?
- (08:55) – Regulating your nervous system under fear
- (15:55) – Direct snail mail outreach for SaaS
- (18:44) – Cold calling an unfamiliar industry
- (20:27) – How to learn a new skill fast
- (21:08) – Finding trusted sales resources
- (27:01) – Learning Facebook ads the hard way
Links from the show:
- Idea to Traction: Stop Building SaaS Nobody Wants (book wait list)
- The SaaS Playbook
- Rob Walling | YouTube
- Rob Walling Newsletter
- MicroConf Masterminds
- TinySeed Mentors
- Close CRM (Steli Efti)
- SalesMVP Lab (Daniel Hebert)
- Ben Hyneck, B2B sales coach
- Stephen Steers, B2B sales and storytelling
- Outscraper
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
Subscribe & Review: iTunes | Spotify
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.
Rob Walling: Welcome back to another episode of Startups for the Rest of Us. I’m your host, Rob Walling. And in this episode, I’m going to mix a couple formats. I have some listener questions, but I also have a solo adventure topic that I want to talk about. And so I’m going to combine those along with a really interesting question, kind of an inside baseball question I got from a reader of my email newsletter where he asked, “Why do you do what you do? Why do you still do it?” And it was a fun question for me to ponder. I think we should all be asking ourselves why we do what we do. Before we dive into those topics and questions, I am launching the wait list for my next book. I’ve been talking about this book for a few years. It was previously titled The SaaS Launchpad, but I have changed the title.
It’s now titled Idea to Traction: Stop Building SaaS Nobody Wants, Even in the Age of AI. And this book covers from coming up with ideas to validating them, to building a launch list, to launching and getting some early traction. You can think of it as, honestly, it’s an updated version of Start Small, Stay Small 16 years later and updated for the age of AI. It’s also the prequel to The SaaS Playbook. The SaaS Playbook says you have a product in market, you have some weak product market fit, some traction. Idea to Traction covers the steps before that. So if you want to get to it right now, it’s ideatotractionbook.com. So as I think about Start Small, Stay Small and all of the requests that I’ve received to update that book over the last 16 years, I tried to start with Start Small, Stay Small and just edit it, but you can’t do that.
So much has changed. So much has changed. The philosophy of bootstrapping and mostly bootstrapping still holds, but everything else, all the other pieces and parts just had to be disassembled. So even these days, a lot of folks who aren’t developers are now building software and building SaaS, right? And Start Small, Stay Small was a developer’s guide to launching a startup. That was the title. It didn’t say anything about bootstrapping. It certainly didn’t say anything about SaaS, but these days, whether it’s no code or vibe coding or partnering, there’s a lot of non-developers. And Idea to Traction is focused on SaaS, as you can tell by the subtitle. Even in the age of AI though, some SaaS will succeed. We know that SaaS is seeing headwinds, but there are a lot of types of SaaS companies that are going to be okay. And that’s what Idea to Traction covers.
I’ve spent the last two months really focusing in on adding all types of comments and thoughts around how AI impacts each of the steps. There’s a validation step and I talk about why AI doesn’t mean that you can just skip it. I give examples of that from real life founders who have validated recently in the past six months. So the approaches are battle tested recently. These are not five or 10 year old approaches. And it’s all of my current thinking on how to go from idea to launch and gaining early traction. And of course, product-less marketing first [VERIFY: “product glass marketing first”] is something that I haven’t said since Start Small, Stay Small. And I bring it up in the book, in the introduction actually. I’m really excited. I’ve been working on this book for too long. Since The SaaS Playbook, actually. It was originally part of The SaaS Playbook, but The SaaS Playbook is what, 210 pages maybe?
And Idea to Traction is I think 260 or 270 pages. It’s long and I didn’t want a 500 page book. So I broke it out and I’ve had to continuously update it as AI has come out and affected everything. So I just submitted the manuscript to my editor a few days ago, and that’s how hot off the press this is. If you want to get on the wait list, I’m going to notify you as soon as the book is ready for pre-order. And you’re going to get access to a live Q&A that I’ll be doing all about early stage SaaS. You will only get access to that Q&A if you are on this wait list. And I’m also going to send you some pretty important resources like worksheet and checklist type things that you can use straight away without the book, but they are pulled from the content of the book.
And it’s not AI slop crap. We’ve spent a lot of time, my team and I, putting together something that we hope can be genuinely useful. So that’s ideatotractionbook.com. And if you enter your email there, you’ll be the first to know and you’ll hear about the live Q&A and receive all of those resources.
I’d like to dive into my first topic of the day. This was in response to an email that I sent out. If you go to robwalling.com/emails, you can get on my email list where I am sending out essays with original think pieces. It was every week and now it’s about every week or two, but I’m hoping to get back on the weekly train soon. And I’m going to keep this responder anonymous because I did not get permission to share their name. But they said, “I’m excited to read the book.” I think this is The SaaS Playbook. “For $10,” because you can get it on Kindle or I think I saw PDF for $10. “For $10, it was a steal given the value I got from watching your content. The video, What SaaS Buyers Actually Want in 2026, and the great conference video on content marketing strategy.”
So these are a couple videos that we can link up in the show notes, but if you go to youtube.com/robwalling, you can see both of those. And so this person says, “I was just wondering, why do you do this? As in, do you derive the most pleasure from your conference, your accelerator, or just getting your content out there? I’m curious what inspires you today?” And it’s such an interesting question, right? I’ve answered it a bit on the show before in the sense of I don’t need to work. I could retire. I could have retired years ago actually. And yet I keep doing stuff. Since being able to retire, I’ve written three or four books. I’ve recorded at least 400 podcast episodes and hundreds of YouTube videos and started the Accelerator, continued to run and grow MicroConf. So why do I do it? There’s a couple things for me.
One, I love having an impact on people, like a positive impact. And I really enjoy putting out a book and having the SaaS Playbook I think has sold 55,000 copies. And for a self-published book, that’s not bad. It’s really not bad. It’s my best selling book of all time across all my books. Sold well over a hundred thousand copies. That’s fun to me. As hard as writing books is and creating all these podcast episodes and the YouTube videos and such, it really does bring me joy to put things out in the world and then hear people put them to use and have it change their lives. That is probably what gives me the most joy of anything that I do today. And for me, I’m wired that there also has to be some financial tie to it. If I’m not making money doing it, I struggle to stay motivated.
That doesn’t include my hobbies. I play the guitar. I don’t make money on that. I play tabletop games. I definitely lose money on that because I spend so much money on these games. I hang out with my family. I love going out to eat. I hang out with friends. Obviously I don’t need to make money doing those things. But if I’m doing something in the professional world where perhaps people are taking my advice and using it to make money, it feels like I should be in on that transaction. And even if I give away far more value than has come back to me, I’m okay with that. But as long as some comes back to me with selling conference tickets and there’s sponsorships on this podcast and potentially making money from a TinySeed company’s exit and we get carried because we run an accelerator as well as SaaS Institute, the coaching, the premium coaching program we have, we get money on a recurring basis for that.
But that’s not why I do it. That’s just a need or a desire that I have in order to be fulfilled and to justify the time, effort and energy that I spend creating all of this content and thinking all of this through. So that’s why I do it. It’s to have an impact on a lot of people that brings me joy. And I’ve figured out a way to do that and make enough money to justify it and to hire the team, frankly. Between MicroConf and TinySeed, I think there are 10 of us and people make full-time salaries. These are mostly W-2 folks living in North America, so it’s not cheap. And if I want to put out content and run an accelerator at the quality that we run, MicroConf as well obviously, and write books at the quality that I want to, that takes money.
It takes a lot of time, money and effort. So I appreciated that question and hope you enjoyed hearing me talk it through. And if not, I hope you started hitting the 10 second skip button at some point. My next topic is one that I bet more people will skip than the topic I just covered. I want to talk for just a couple minutes about regulating your nervous system while you’re doing something that scares you. And even to be honest, just noticing when your nervous system is flipping out. I didn’t learn this skill until the last probably 10 years, which is way too late. I remember being so tied to whatever my body was doing, like anxiety, fears when I was 17, when I was in college, just these intense swaying feelings and I was my feelings. And I still know some people like this and it sucks when you don’t recognize that a feeling is not you, a feeling is not permanent and it’s not who you are, and that you should not be making big decisions when your nervous system is dysregulated, when you feel that tightness in your chest, when you’re really concerned and worried and you’re thinking in a pattern that really isn’t that healthy.
It’s certainly not calm and it’s certainly not a rational or a stable, grounded place to be, which is where you want to be to make decisions. So it wasn’t until the last 10 years of therapy and really getting to know myself and really feeling those days when I would wake up and just feel massively anxious or wake up and feel a bit depressed. I don’t have clinical depression, but some days I wake up and I feel melancholy. And on those days I would wake up and I used to say, “Everything sucks. Everything’s going to zero. Why am I even doing this? Maybe I should sell the company. Maybe I should shut it down. Nothing’s working.” And now when I wake up and I feel that way, I think this is probably just for the first few hours of the day. Or maybe even if I feel this way the whole day, it’s not real.
Like that’s not my reality. My feelings are not my reality. I didn’t know that until 10, 12 years ago. And obviously if you’re well adjusted and you don’t have issues regulating your nervous system, good on you. Congratulations. That is not me. I should say that was not me. It is at this point, but I had to learn it. And I think the important thing I wish I’d known a lot earlier, even before I could regulate it, is to identify when I was feeling out of sorts and to realize, oh, this isn’t normal. This feeling in my chest, this tightness in my chest or this anxiety or this fear or this, again, depression, whatever these swaying emotions are, these aren’t a good place to make a big decision and they don’t represent me. They just represent a feeling. That’s the first step. The second step is to learn to regulate it yourself.
And you might need help. You might need a therapist. You might need medication. And I’m sure there are other approaches that I could probably get Dr. Sherry Walling on the show to talk about. This is not something I’m an expert in other than I’ve gone through it myself. And I know some folks at different stages of this. I have a friend I was talking to and they actually inspired this segment. They’ve been really trying to push through nervous system scariness, basically. When you get scared to do something risky, but you know you need to do it anyway and you resist it, but you should be doing it, that’s a problem. That’ll keep your life small. You won’t ask for the raise. You won’t ask the person out that you want to date. You won’t stand up to someone at work. You won’t stand up to your spouse or the person you’re dating.
There’s a lot of things that you want to do, but if you’re scared to do them and you let your nervous system override them, it will hold you back both personally and professionally. And so developing this skill is something important. And in order to do it, this friend of mine is practicing and doing things that scare them over and over. And it gets a little easier each time. You’ve heard me talk on the show about the first time I ever published a blog post back in 2005. I was terrified, which is just laughable now. Why would I be scared of publishing a blog post? For some reason, writing an essay and publishing it on the internet terrified me. Hair stood up on the back of my neck. I got cold sweats. I thought, what if people judge me? What if people hate me? All these things.
And it got a little easier with the second one and the 10th one and the 100th one. Honestly, by the 50th one, I just didn’t care anymore. I wasn’t worried. Same thing, first podcast episode of the show. I was terribly, terribly nervous. Yeah, it terrified me. First time I got on stage to do a talk, completely dysregulated. First time I emceed one of my events, completely shattered. First YouTube video I did. I’ve been recording this podcast for years. And the first YouTube video I recorded was a mess. I was so nervous being on camera. It’s such a trip how these things change. And you know how I got through each of them? By doing them over and over. Repetition. By standing up, being scared and doing it anyway. And sometimes you can just do it through brute force. You just do it over and over and you become accustomed to it.
And now when I get on stage at MicroConf to MC the event, I’m nervous a tiny bit before I get up and for about 30 seconds and then it’s done. And that did not used to be the case. And if you’ve ever MC’d a big event, it can be nerve wracking. But through repetition and through learning how to regulate my nervous system, that’s the other thing. The brute force is just doing it over and over, but also learning the slow breathing and the self-talk of, “Hey, it’s going to be all right. This is not reality right now. This is just how you’re feeling.” And honestly, for me, it’s music. So I have a handful of songs that I can play and I will play them on loop if needed that pull me back into a place of calm. And I can feel the warmth fill my chest and I can feel my body relax and enter into a place of calm and peace and grounding.
And if you think that I sound super woo-woo and new age, I would not classify myself as someone who is new age or woo or whatever term you want to put on it. I would classify myself as someone who for most of my life struggled with anxiety massively and figured out how to manage that and to regulate my nervous system over the last 10 years. And again, to reiterate, the reason this is important, to learn to do this, is A, so that you can do new things because doing new scary things is how you grow. It’s how you get better. It’s a huge part of entrepreneurship. It’s a huge part of being a human who gets better over time. I think all of us should be growing and looking back six months ago and saying, “Wow, who was that person? They’re so different than I am now,” because you are learning and expanding and becoming a better human each day.
And because this can help you both personally and professionally to take the risks and stand up for yourself and do things that are scary, but you do them anyway. And each time you do it, you’re going to get a little better at it and it’s going to be a little easier. My next topic is a listener question. Just going to have a couple more listener questions and then we’ll wrap up. But this one is from March of 2025. It is a text question. And of course, text questions go to the bottom of the stack, which is why it has taken a while for me to get to it. Question comes from Jeremy Oakes. It’s about direct snail mail. Jeremy asks, “I run SaaS for managed IT companies and I’m having trouble with marketing problem awareness through product awareness. And I think the use of ad blockers and email rules by my target market is part of the issue.
However, I can identify potential clients using public data. My question is, is direct snail mail outreach, either letters or gift boxes, something you’ve seen work well before?” And Jeremy is with automationtheory.com. The answer is, I have seen this work for folks. The first question is, do you have the annual contract value to support this? Because if you’re selling something for $5,000 a year and you’re trying to do direct snail mail, which will likely be accompanied with cold calling, if you’re going to spend this type of money to send a gift box, I think I would want to educate myself on ABM. And there are books out there on this topic that you can look at and I’m sure there are influencers. What’s the Startups for the Rest of Us equivalent for sales folks and ABM folks? It has to be out there. So the answer is it can work.
The couple of challenges are you need a high enough annual contract value to justify it and you need cash upfront because especially at the start, you’re going to send a lot of letters or gift boxes that aren’t going to work as you optimize your process. And so you are going to need a significant amount of capital before you start getting a return. And in that return, you’re probably going to want to charge annually, by the way, annually only because you are going to need that cash to feed back in. But this is why a lot of companies raise money. And even if you only raised a few hundred thousand dollars, it’s going to be easier than if you are trying to bootstrap. And I’m actually going to put out a call. If you have used direct snail mail, letters, gift boxes, anything else to sell SaaS specifically and you have had success with it and you have a camera and a good microphone and you’re good on the mic.
I’d love to have a little podcast segment where we call in a remote correspondent who gives us, I don’t know, four to six minutes of audio about how they’ve done it, what worked, what didn’t. I have seen TinySeed and MicroConf companies do this. I say I’ve seen, I have heard, I’ve been told that they did it with some success. And I’m curious if anyone out there is doing it. So thanks for that question, Jeremy. Little bit of TBD on part of the answer, but I hope it was helpful. And my last question of the day is about cold calling in an industry you are unfamiliar with.
Speaker 2: Hi, Rob. I’m relatively new to the pod. However, I love your insight into the SaaS world and bootstrapping. I am someone who heavily believes in providing value in exchange for receiving value. So if there’s any way I could potentially provide value to you, I’d love to do so. With that said, my question is, how can one overcome the hurdle that comes with cold calling strangers in an industry you’re unfamiliar with? For context, I’m based in the UK and I built an automation system to help small cleaner company owners avoid losing potential clients due to slow response times from an inquiry. My primary way of reaching them is cold calling, where I find that most of the owners I call don’t even entertain the conversation or some don’t even pick up the phone. I’ve got a list of around 400 plus companies in London alone because that’s where I’m trying to get my target ICP that I scraped from a software called Outscraper for the purpose of the cold call.
So how do I figure out, one, why I’m not able to have decent conversations with them? And two, how do I convert more of the calls I have into booked demos? Because I feel I may be struggling a bit on that front. So when you started out with yours, how did you overcome that hurdle? Or do you know anyone who has tried that and actually overcome it? Thanks for the support and all the messages you’ve given in your podcast. I hope you’re able to answer this question in your following episodes. I could have an idea on how to resolve mine. Once again, if there’s any way I can provide value to you, please do let me know. I’ll be happy to do so at any time. Thank you.
Here’s why I like this question, because I have never made a cold call, but I can tell you that if I had to, I would have and I would have learned how to do it. So you and I right now are in the same boat. So what I’m going to talk you through is how I would learn to do it myself. As a 20 year SaaS entrepreneur who’s invested in a gajillion companies and done the podcast and YouTube and all the other stuff and come from someone who used to be so anxious I couldn’t publish a blog post on the internet to where I am today. I’ve gotten pretty good at learning things quickly and at getting good at things that I don’t know how to do. So today, if I was going to try to answer your questions, which are how do I cold call?
How do I get better conversions? What do I do? I would go to Google and I would type in Steli Efti cold calling. Steli Efti is a friend of mine. He’s a many time MicroConf speaker. He’s been on this podcast a couple times. He is a supporter of MicroConf and TinySeed. And he is a sales consultant and has been advising founders on sales for I think 15 years, maybe a little more. Go to Google, type in Steli Efti cold calling. You’ll see some podcasts and some articles and there are some golden rules. I’m sure there are YouTube videos. You could ask ChatGPT or Claude what advice Steli would give you, any of that. He’s just a knowledgeable person. And you could say, “You be Steli Efti and tell me what he would tell me to do about these things.” So that’s one step I would take. The other thing I would do is I would go to close.com, the CRM, and I would look for cold calling resources there because they have an amazing blog and they have a bunch of free eBooks, free or low cost ebooks.
Just because they’re free does not mean they’re not valuable. They are basically funded by Close. And Close is an exceptional CRM for SaaS companies. And they have a ton of great content they’ve been putting out for well over 10 years. Again, maybe close to 15. So that’s the second thing I’d do. And I would consume all of that content. I mean, you could consume all of it in like a few hours. Then I would go to a reputable source for folks who talk about this type of thing. And the place I would go to is tinyseed.com/mentors. And then you can command F, type in sales. Who are the sales mentors for TinySeed? Oh yeah, Steli Efti here is a TinySeed mentor. Yay. So his just says co-founder of Close. But when I type in sales, three mentors come up. I think there are a few more that maybe don’t have sales in their title.
Daniel Hebert of SalesMVP Lab, Ben Hyneck, B2B sales coach, Steven Steers, B2B sales and storytelling expert. I know that those three plus Steli, those four are exceptionally good at sales and at coaching sales and that any advice they give you or any content that they put out, I’m going to trust. They’re vetted. They’re vetted by me personally or folks on the TinySeed team, Tracy and Alex, who’ve been on this podcast and on the YouTube videos. We do not let people in that we do not trust to give advice to founders that we are invested in. So we have a very vested interest in having only exceptional people on this mentor list. So I would copy paste each of them into Google and look at what they talk about. Each of them has a different specialty. Each of them has a different mode of engagement.
I think one of them is only a coach. And I don’t think he’s written a book. So if you want coaching, then you hire him. Other folks have put out content and I’m sure they have podcasts and YouTube and you just go down that rabbit hole. That’s basically the first step I would take because for me, I know almost nothing about cold calling. And the first thing I want to do is get some frame of reference. But the thing is, you can spend a day or two or you can spend six months consuming this content. Err on the side of a day or two. Once you’re a day or two into it, and I don’t mean spending two eight hour days to do this, it should not be that much. I mean in the background while I’m doing dishes, I mean an hour or two or three during my workday if I’m working full-time on my product, not if I’m working for someone else.
And I am going to be learning enough to then pick up the phone and make my first cold call. That’s what I’m going to do. And I’m going to make one and I’m going to realize that was really hard. That was very scary. And did I screw up? What happened? And then maybe go back to the resources. Go to, is there a subreddit? Do I have this coach who can help me? Am I recording these so that he can help me get better at them? And another thing to do, of course, is to get into a peer group, like a mastermind group. We have MicroConf Masterminds. We match founders with other founders. And you could bring this to your mastermind group and be like, who here has done cold calls? Because there are a lot of folks who have. And selling over the phone is a thing that you will get better at, you can get better at if you do it over and over.
So that’s how I attack something that I don’t know anything about. I would also these days use Claude and ChatGPT quite a bit. I mean, I mentioned them early on, but I prefer to listen directly to the humans unless I need stuff maybe aggregated a bit more because I don’t love the averages. Like you ask ChatGPT or Claude how to cold call and it’s going to give you average answers. But if Steli Efti is directly telling me or Ben Hyneck, any of these other mentors that I mentioned, to me, it’s a bit closer to the metal and closer to the source. The last thing I’ll say about it is there is certainly software out there that helps you make cold calls. And I think close.com is one of them, but I know for a fact there are others, I just don’t know them off the top of my head.
Those, if they’re SaaS companies, they are likely putting out content on how to make cold calls because they want to rank in Google for all five stages of awareness around cold calling. The thing is, finding which one or two or three are reputable and that you think are actually putting out good content and not just SEO crap that is these days you call it AI slop, but even five years ago, kind of pre the LLMs, people were putting out kind of crappy articles. And you’re either going to recognize it, maybe you’ll recognize it, maybe you won’t. But that’s why I look for trusted sources like I’m saying right now. But these are not the only sources that are going to have good knowledge. And so if you can get in and get a feeling of like, oh, these people know what they’re talking about, this particular app, then that’s another place that you could look.
You can obviously look at, go to Amazon and type in books on cold calling. That works fine too. I’m an audiobook person, so I could imagine. I mean, I remember learning Facebook ads in 2011, 2012. And there were only a handful of books, maybe like four or five. And I think most of them weren’t even print. They were like Kindle only. I bought all of them and I consumed all of them in a matter of hours. There’s a bunch and you kind of start seeing repeating patterns. I went to a Starbucks, I remember this in Fresno when we lived there, and I was just skimming through them trying to figure out, okay, what’s the head space here? Now these days, are there video courses? Are there experts you can hire, other coaches? Of course. There were almost none back in 2011-ish. And so I just had to learn it.
And then I spent about a day trying to consume it, taking notes, opening up the interface, the interface that’s so ugly that you can’t unsee it. That was the Facebook ads interface back then, very complicated. And I started running ads. And that’s not as scary as cold calling by the way, but I was spending money and this was for HitTail. And over the course of probably six months, I grew revenue significantly using Facebook ads and Facebook retargeting. I had a bunch of other marketing approaches in place, so it’s hard to know exactly what ads did for me. It was at least 10K MRR that I added to that business and it might have been 15 plus K MRR. This was a business where it was just me and a couple contractors. I had 90% net margins on this. So at a certain point I was doing 30 grand a month and three grand was going to all expenses and all the rest of it was going to my bank account.
It was a life changing moment for myself and my family. And that came through me learning how to run Facebook ads myself. And this is effectively the process that I went through to do that. So thank you for that question, Michelangelo. I hope that was helpful. I’m getting low on listener questions. You can email questions@startupsfortherestofus.com or go to the website, click ask a question in the top nav. Audio and video questions, of course, go to the top of the stack. If you want to send a text question, that’s fine too. It just might take me a little while to get to them. Later stage questions also go to the top of the stack. Early stage stuff, eventually I answer, but I really like those intermediate to later stage questions. Thanks for listening this week and every week. This is Rob Walling signing off from episode 846.
Episode 845 | Lifetime Deals Revisited, Building is Not the Hard Part, and Confirming an Idea is Worth Paying For (Rob Solo)
/
RSS Feed
What does it take to make a lifetime deal work?
In this listener questions episode, Rob Walling revisits the lifetime pricing debate with new context from Davis Baer of Youform. He also tackles why building is rarely the hard part, how bootstrappers get shut out of startup discount programs, what to watch for when signing customer agreements ahead of an acquisition, and why nearly every successful second or third time founder does real validation before they build.
Want to get your question answered? Submit it here.
Topics we cover:
- (1:58) – Davis Baer on lifetime deals for Youform
- (5:03) – Lifetime pricing question
- (7:49) – Why lifetime deals need built-in virality
- (10:47) – Building is not the hard part
- (12:11) – Why startup programs won’t help bootstrappers
- (14:53) – Signing customer agreements and NDAs
- (19:20) – What buyers check during acquisition
- (21:40) – The validation vs just launching debate
- (23:26) – How successful founders actually validate
Links from the show:
- TinySummit | December 5–7, 2026 · JW Marriott, Cancun
- TinySeed Accelerator
- The SaaS Playbook
- Rob’s Weekly Newsletter
- Youform
- Davis Baer (@mynameis_davis) | X
- OneUp
- SignWell
- Rosie
- X Thread: Product Validation
- The Code Is Your Enemy (Jason Cohen essay)
- Mike Taylor (@hammer_mt) | X
- Rob Walling (@robwalling) | X
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
Subscribe & Review: iTunes | Spotify
Rob Walling: Welcome back to another episode of Startups for the Rest of Us. I’m your host, Rob Walling. And in this episode, I’m going to walk through a few listener questions and a few listener comments. We got a couple really helpful and insightful comments about lifetime pricing, selling a one-time deal, that was a few episodes back. And we heard from none other than Davis Baer, who I had mentioned in that episode. And he gave me more info on X. You can go read that thread if you are interested. We will link it up, as well as someone else weighed in. And then there are a handful of other listener questions that I’m going to be attacking today. Before we dive into today’s episode, if you’re a founder doing more than a million in ARR, you’ve probably hit a decision that really matters: a pricing change, a key hire, whether to raise funding or not.
Rob Walling: And realize there’s almost no one you can actually talk it through with. Your team’s too close to it. Your friends don’t get it. And so much of the advice online is for people 10 steps behind you. That’s exactly why we started Tiny Summit. It’s a small group of founders, all past a million in ARR, together for two and a half days, built around round tables and the kind of conversations you can’t have anywhere else. It’s December 5th through the 7th at one of the top resorts in Cancun. At your stage, getting one of those big decisions right pays for the trip many times over. Most of the folks in the room are part of SaaS Institute, our year-round community for founders past a million. Tiny Summit is where that community comes together in person. And if you join SaaS Institute before the event, your ticket’s on us.
Rob Walling: Get all the details and your ticket at tinyseed.com/tinysummit.
Rob Walling: Let’s move on to my first topic, which is a very thoughtful tweet from Davis Baer, who’s the co-founder of Youform. And I had mentioned him a couple episodes ago about doing lifetime deals because we had a question about lifetime deals. And it’s like one-time payments or lifetime deals, however we want to call them. And I am bearish on them in general. I wouldn’t do them, but I called Davis and Youform out as a success story in a sense that had done it. So Davis responded to me and said, “In regards to the one-time payments, I would say overall it was a success for us, but I think it only works in certain circumstances.” And I like that he did this because this is something I called out in the episode, that I’m almost viewing the criteria more like freemium, because it kind of is freemium.
Rob Walling: You get one payment, you do get some money, but then they’re freemium from then on. And I was guessing, conjecturing, educated guessing, as we call it in the business, that that would be the case. And so returning back to Davis’s tweet. Some things that worked in our favor: I already had a decent following on X. I had a large email list from our other product called OneUp. I had a successful track record, and OneUp’s revenue meant we basically had infinite runway. And keep that in mind. Infinite runway to keep Youform alive forever, which helped with trust. On the flip side, most lifetime deals I see are people’s first products. So it takes a lot of trust from a customer, and from someone who has not proven that they will stick with it long term. I think it made us $30,000 in the first few months and helped us get a foothold in the early going.
Rob Walling: And to be honest, provided some validation. We also had and still have a free plan. And there isn’t really any additional cost or support burden that a Pro plan user causes that a free plan user wouldn’t also cause. So I’m going to assume that Pro plan is the lifetime deal. We had both a lifetime deal and a monthly plan running simultaneously for a while, but then eventually dropped the lifetime deal once we hit 5K MRR. The upfront cash was nice, but recurring revenue is definitely the healthier business model. Would I do it again the same way? Yes. Is it easily replicable? No. In fact, we saw many Youform copycats come and try to do the same with lifetime deals and basically all of them are now shut down. So I appreciate Davis taking the time to write in, to put it on X and allow me to add more context to it.
Rob Walling: The counter example. That’s the thing, is I often get questions that it’s like, is this possible? Yes. Is it probable or should you do it? Probably not, is often my answer with a lot of things. With freemium, with trying to build a standalone SaaS if you’re not a developer, with not wanting to validate because X, Y, Z reason, not wanting to stair step because you want to jump to standalone SaaS even though you haven’t ever launched a product. There’s different things, right? And usually it’s, well, you can do what you want, but in your shoes, I wouldn’t. In my shoes, maybe I would, because I have more of a track record. I have resources. I have experience. I have a network and an audience and all that stuff. So really appreciate Davis weighing in on this one. My next email, which he sent to questions@startupsfortherestofus.com, is from Hussein from Scrollbook.
Rob Walling: That’s at scrollbook.io. And he writes, “Hey Rob, I’m a solo founder. I spent two years building Scrollbook.” Oh, that’s a lot. “A visual learning platform for nonfiction, 252 titles as five minute visual scrolls, free forever. And chapter by chapter breakdowns with infographics and professional audio. Plus BookBuddy, an AI reading coach grounded in the licensed library. Launched it April 17th of this year, 2026. The reason I’m writing is instead of charging a subscription, we priced it at $199 lifetime. And the first thousand got in for just $99 lifetime. Wow. We priced it this way in a category, which is book summaries and consumer AI, that is almost entirely subscription. I’d love your read on whether lifetime pricing survives this cycle for bootstrap consumer AI apps or whether it’s a founder mistake I’ll be undoing in 12 months. Happy to send comp lifetime access if you or anyone on your team wants to check it out.”
Rob Walling: I’ll be honest, I dragged this here because it said lifetime pricing. And I thought Hussein was weighing in on the discussion. This was actually sent before I answered the previous question, but I want to weigh in on it if only briefly. Scrollbook looks interesting. I don’t like consumer products, and consumer AI especially is a dicey proposition. So it’s not something I personally would be doing. The lifetime price at this point, the thousand people for a hundred bucks and then 200 lifetime. I think similar to what Davis said, do you have what he has, which is a social following and a need to not have revenue now? If everyone else is subscription, why are they subscription? It’s because subscription is the best business model in the world. And so why are you breaking that? If you go back and listen to the episode, it was what, four or five episodes ago.
Rob Walling: It was someone wanting to do more validation before committing to recurring support in a sense, and keeping the product updated. But it sounds like for you potentially, this could be to get more cash upfront. If that’s the reason I’m intrigued by this, I wouldn’t do a thousand at $99. I might do a hundred or 50. I can imagine doing it, because what are you going to charge for this monthly? Five bucks, maybe 50 bucks a year, five, six dollars a month. So if you can instead get that hundred or $200 lifetime upfront and you need the cash, I could be convinced, and get those early users. I think the big thing for me is the virality. I still come back to me feeling like lifetime deals are like free plans. And free plans really only work well, they’re only worth it usually, if you have some type of virality, like built-in virality, not like, oh, there’s a share button here.
Rob Walling: It’s like for every person that signs up, 0.2, 0.4, 0.5, a full 1.0 number of people also sign up, are also pulled into it, like Slack, right? You sign up for Slack. You don’t sit there on your own. You’re always going to invite at least one person. And usually the viral coefficient, is what this is called. Usually it’s above one. For every person who signs up, you’re going to invite three, four, five people, 10 people, 100 people. I don’t see that here, but I haven’t dug into BookBuddy and Scrollbook. I also wonder, why did you build two different products? Yeah, I guess this all sounds like B2C. And the only reason I could possibly see doing a lifetime deal here is to get more cash upfront. Otherwise, you’re basically selling a one-time sale. It’s like you’re selling a towel on Amazon, right? And you’re shipping them a thing and that’s it.
Rob Walling: That’s fine, but you always need to be finding more and more and more customers in order to keep the business alive. I’ve done that. All of my stuff before SaaS, up until ’08, ’09, were one-time products. And even Net Invoice [VERIFY: “Net Invoice” – product name], which sold for $300 a pop, it was just a grind trying to find new people every month. And the only way we did it was through SEO. Ads worked for a while until they didn’t. And I did some content marketing. I did partnerships that drove. I would do these partnerships and it’s like, oh, we’d have this amazing month, $5,000 in sales. And this was like a nights and weekends thing for me back in 2005, six, seven. That was a chunk of money for me. And then the revenue would go back to the 2000, I think it was between two and three grand usually every month, that all of that, such a big chunk of that was SEO.
Rob Walling: It was Google organic. Or over time, it was as we sold more and we had annual renewals. So we did charge 80 bucks or 100 bucks of annual renewals so people could get up-to-date features and all that. So all that said, if you don’t have a flywheel of traffic and you’re selling one time, I think this is not a good business. And if you’re selling B2C and not B2B, I think this is probably not a good business. So I appreciate your question and I certainly wish you the best of luck, but those are my thoughts for now. My next email is one that I’m going to keep anonymous. And this is one, if you want to receive a weekly email from me, a weekly essay, although the last two weeks I haven’t sent an essay because I’ve been finishing the book, but I am going to get back on that train.
Rob Walling: Go to robwalling.com/subscribe. And I have new and innovative thoughts that sometimes appear on the podcast, but most of the time don’t. In-depth thoughts, essays, all that kind of stuff that I’m sending out. So someone responded to that. And it was in an email that I had sent about, if you share your business idea, should you worry about someone stealing it? And I wrote this long form essay about it and even addressed it in the age of AI. But if someone can build it in a weekend, are you still confident that I shouldn’t share my business idea? And I addressed that in the essay as well. And basically say, look, it’s like marketing, distribution, all that is the hard part. And he wrote back and he said, “I got to see all of this firsthand this week. A friend of mine is an executive at a large tech company and his contacts there inspired several good ideas for internal products.
Rob Walling: He built a couple of them with Claude, but then nothing. And I asked him why he didn’t work with the stakeholders to start iterating and improving the products. He said he couldn’t convince any of them to take the app seriously. Now I see what you mean from secondhand experience.” Building is not, and generally has never been, the hardest part. And I say that in terms of just marketing and finding people, but in this case, it’s like entrepreneurship. Are you doing it internally? He built the products and people still internally weren’t willing to give him the time of day around it. So that’s a lesson for us, whether we are trying to market or convince folks internally. Certainly AI makes building products easier, but there’s still all the other stuff around building that so many people forget is hard. Another email response I received, I’m going to keep it anonymous, is someone writing in saying, “Everywhere we turn, discounts and startup programs will not support bootstrappers.
Rob Walling: We secured our first enterprise account.” So an enterprise deal for $250,000. “Yet companies like Google, who have Google Cloud Provider GCP and many others, will only help if you are VC backed. It seemed crazy that you have to give up your kidney just to get a little help. Have you run into a similar thing?” My answer is yes. And especially, yeah, when I was bootstrapping, and I’ve seen other bootstrappers run into this, the challenge with these startup programs is they want companies that ultimately have a lot of money to spend. And it is giving away the razor to sell the blades type thing, or giving the first piece of candy is free and they want you to start using GCP, but they want to know that you have money to use it down the line. And they want some type of, what’s the easy filtering mechanism?
Rob Walling: Because if they just said anyone can do it and you can bootstrap, they’re going to get hundreds or thousands of applicants and have to sort through them. And that’s expensive and costly and time consuming. But if some venture capitalist has invested in them, then that’s at least, it says something. It says you have some funding and it says someone has looked through your business and made sure it’s somewhat legitimate. So yeah, I have seen it and it’s unfortunate. It’s interesting, you don’t actually need to be VC backed, because TinySeed, through our accelerator, has a ton of these startup discount programs. And we are technically a fund, but it’s not like you have to raise millions of dollars. I mean, our checks are in the 120 to $300,000 range. And so you don’t have to raise that much to get them. But yes, this is the case.
Rob Walling: I’ve never seen exceptions to this. If you are out there listening and you know of exceptions, or you have a list of all the ones that are maybe bootstrapper friendly, feel free to write into the show. You can hit questions@startupsfortherestofus.com, or you can head to the website startupsfortherestofus.com, click ask a question in the top nav, and submit audio, video or text. It’s a bummer to be a bootstrapper when it’s not fair. And as a bootstrapper, you probably need the GCP more than the funded companies do, but alas. That is, I’ll say it’s a form of, I guess, it’s unintentional discrimination, I think. I don’t think they specifically want to discriminate against bootstrappers. I just think it makes their job a lot simpler in terms of filtering. My next question is from Johannes.
Johannes: Hi, Rob. Johannes here from Sweden. I have a question around signing customer agreements with customers. We have a product that we sell to large sites and also enterprise customers. And from now and then we get requests from the customer to sign customer agreements. It can be just a basic NDA. It can be a special license agreement, or it can be some kind of processing agreement. And my question is how careful we should be about signing those agreements and how much we should have those agreements gone through and reviewed by a lawyer. So my question is from an acquisition standpoint, when an acquisition is done, how much do the M&A firm or the buyer go through these agreements? And how much should we care about them? Because my thought or my point of view here is that we should try to be careful about not having a lot of agreements signed, and really review the different terms there so we don’t end up with a pile of agreements with hard terms like huge liability clause and similar things.
Johannes: Yep. So that’s my question. What’s happening with those kind of agreements during a due diligence of a company in like one to two million ARR range when it’s getting purchased? And what can we do now to really prepare for not having any trouble with that further on?
Rob Walling: Johannes is a frequent attendee of MicroConf. We met several times in person and I believe he’s also written into the podcast in the past. He’s a long time listener. So thanks for writing in. This is a really good question and I’ve never answered it on the show. So I really appreciated him writing in. And for the record, he is the founder of SQL Spreads, sqlspreads.com. Use SQL Spreads Excel add-in to update data in SQL Server. And yes, I do realize I just said SQL and then SQL and then I went back and forth. So you can hit me up on X if you’re annoyed by the fact that I flip flopped there. So I think you answered your own question, Johannes. It’s basically, yes, you should be aware of anything that you sign. These days, look, not legal advice, definitely not a lawyer. But these days I do like that Claude and ChatGPT, they’re not the worst at giving some legal advice.
Rob Walling: Now, there’s a ton of liability. Have you heard about the, there was a case where someone, they were asking ChatGPT, I think, legal questions and saying like, “Well, if I did this, we know what the outcome would be.” And then when it got subpoenaed, he said, “Well, I was treating it like my attorney. So there’s client attorney privilege, right? Confidentiality.” And the judge said no. And so it was admitted as evidence and it was evidence against him because he was saying things in that transcript to ChatGPT that really were damning evidence. So you have to be careful with all this. This is where, once again, I say this is not legal advice. But yeah, I think taking a first pass with AI is a thing. I think, man, by the time you’re doing one to two million ARR, I do think that you need that contracts attorney who is not outrageously expensive.
Rob Walling: That you can have review, definitely the more onerous contracts. In a perfect world, if you’re going to cover your ass, yes, a lawyer reviews everything that you sign. Is that realistic for a bootstrapper? I would say not. Did I have a lawyer review everything that I signed or had my employees sign? No, I did not. Did I go to rocketlawyer.com years ago and download templates for employment agreements and IP agreements, and basically skim through them and use them as is? I did. Did those pass the muster when we got acquired? Yes, they did. So it’s that thing of, I would, from day one, have $10 million of insurance and be an LLC and cover my ass on everything and dot every i and cross every t in a perfect world. And as a bootstrapper, you have to make trade-offs. You really do. And so this comes down to risk tolerance.
Rob Walling: If you’re signing an NDA, do you need an attorney to review that? In a perfect world, yeah. Have I had an attorney review every NDA I’ve ever signed? No, I have not. I have read through them. And these days, I would also use AI to kind of give me a sanity check. But to get to the meat of your question, which is about during an acquisition, yeah, if you’re being purchased for millions or tens of millions of dollars, 100%, they’re going to go through everything you’ve ever signed and they’re going to look at it. The thing that they are looking out for is, like you said, it’s these big liability clauses. Because if they buy you and then there’s unkept liability for some contract that you’ve signed, that’s a real problem. As I’m thinking through this, I think this would be a good question for me to ping over to [VERIFY: “A&R” – name or initials] and see if he’s seen, because he’s been involved in many, many deals and big deals as well, right?
Rob Walling: Seven, eight figures. And I’m curious if there’s ever been a contract that has really caused issues. Because I remember mine were not the cleanest, but everyone signed something. And I had signed a deal with a couple big Fortune 500 / 1000 companies and I did my best to review them. I was aware of uncapped liability and that kind of stuff. But Johannes, I do think that you’re thinking about it the right way. And the fact that you are even cognizant of it, I think is a step in the right direction. I’d also be interested in either going to Google or Claude or ChatGPT and saying, what are some clauses? What are the top five clauses I should be on the lookout for that could kill an M&A deal later on? And getting that kind of list. Because the only one that I can think of would be a big, like a liability swing.
Rob Walling: I mean, the other ones are where you’ve licensed out your IP or you’ve given away any type of IP rights. It’s that kind of stuff that really gets at the value of what you are selling. Because what are you selling? Well, you’re selling your code, your customer base, your marketing, your brand. It’s those types of things. So anything that degrades those would be of concern. But I like the way you’re thinking about it. And I think as with everything, it’s a balance and you kind of have to balance that, the risk tolerance of it. And look, if you’re doing 10, 20 million in revenue, you probably want to be able to afford an attorney to review everything. And when you’re scraping by and doing a couple hundred grand in ARR and you’re trying to get to that seven figure point, that’s where you may have to make a few compromises as you move forward.
Rob Walling: And for my last question of the day, this one comes from a conversation on X. Jason Cohen, he is a smart bear on X, said, “Once you build your product, you’ll need to find 50 people to try to sell it to, whether in sales assisted or self-serve. Why would you first build the product and then only later find out what to build? Because you’re scared, not because it’s wise.” And he links to, we’ll obviously link this up in the show notes, but he links to an essay called The Code Is Your Enemy. And it’s an essay I think he wrote a while back. But then Mike Taylor, @Hammer_MT, chimed in, “How do you know it’s a problem worth solving though? Way more problems exist than profitable, scalable solutions. For the vast majority of problems in the world, the right solution is a service business or a charity, which isn’t the type of business most tech people want to build.
Rob Walling: I also wonder how many successful businesses actually start with this kind of scientific customer first approach. Every single example I can think of built an idea first and then launched it. Sometimes pivoted after launch. My theory is you can’t get real feedback from people until you give them a real product. Genuinely curious though, because lots of smart people I respect believe in the lean startup/customer development approach.” And then Johannes Radig wrote in and said, “Can we have a podcast episode on this, Rob Walling?” And then asked about Laura Roeder and how she validated MeetEdgar/Paperbell. All right. So here’s my take on it. I know a lot of folks who have done either pre-sales or customer development conversations around this, like before building something. And I think the interesting thing is that the draw is to not do that. And so there are obviously more examples of people who quote unquote just launched something.
Rob Walling: But I think even a lot of those people who just launched something, a lot of those folks are launching something that either they paid for at their day job, they used to pay for themselves. They are truly scratching an itch. Drip was built out of a problem that I was having on the prior SaaS app HitTail. And so I knew there was at least one customer for it. And that’s not a great way to go. And that’s why I then went and got 11 yeses. I was trying to get 10 and I got 11 yeses of people who would try it. There was at least some validation I was building something. Jason Cohen got 40 yeses, I think, before doing WP Engine. A lot of things happen that way. Ruben Gamez with SignWell, you would say, “Well, did he do a bunch of customer validation and conversations?” And it’s like, kind of.
Rob Walling: He actually went and put up, it was either a landing page or a website, started doing SEO, started getting some traffic and had a bunch of conversations with folks that were customers of Bidsketch, which is his other SaaS app that’s proposal software. And so he was having these invisible conversations, invisible to us on the internet. We could say, “Well, he just launched SignWell because he thought it would work and he didn’t do any validation.” He did a ton of validation. He did SEO, he did SEO keyword research to figure out what he could rank for and how much traffic he could potentially drive. He was having conversations with past employees of other electronic signature services. He was doing market research out the wazoo. And it wasn’t just, I don’t mean going to Google and going to Reddit. I mean, it was conversations, validation in the truest sense of the word.
Rob Walling: I’ve actually just gotten out of doing a bunch of kind of research and thinking on this topic and interviewing folks who did validation, like Jordan Gal with Rosie. So heyrosie.com is that domain name. And you could say, “Well, I didn’t see Jordan go out and get a bunch of purchase commitments, but you know what Jordan did do?” And the reason I know is I just interviewed him about this and then included it in SaaS Launchpad, the book that I mentioned earlier. And I tell the story of how even a third time founder with an exit under his belt went and did validation. And it isn’t the exact copy of what Jason Cohen says. Did he go to LinkedIn and ask people to talk to him for 45 minutes and ask if they would buy it and that kind of stuff? No, I don’t believe he did.
Rob Walling: But he did take several different ideas and he did research for demand, competitive research. He had a bunch of conversations. And I know he did this because he talked to me. And then he talked to Ruben about it. And then he talked to some folks. He’s a TinySeed mentor and he was talking to some folks at TinySeed. And he had a bunch of conversations and gathered information and looked at the market. And I do believe he actually had some potential customer conversations. I honestly didn’t get so deep into that, but he did a real solid assessment of the market, the space, and not just stuff you can find on the internet. This is the issue, is I see a lot of builders who, they just want to indie hack. They just want to kind of make a thing. And then you say, “Oh, we’ll go do research and validate it.” And they want to spend 20 minutes going to Reddit and being like, “Oh, see, someone has a problem.
Rob Walling: I want to build it.” Or, “I have the problem, therefore I’m going to build it, because even if no one else uses it, at least I have it for myself.” And that’s a dumb way to go about it. It doesn’t mean it’s not going to work, but I’ve heard that a lot and seen people build a lot of things that basically have a customer count of one and it’s you. For you to take a few hours, maybe build a landing page, maybe have some conversations, do the customer competitor research, all these things. Again, I’m knee deep in this, or I was last week writing this out, making sure I stand behind it for SaaS Launchpad, because SaaS Launchpad is about all the early days. It’s about coming up with ideas. There’s a chapter called How to Find Startup Ideas. And then it’s about how to validate.
Rob Walling: And I talk about the 2200 framework [VERIFY: “2200 framework”] I’ve talked about on the podcast. And then I talk about how to build a launch list and how to launch, find early customers, try to scrape and claw to product market fit. Talk about the five stages of bootstrappers, bootstrap SaaS product market fit, all that stuff. So all that said, yeah, most of the successful entrepreneurs I know, when they go back to do it again, they do some type of validation. That’s actually the biggest signal. For me, it’s not, oh, there’s several people who just launched, or there’s a lot of people who just launched. Like a lot of TinySeed companies, when we fund them, I will ask them how they validated. Many of them just built a bunch of things. Some people it was their sixth or seventh thing they launched, but they killed a year or two doing that.
Rob Walling: What I’ve noticed is that I believe, mostly without exception, every second or third time entrepreneur that I’ve seen that’s doing it does some validation, has some conversations, does that research and digs in. And there’s specific questions you can ask from The Mom Test, and how do you find it, cold and warm folks to talk to? And there’s all these different types of approaches. This is where you build your network. Often not your audience, because audience is not the best way to do it. But in any case, those are my thoughts. I didn’t do a whole episode on it, Johannes, but I am a believer. When we did Drip, I did some validation. I had customer conversations. I got 11 verbal yeses. I definitely did market research about how much demand there was. If I were to start another SaaS app today, you bet your ass I’d be doing all of this stuff that Jason Cohen talks about, that I talk about, that Ruben did, that Jordan Gal did, that there’s a lot of folks.
Rob Walling: And I think that’s telling, right? There’s no one right answer and there’s no one right way to do these things, but I do think there’s kind of directions. I think being directionally correct, there’s no map, but there’s a compass that can kind of tell you like, “Yeah, most of us have done this. Most of the successful people have gone in that direction.” And I do want to weigh in. There was kind of an interesting later piece of that thread where Jason Cohen said, “No one said you should find a problem before the idea. In fact, I’ve explicitly said the opposite. I said talk to customers before you build the idea.” Tons of examples of that. Superhuman is a nice one. So he’s not saying that you can just talk to customers to come up with ideas. It’s more about vetting your idea. I often say validation, not coming up with a new idea.
Rob Walling: And Mike Taylor came back and said, “Yeah, I’m specifically talking about coming up with the idea of talking to potential customers before you have a product.” And Jason says, “Yeah, I’ve almost never heard of talking to customers in order to find an idea. My advice has always been to have an idea, then make theories about what would have to be true for this to really work, then test that by talking to customers.” And that’s what I’m saying as well. That’s why I talk about validation. And in the chapter, How to Find Startup Ideas, I give, it’s either seven or eight different approaches or kind of thought processes for how to come up with ideas. It’s like, look at a problem you’re experiencing at a day job. Look at something that you pay for at your day job. Is there a problem that a spouse or a friend or a coworker is experiencing at their job?
Rob Walling: There’s all these things where, because first you’re looking for a problem. That’s what I ask people these days. “Hey, I want to tell you my startup idea.” I say, “First, tell me what problem it solves and for whom.” And if you’re not starting there, it’s not B2B SaaS, because you need to be solving some type of problem that some business has and will hopefully pay for. And that’s the hopefully pay for part, and hopefully you can reach them at a scale for a cost that is reasonable enough that you can charge enough that you can make it a viable business. Each of those things, you validate as much as you can separately and together through conversations and research and talking to smart people in your network. And then with all of that, you don’t get to 100% validation. You don’t get to where it’s like, oh, 100% this will work.
Rob Walling: There’s no way. Maybe you go from zero to a hunch, which is 10%, to doing validation and vetting. Do you get to the 30, 40, 50% certainty that it’ll work? Yeah, it’s probably somewhere in there. And that’s probably about as good as you’re going to get without building something, without kind of diving in deep to this. So thanks, Johannes, for referring this over to me on X. And obviously if you’re out there in the wild and you see a conversation and you feel like you’d like to hear my take, or the take of me plus a guest in a future episode, I’m at Rob Walling on Twitter. And you can follow me there. And of course @mention me if you want to call something to my attention. Starting to run a little low on questions, you can head to startupsfortherestofus.com, click ask a question in the top nav.
Rob Walling: Audio and video questions, of course, go to the top of the stack. Thank you so much for joining me this week and every week. It’s great to be in your earbuds. And this is literally one of the highlights of my week, is when I get to sit down and record an episode of this show. And that’s why I’ve been doing it every week for 16 years, since 2010. Thanks for listening this week and every week. This is Rob Walling signing off from episode 845.
Rob Walling: And realize there’s almost no one you can actually talk it through with. Your team’s too close to it. Your friends don’t get it. And so much of the advice online is for people 10 steps behind you. That’s exactly why we started Tiny Summit. It’s a small group of founders, all past a million in ARR, together for two and a half days, built around round tables and the kind of conversations you can’t have anywhere else. It’s December 5th through the 7th at one of the top resorts in Cancun. At your stage, getting one of those big decisions right pays for the trip many times over. Most of the folks in the room are part of SaaS Institute, our year-round community for founders past a million. Tiny Summit is where that community comes together in person. And if you join SaaS Institute before the event, your ticket’s on us.
Rob Walling: Get all the details and your ticket at tinyseed.com/tinysummit.
Rob Walling: Let’s move on to my first topic, which is a very thoughtful tweet from Davis Baer, who’s the co-founder of Youform. And I had mentioned him a couple episodes ago about doing lifetime deals because we had a question about lifetime deals. And it’s like one-time payments or lifetime deals, however we want to call them. And I am bearish on them in general. I wouldn’t do them, but I called Davis and Youform out as a success story in a sense that had done it. So Davis responded to me and said, “In regards to the one-time payments, I would say overall it was a success for us, but I think it only works in certain circumstances.” And I like that he did this because this is something I called out in the episode, that I’m almost viewing the criteria more like freemium, because it kind of is freemium.
Rob Walling: You get one payment, you do get some money, but then they’re freemium from then on. And I was guessing, conjecturing, educated guessing, as we call it in the business, that that would be the case. And so returning back to Davis’s tweet. Some things that worked in our favor: I already had a decent following on X. I had a large email list from our other product called OneUp. I had a successful track record, and OneUp’s revenue meant we basically had infinite runway. And keep that in mind. Infinite runway to keep Youform alive forever, which helped with trust. On the flip side, most lifetime deals I see are people’s first products. So it takes a lot of trust from a customer, and from someone who has not proven that they will stick with it long term. I think it made us $30,000 in the first few months and helped us get a foothold in the early going.
Rob Walling: And to be honest, provided some validation. We also had and still have a free plan. And there isn’t really any additional cost or support burden that a Pro plan user causes that a free plan user wouldn’t also cause. So I’m going to assume that Pro plan is the lifetime deal. We had both a lifetime deal and a monthly plan running simultaneously for a while, but then eventually dropped the lifetime deal once we hit 5K MRR. The upfront cash was nice, but recurring revenue is definitely the healthier business model. Would I do it again the same way? Yes. Is it easily replicable? No. In fact, we saw many Youform copycats come and try to do the same with lifetime deals and basically all of them are now shut down. So I appreciate Davis taking the time to write in, to put it on X and allow me to add more context to it.
Rob Walling: The counter example. That’s the thing, is I often get questions that it’s like, is this possible? Yes. Is it probable or should you do it? Probably not, is often my answer with a lot of things. With freemium, with trying to build a standalone SaaS if you’re not a developer, with not wanting to validate because X, Y, Z reason, not wanting to stair step because you want to jump to standalone SaaS even though you haven’t ever launched a product. There’s different things, right? And usually it’s, well, you can do what you want, but in your shoes, I wouldn’t. In my shoes, maybe I would, because I have more of a track record. I have resources. I have experience. I have a network and an audience and all that stuff. So really appreciate Davis weighing in on this one. My next email, which he sent to questions@startupsfortherestofus.com, is from Hussein from Scrollbook.
Rob Walling: That’s at scrollbook.io. And he writes, “Hey Rob, I’m a solo founder. I spent two years building Scrollbook.” Oh, that’s a lot. “A visual learning platform for nonfiction, 252 titles as five minute visual scrolls, free forever. And chapter by chapter breakdowns with infographics and professional audio. Plus BookBuddy, an AI reading coach grounded in the licensed library. Launched it April 17th of this year, 2026. The reason I’m writing is instead of charging a subscription, we priced it at $199 lifetime. And the first thousand got in for just $99 lifetime. Wow. We priced it this way in a category, which is book summaries and consumer AI, that is almost entirely subscription. I’d love your read on whether lifetime pricing survives this cycle for bootstrap consumer AI apps or whether it’s a founder mistake I’ll be undoing in 12 months. Happy to send comp lifetime access if you or anyone on your team wants to check it out.”
Rob Walling: I’ll be honest, I dragged this here because it said lifetime pricing. And I thought Hussein was weighing in on the discussion. This was actually sent before I answered the previous question, but I want to weigh in on it if only briefly. Scrollbook looks interesting. I don’t like consumer products, and consumer AI especially is a dicey proposition. So it’s not something I personally would be doing. The lifetime price at this point, the thousand people for a hundred bucks and then 200 lifetime. I think similar to what Davis said, do you have what he has, which is a social following and a need to not have revenue now? If everyone else is subscription, why are they subscription? It’s because subscription is the best business model in the world. And so why are you breaking that? If you go back and listen to the episode, it was what, four or five episodes ago.
Rob Walling: It was someone wanting to do more validation before committing to recurring support in a sense, and keeping the product updated. But it sounds like for you potentially, this could be to get more cash upfront. If that’s the reason I’m intrigued by this, I wouldn’t do a thousand at $99. I might do a hundred or 50. I can imagine doing it, because what are you going to charge for this monthly? Five bucks, maybe 50 bucks a year, five, six dollars a month. So if you can instead get that hundred or $200 lifetime upfront and you need the cash, I could be convinced, and get those early users. I think the big thing for me is the virality. I still come back to me feeling like lifetime deals are like free plans. And free plans really only work well, they’re only worth it usually, if you have some type of virality, like built-in virality, not like, oh, there’s a share button here.
Rob Walling: It’s like for every person that signs up, 0.2, 0.4, 0.5, a full 1.0 number of people also sign up, are also pulled into it, like Slack, right? You sign up for Slack. You don’t sit there on your own. You’re always going to invite at least one person. And usually the viral coefficient, is what this is called. Usually it’s above one. For every person who signs up, you’re going to invite three, four, five people, 10 people, 100 people. I don’t see that here, but I haven’t dug into BookBuddy and Scrollbook. I also wonder, why did you build two different products? Yeah, I guess this all sounds like B2C. And the only reason I could possibly see doing a lifetime deal here is to get more cash upfront. Otherwise, you’re basically selling a one-time sale. It’s like you’re selling a towel on Amazon, right? And you’re shipping them a thing and that’s it.
Rob Walling: That’s fine, but you always need to be finding more and more and more customers in order to keep the business alive. I’ve done that. All of my stuff before SaaS, up until ’08, ’09, were one-time products. And even Net Invoice [VERIFY: “Net Invoice” – product name], which sold for $300 a pop, it was just a grind trying to find new people every month. And the only way we did it was through SEO. Ads worked for a while until they didn’t. And I did some content marketing. I did partnerships that drove. I would do these partnerships and it’s like, oh, we’d have this amazing month, $5,000 in sales. And this was like a nights and weekends thing for me back in 2005, six, seven. That was a chunk of money for me. And then the revenue would go back to the 2000, I think it was between two and three grand usually every month, that all of that, such a big chunk of that was SEO.
Rob Walling: It was Google organic. Or over time, it was as we sold more and we had annual renewals. So we did charge 80 bucks or 100 bucks of annual renewals so people could get up-to-date features and all that. So all that said, if you don’t have a flywheel of traffic and you’re selling one time, I think this is not a good business. And if you’re selling B2C and not B2B, I think this is probably not a good business. So I appreciate your question and I certainly wish you the best of luck, but those are my thoughts for now. My next email is one that I’m going to keep anonymous. And this is one, if you want to receive a weekly email from me, a weekly essay, although the last two weeks I haven’t sent an essay because I’ve been finishing the book, but I am going to get back on that train.
Rob Walling: Go to robwalling.com/subscribe. And I have new and innovative thoughts that sometimes appear on the podcast, but most of the time don’t. In-depth thoughts, essays, all that kind of stuff that I’m sending out. So someone responded to that. And it was in an email that I had sent about, if you share your business idea, should you worry about someone stealing it? And I wrote this long form essay about it and even addressed it in the age of AI. But if someone can build it in a weekend, are you still confident that I shouldn’t share my business idea? And I addressed that in the essay as well. And basically say, look, it’s like marketing, distribution, all that is the hard part. And he wrote back and he said, “I got to see all of this firsthand this week. A friend of mine is an executive at a large tech company and his contacts there inspired several good ideas for internal products.
Rob Walling: He built a couple of them with Claude, but then nothing. And I asked him why he didn’t work with the stakeholders to start iterating and improving the products. He said he couldn’t convince any of them to take the app seriously. Now I see what you mean from secondhand experience.” Building is not, and generally has never been, the hardest part. And I say that in terms of just marketing and finding people, but in this case, it’s like entrepreneurship. Are you doing it internally? He built the products and people still internally weren’t willing to give him the time of day around it. So that’s a lesson for us, whether we are trying to market or convince folks internally. Certainly AI makes building products easier, but there’s still all the other stuff around building that so many people forget is hard. Another email response I received, I’m going to keep it anonymous, is someone writing in saying, “Everywhere we turn, discounts and startup programs will not support bootstrappers.
Rob Walling: We secured our first enterprise account.” So an enterprise deal for $250,000. “Yet companies like Google, who have Google Cloud Provider GCP and many others, will only help if you are VC backed. It seemed crazy that you have to give up your kidney just to get a little help. Have you run into a similar thing?” My answer is yes. And especially, yeah, when I was bootstrapping, and I’ve seen other bootstrappers run into this, the challenge with these startup programs is they want companies that ultimately have a lot of money to spend. And it is giving away the razor to sell the blades type thing, or giving the first piece of candy is free and they want you to start using GCP, but they want to know that you have money to use it down the line. And they want some type of, what’s the easy filtering mechanism?
Rob Walling: Because if they just said anyone can do it and you can bootstrap, they’re going to get hundreds or thousands of applicants and have to sort through them. And that’s expensive and costly and time consuming. But if some venture capitalist has invested in them, then that’s at least, it says something. It says you have some funding and it says someone has looked through your business and made sure it’s somewhat legitimate. So yeah, I have seen it and it’s unfortunate. It’s interesting, you don’t actually need to be VC backed, because TinySeed, through our accelerator, has a ton of these startup discount programs. And we are technically a fund, but it’s not like you have to raise millions of dollars. I mean, our checks are in the 120 to $300,000 range. And so you don’t have to raise that much to get them. But yes, this is the case.
Rob Walling: I’ve never seen exceptions to this. If you are out there listening and you know of exceptions, or you have a list of all the ones that are maybe bootstrapper friendly, feel free to write into the show. You can hit questions@startupsfortherestofus.com, or you can head to the website startupsfortherestofus.com, click ask a question in the top nav, and submit audio, video or text. It’s a bummer to be a bootstrapper when it’s not fair. And as a bootstrapper, you probably need the GCP more than the funded companies do, but alas. That is, I’ll say it’s a form of, I guess, it’s unintentional discrimination, I think. I don’t think they specifically want to discriminate against bootstrappers. I just think it makes their job a lot simpler in terms of filtering. My next question is from Johannes.
Johannes: Hi, Rob. Johannes here from Sweden. I have a question around signing customer agreements with customers. We have a product that we sell to large sites and also enterprise customers. And from now and then we get requests from the customer to sign customer agreements. It can be just a basic NDA. It can be a special license agreement, or it can be some kind of processing agreement. And my question is how careful we should be about signing those agreements and how much we should have those agreements gone through and reviewed by a lawyer. So my question is from an acquisition standpoint, when an acquisition is done, how much do the M&A firm or the buyer go through these agreements? And how much should we care about them? Because my thought or my point of view here is that we should try to be careful about not having a lot of agreements signed, and really review the different terms there so we don’t end up with a pile of agreements with hard terms like huge liability clause and similar things.
Johannes: Yep. So that’s my question. What’s happening with those kind of agreements during a due diligence of a company in like one to two million ARR range when it’s getting purchased? And what can we do now to really prepare for not having any trouble with that further on?
Rob Walling: Johannes is a frequent attendee of MicroConf. We met several times in person and I believe he’s also written into the podcast in the past. He’s a long time listener. So thanks for writing in. This is a really good question and I’ve never answered it on the show. So I really appreciated him writing in. And for the record, he is the founder of SQL Spreads, sqlspreads.com. Use SQL Spreads Excel add-in to update data in SQL Server. And yes, I do realize I just said SQL and then SQL and then I went back and forth. So you can hit me up on X if you’re annoyed by the fact that I flip flopped there. So I think you answered your own question, Johannes. It’s basically, yes, you should be aware of anything that you sign. These days, look, not legal advice, definitely not a lawyer. But these days I do like that Claude and ChatGPT, they’re not the worst at giving some legal advice.
Rob Walling: Now, there’s a ton of liability. Have you heard about the, there was a case where someone, they were asking ChatGPT, I think, legal questions and saying like, “Well, if I did this, we know what the outcome would be.” And then when it got subpoenaed, he said, “Well, I was treating it like my attorney. So there’s client attorney privilege, right? Confidentiality.” And the judge said no. And so it was admitted as evidence and it was evidence against him because he was saying things in that transcript to ChatGPT that really were damning evidence. So you have to be careful with all this. This is where, once again, I say this is not legal advice. But yeah, I think taking a first pass with AI is a thing. I think, man, by the time you’re doing one to two million ARR, I do think that you need that contracts attorney who is not outrageously expensive.
Rob Walling: That you can have review, definitely the more onerous contracts. In a perfect world, if you’re going to cover your ass, yes, a lawyer reviews everything that you sign. Is that realistic for a bootstrapper? I would say not. Did I have a lawyer review everything that I signed or had my employees sign? No, I did not. Did I go to rocketlawyer.com years ago and download templates for employment agreements and IP agreements, and basically skim through them and use them as is? I did. Did those pass the muster when we got acquired? Yes, they did. So it’s that thing of, I would, from day one, have $10 million of insurance and be an LLC and cover my ass on everything and dot every i and cross every t in a perfect world. And as a bootstrapper, you have to make trade-offs. You really do. And so this comes down to risk tolerance.
Rob Walling: If you’re signing an NDA, do you need an attorney to review that? In a perfect world, yeah. Have I had an attorney review every NDA I’ve ever signed? No, I have not. I have read through them. And these days, I would also use AI to kind of give me a sanity check. But to get to the meat of your question, which is about during an acquisition, yeah, if you’re being purchased for millions or tens of millions of dollars, 100%, they’re going to go through everything you’ve ever signed and they’re going to look at it. The thing that they are looking out for is, like you said, it’s these big liability clauses. Because if they buy you and then there’s unkept liability for some contract that you’ve signed, that’s a real problem. As I’m thinking through this, I think this would be a good question for me to ping over to [VERIFY: “A&R” – name or initials] and see if he’s seen, because he’s been involved in many, many deals and big deals as well, right?
Rob Walling: Seven, eight figures. And I’m curious if there’s ever been a contract that has really caused issues. Because I remember mine were not the cleanest, but everyone signed something. And I had signed a deal with a couple big Fortune 500 / 1000 companies and I did my best to review them. I was aware of uncapped liability and that kind of stuff. But Johannes, I do think that you’re thinking about it the right way. And the fact that you are even cognizant of it, I think is a step in the right direction. I’d also be interested in either going to Google or Claude or ChatGPT and saying, what are some clauses? What are the top five clauses I should be on the lookout for that could kill an M&A deal later on? And getting that kind of list. Because the only one that I can think of would be a big, like a liability swing.
Rob Walling: I mean, the other ones are where you’ve licensed out your IP or you’ve given away any type of IP rights. It’s that kind of stuff that really gets at the value of what you are selling. Because what are you selling? Well, you’re selling your code, your customer base, your marketing, your brand. It’s those types of things. So anything that degrades those would be of concern. But I like the way you’re thinking about it. And I think as with everything, it’s a balance and you kind of have to balance that, the risk tolerance of it. And look, if you’re doing 10, 20 million in revenue, you probably want to be able to afford an attorney to review everything. And when you’re scraping by and doing a couple hundred grand in ARR and you’re trying to get to that seven figure point, that’s where you may have to make a few compromises as you move forward.
Rob Walling: And for my last question of the day, this one comes from a conversation on X. Jason Cohen, he is a smart bear on X, said, “Once you build your product, you’ll need to find 50 people to try to sell it to, whether in sales assisted or self-serve. Why would you first build the product and then only later find out what to build? Because you’re scared, not because it’s wise.” And he links to, we’ll obviously link this up in the show notes, but he links to an essay called The Code Is Your Enemy. And it’s an essay I think he wrote a while back. But then Mike Taylor, @Hammer_MT, chimed in, “How do you know it’s a problem worth solving though? Way more problems exist than profitable, scalable solutions. For the vast majority of problems in the world, the right solution is a service business or a charity, which isn’t the type of business most tech people want to build.
Rob Walling: I also wonder how many successful businesses actually start with this kind of scientific customer first approach. Every single example I can think of built an idea first and then launched it. Sometimes pivoted after launch. My theory is you can’t get real feedback from people until you give them a real product. Genuinely curious though, because lots of smart people I respect believe in the lean startup/customer development approach.” And then Johannes Radig wrote in and said, “Can we have a podcast episode on this, Rob Walling?” And then asked about Laura Roeder and how she validated MeetEdgar/Paperbell. All right. So here’s my take on it. I know a lot of folks who have done either pre-sales or customer development conversations around this, like before building something. And I think the interesting thing is that the draw is to not do that. And so there are obviously more examples of people who quote unquote just launched something.
Rob Walling: But I think even a lot of those people who just launched something, a lot of those folks are launching something that either they paid for at their day job, they used to pay for themselves. They are truly scratching an itch. Drip was built out of a problem that I was having on the prior SaaS app HitTail. And so I knew there was at least one customer for it. And that’s not a great way to go. And that’s why I then went and got 11 yeses. I was trying to get 10 and I got 11 yeses of people who would try it. There was at least some validation I was building something. Jason Cohen got 40 yeses, I think, before doing WP Engine. A lot of things happen that way. Ruben Gamez with SignWell, you would say, “Well, did he do a bunch of customer validation and conversations?” And it’s like, kind of.
Rob Walling: He actually went and put up, it was either a landing page or a website, started doing SEO, started getting some traffic and had a bunch of conversations with folks that were customers of Bidsketch, which is his other SaaS app that’s proposal software. And so he was having these invisible conversations, invisible to us on the internet. We could say, “Well, he just launched SignWell because he thought it would work and he didn’t do any validation.” He did a ton of validation. He did SEO, he did SEO keyword research to figure out what he could rank for and how much traffic he could potentially drive. He was having conversations with past employees of other electronic signature services. He was doing market research out the wazoo. And it wasn’t just, I don’t mean going to Google and going to Reddit. I mean, it was conversations, validation in the truest sense of the word.
Rob Walling: I’ve actually just gotten out of doing a bunch of kind of research and thinking on this topic and interviewing folks who did validation, like Jordan Gal with Rosie. So heyrosie.com is that domain name. And you could say, “Well, I didn’t see Jordan go out and get a bunch of purchase commitments, but you know what Jordan did do?” And the reason I know is I just interviewed him about this and then included it in SaaS Launchpad, the book that I mentioned earlier. And I tell the story of how even a third time founder with an exit under his belt went and did validation. And it isn’t the exact copy of what Jason Cohen says. Did he go to LinkedIn and ask people to talk to him for 45 minutes and ask if they would buy it and that kind of stuff? No, I don’t believe he did.
Rob Walling: But he did take several different ideas and he did research for demand, competitive research. He had a bunch of conversations. And I know he did this because he talked to me. And then he talked to Ruben about it. And then he talked to some folks. He’s a TinySeed mentor and he was talking to some folks at TinySeed. And he had a bunch of conversations and gathered information and looked at the market. And I do believe he actually had some potential customer conversations. I honestly didn’t get so deep into that, but he did a real solid assessment of the market, the space, and not just stuff you can find on the internet. This is the issue, is I see a lot of builders who, they just want to indie hack. They just want to kind of make a thing. And then you say, “Oh, we’ll go do research and validate it.” And they want to spend 20 minutes going to Reddit and being like, “Oh, see, someone has a problem.
Rob Walling: I want to build it.” Or, “I have the problem, therefore I’m going to build it, because even if no one else uses it, at least I have it for myself.” And that’s a dumb way to go about it. It doesn’t mean it’s not going to work, but I’ve heard that a lot and seen people build a lot of things that basically have a customer count of one and it’s you. For you to take a few hours, maybe build a landing page, maybe have some conversations, do the customer competitor research, all these things. Again, I’m knee deep in this, or I was last week writing this out, making sure I stand behind it for SaaS Launchpad, because SaaS Launchpad is about all the early days. It’s about coming up with ideas. There’s a chapter called How to Find Startup Ideas. And then it’s about how to validate.
Rob Walling: And I talk about the 2200 framework [VERIFY: “2200 framework”] I’ve talked about on the podcast. And then I talk about how to build a launch list and how to launch, find early customers, try to scrape and claw to product market fit. Talk about the five stages of bootstrappers, bootstrap SaaS product market fit, all that stuff. So all that said, yeah, most of the successful entrepreneurs I know, when they go back to do it again, they do some type of validation. That’s actually the biggest signal. For me, it’s not, oh, there’s several people who just launched, or there’s a lot of people who just launched. Like a lot of TinySeed companies, when we fund them, I will ask them how they validated. Many of them just built a bunch of things. Some people it was their sixth or seventh thing they launched, but they killed a year or two doing that.
Rob Walling: What I’ve noticed is that I believe, mostly without exception, every second or third time entrepreneur that I’ve seen that’s doing it does some validation, has some conversations, does that research and digs in. And there’s specific questions you can ask from The Mom Test, and how do you find it, cold and warm folks to talk to? And there’s all these different types of approaches. This is where you build your network. Often not your audience, because audience is not the best way to do it. But in any case, those are my thoughts. I didn’t do a whole episode on it, Johannes, but I am a believer. When we did Drip, I did some validation. I had customer conversations. I got 11 verbal yeses. I definitely did market research about how much demand there was. If I were to start another SaaS app today, you bet your ass I’d be doing all of this stuff that Jason Cohen talks about, that I talk about, that Ruben did, that Jordan Gal did, that there’s a lot of folks.
Rob Walling: And I think that’s telling, right? There’s no one right answer and there’s no one right way to do these things, but I do think there’s kind of directions. I think being directionally correct, there’s no map, but there’s a compass that can kind of tell you like, “Yeah, most of us have done this. Most of the successful people have gone in that direction.” And I do want to weigh in. There was kind of an interesting later piece of that thread where Jason Cohen said, “No one said you should find a problem before the idea. In fact, I’ve explicitly said the opposite. I said talk to customers before you build the idea.” Tons of examples of that. Superhuman is a nice one. So he’s not saying that you can just talk to customers to come up with ideas. It’s more about vetting your idea. I often say validation, not coming up with a new idea.
Rob Walling: And Mike Taylor came back and said, “Yeah, I’m specifically talking about coming up with the idea of talking to potential customers before you have a product.” And Jason says, “Yeah, I’ve almost never heard of talking to customers in order to find an idea. My advice has always been to have an idea, then make theories about what would have to be true for this to really work, then test that by talking to customers.” And that’s what I’m saying as well. That’s why I talk about validation. And in the chapter, How to Find Startup Ideas, I give, it’s either seven or eight different approaches or kind of thought processes for how to come up with ideas. It’s like, look at a problem you’re experiencing at a day job. Look at something that you pay for at your day job. Is there a problem that a spouse or a friend or a coworker is experiencing at their job?
Rob Walling: There’s all these things where, because first you’re looking for a problem. That’s what I ask people these days. “Hey, I want to tell you my startup idea.” I say, “First, tell me what problem it solves and for whom.” And if you’re not starting there, it’s not B2B SaaS, because you need to be solving some type of problem that some business has and will hopefully pay for. And that’s the hopefully pay for part, and hopefully you can reach them at a scale for a cost that is reasonable enough that you can charge enough that you can make it a viable business. Each of those things, you validate as much as you can separately and together through conversations and research and talking to smart people in your network. And then with all of that, you don’t get to 100% validation. You don’t get to where it’s like, oh, 100% this will work.
Rob Walling: There’s no way. Maybe you go from zero to a hunch, which is 10%, to doing validation and vetting. Do you get to the 30, 40, 50% certainty that it’ll work? Yeah, it’s probably somewhere in there. And that’s probably about as good as you’re going to get without building something, without kind of diving in deep to this. So thanks, Johannes, for referring this over to me on X. And obviously if you’re out there in the wild and you see a conversation and you feel like you’d like to hear my take, or the take of me plus a guest in a future episode, I’m at Rob Walling on Twitter. And you can follow me there. And of course @mention me if you want to call something to my attention. Starting to run a little low on questions, you can head to startupsfortherestofus.com, click ask a question in the top nav.
Rob Walling: Audio and video questions, of course, go to the top of the stack. Thank you so much for joining me this week and every week. It’s great to be in your earbuds. And this is literally one of the highlights of my week, is when I get to sit down and record an episode of this show. And that’s why I’ve been doing it every week for 16 years, since 2010. Thanks for listening this week and every week. This is Rob Walling signing off from episode 845.
Episode 844 | Building a $1M+ ARR SaaS for Laundromats
/
RSS Feed
What does it take to build a seven figure SaaS in a market almost no one thinks about?
In this episode, Rob Walling sits down with Brian Henderson, co-founder of Wash-Dry-Fold POS, to walk through the 10-year arc of building it in one of the most overlooked markets there is: laundromats. From selling other people’s hardware as a scrappy reseller, to teaching himself to rebuild the entire product on no-code during COVID, to competing head-on against a rival that has raised $220 million in venture capital, Brian shares why staying bootstrapped became his biggest advantage.
Episode Sponsor:
What if you could go from idea to your first real user in 30 days?
Not a prototype, not a promise, but an actual working app. Designli will put that in writing.
Their TractionLab is a 90-day plan that takes you from idea to first paying customers. By Day 30, v1 of your app is in your users’ hands, guaranteed. Miss that deadline and your next month is free.
It starts with a free 30-minute call where you share your idea and they tell you exactly what they’ll build and what it costs. No surprises.
You get a full senior team: product owner, engineering lead, full-stack developer, senior UX designer, and solutions architect. They use AI to ship faster, but senior engineers own every architecture decision and review every line of code. The result is yours, and it’s built to last.
Go from idea to revenue in 90 days: designli.co/gettraction
Topics we cover:
- (2:41) – What software for laundromats actually does
- (5:41) – Hitting seven figures with seven people
- (6:33) – Bootstrapping with only $100
- (7:39) – Why no laundromat software existed
- (10:18) – Starting as a value-added reseller
- (18:35) – Rebuilding on Bubble during COVID
- (24:56) – Running a large no-code SaaS
- (31:28) – Hardware as a competitive moat
- (33:43) – Competing against a VC-backed rival
- (39:32) – Selling hardware to cover CAC
Links from the show:
- TinySeed Accelerator | Join our email list – Applications open in September 2026
- Wash-Dry-Fold POS
- Bubble
- Coaching No Code Apps
- Not Quite Unicorns
- Wash-Dry-Fold POS | Facebook
- Brian Henderson | LinkedIn
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
Subscribe & Review: iTunes | Spotify
Rob Walling: Welcome back to another episode of Startups for the Rest of Us. I’m your host, Rob Walling. And in this episode, I talk with Brian Henderson, the co-founder of Wash Dry Fold POS, which is SaaS software made for laundromats. And it’s such a fascinating story to hear how he and his co-founder over the last 10 years have built a seven figure SaaS company in a very atypical fashion using no code in a very small market. And as Brian told me offline, they’ve used a tremendous amount of the lessons that he’s learned listening to this very podcast. In fact, Brian and his co-founder Ian are TinySeed investors, and he gave me permission to say that, but he told me right after we stopped recording that he’s traveled such an interesting journey of bootstrapping, finding this podcast, using those lessons to grow a company, and then has made enough wealth as an entrepreneur that he is able to give back in sorts by reinvesting in this ecosystem and investing in one of our TinySeed funds that then goes to invest in future founders.
So it’s a great story. I think you’re going to enjoy it. Before we dive into that, I want to give you an early heads up for TinySeed Accelerator applications. They’re going to be opening in early September. As you know, TinySeed is one of the best accelerators in the world for B2B SaaS. And it’s an effort my co-founder and I started eight years ago now, and we have raised just shy of $60 million. We’ve invested in 217 B2B SaaS companies. If you’re an early stage founder doing between $500 MRR and say $40,000 of MRR, and you want the perfect amount of funding, an amazing world-class community, mentors and advice, you should head to tinyseed.com/program. You can check out all the details and get on the mailing list to get notified as soon as applications are open. Applications are open for one week, and then we’ll be doing interviews a couple weeks after that.
Tinyseed.com/program. And with that, let’s dive into my conversation with Brian. Brian, welcome to Startups for the Rest of Us.
Brian Henderson: Hey.
Rob Walling: It’s great to have you on, man. So with your co-founder, you run a business called Wash Dry Fold POS. And the H1 is a laundromat POS system and laundry software. Lower cost, better performance. I’ve been to a laundromat before, but I’m not sure I fully understand what your software does. Do you want to give listeners an idea of what the business is?
Brian Henderson: Yeah. Usually the first response I get when I say I make software for laundromats, I get kind of a glazed over response from people and they say, “Oh, I didn’t know that laundromats needed software or technology.”
Rob Walling: I believe when you and I met at MicroConf, because you’ve been to a few MicroConfs, you told me, and I remember thinking, the initial reaction in my head was, “Oh, cute. This must be like a tiny, teeny weenie, a little business.” And then you told me you guys have done a lot of business and I was like, “Holy shit, this is great.” So yeah, I interrupted you. Keep going with that.
Brian Henderson: Well, I mean, it’s nice to be kind of a big fish in a small pond. The laundromat industry is one that flies under the radar a great deal. People don’t think about laundry, but it is universal and it is forever. So to date, we’ve sold over 1,300 systems, point of sale systems to laundromats in all 50 states. So we have subscribers all over, not just local to where I am. In fact, we work almost entirely remotely and we just serve the laundromat vertical. And another kind of reaction I get from people when I say our name is Wash Dry Fold POS. Most people don’t know what POS means. It stands for point of sale. So think like a cash register point of sale system at the service counter at a laundromat where the sales transactions occur. So in broad terms, it’s that spot where you have a combination of hardware and software for recording sales transactions.
And then it’s grown into a lot more than that over time, but that is kind of the initial starting point there. There’s something like 30,000 laundromats in the United States total. And that’s all sizes, huge ones, tiny ones, self-serve only. Others like who we serve that have drop off laundry services where there are laundry tenants at the store. You can leave your laundry there with them. They’ll use those washers and dryers in the laundromat to clean your laundry and then you come pick it up when it’s ready. And then an increasingly growing sector, especially since COVID and all of that, is the pickup and delivery side of business. That is a quickly growing section in the laundry industry where people just have laundry picked up from the front door. And then a day or two later or even later that day, it comes back. It’s all nice and clean and you can just put it away and you’re completely free of doing that chore.
And so laundromats all over the country have found that as a growing source of revenue and expanding the reach beyond just where they’re physically located.
Rob Walling: I’d imagine you’ve built modules or segments in your software that handle that for them.
Brian Henderson: Yeah. Well, I mean, that’s a prime example, one of those moments when an industry pivots or shifts. And so then you have a fairly mature product and then all of a sudden you have to shift gears to add on something or make some changes in order to keep up with what people are asking for. And that was one of the biggest shifts in market demand over the years that we’ve encountered.
Rob Walling: And can you give us an idea of where the business stands today?
Brian Henderson: Yeah. It wasn’t too long ago that we finally passed the seven figure mark for our ARR. And so –
Rob Walling: Congrats.
Brian Henderson: Yeah. It’s incredible. We’ve got a team of seven people. And so part of our story is how we’ve been able to grow as much with a pretty lean team. And then getting ahead of ourselves on the story here is a few years ago, the business was so successful. I was able to use revenue that we had to then purchase a chain of three laundromats that my parents had established. And so we run the two companies in parallel. We’ve got the chain of laundromats in addition to our software that serves laundromats all over the country. So it’s this nice virtuous cycle of the two sides feeding each other in features and experience and field testing and all that.
Rob Walling: That’s cool. Eating your own dog food.
Brian Henderson: Yeah, for sure.
Rob Walling: So seven figures of revenue, seven folks, you’ve done it over about 10 years and you’re bootstrapped. Is that right? You haven’t raised any funding.
Brian Henderson: Entirely. Yeah. Oh yeah. Hope and a prayer. No. So my folks started their first store, Liberty Laundry in Broken Arrow, Oklahoma next to Tulsa in 2005. And then opened up their second store in 2010 and then third store in 2014. I came on board kind of as a full-time manager in 2010, helping grow those stores and helped design and build that third location. But by 2016, wanted to have a business of my own, had been involved in the laundromat industry for some time, knew that there was a need for technology solutions for managing multiple laundromats. There just wasn’t anybody serving that. And so yeah, $100 to open up a business checking account is about the only money that we’ve put into it. The rest has been self-funded by the business. Yeah, open up that business account so I then go spend the money on filing for an LLC and all that.
So that’s it.
Rob Walling: Well, so take me back to 2016. So your family owned a few laundromats, as you’ve mentioned, and you decided to solve a problem they had yourself. And I’m just curious how that came about. Was there literally no other software on the market that could do this?
Brian Henderson: So the story actually kind of goes back to 2011 when just shortly after we had opened our second store and going from one location to two, managing multiple locations, realized that there needed to be some systems to help make sure that things were working the way they needed to in the store without me having to be physically present at each location. And back then, really the only software for point of sale systems for laundry services was just dry cleaning software. And dry cleaning and laundromats are two separate things. Kind of similar industry, but they’re very different businesses and the processes you need. For dry cleaning, it’s a lot of individual garment tracking and racking systems. And when they actually process the dry cleaning items, they put everybody, all people’s stuff together on one machine all at one time, which I think is disgusting, but I’m not involved in dry cleaning.
So I can have opinion about it. Whereas with laundry services and laundromats, orders are kept separate from each other. Typically, only one person’s laundry goes into one machine at a time and they’re washed separately. So it was pretty common for laundromats in this era, if they were going to computerize anything, because most places just used carbon copy triplicate tickets and cash registers back then, you would use dry cleaning software, if anything at all. It was the infancy of Square. I don’t recall if Square was available then or not. It was right near the beginning anyway. And so if you were to go with something like that, then that was another alternative, but that’s more of just generic retail point of sale. So the downside with doing that is there were a lot of features that you didn’t need as a laundromat owner that were dry cleaning specific, and then not enough that were laundromat specific.
And I can talk about that all day if you’d like. I don’t know if it’s relevant to the audience, but for example, most wash dry fold laundry services are priced by the pound. So put your laundry in a bag or hamper on a big weight scale and then it’s priced per pound. Whereas most dry cleaning has not done that. That’s done per individual garment and all that. So having an integrated weight scale, for example, is one thing that was typically lacking for most solutions at the time.
Rob Walling: Yeah, that makes sense. And for the first few years though, you were like a value added reseller of other people’s hardware and software. Is that right? What did you learn from that?
Brian Henderson: Well, yeah, let’s get into that. I mean, you yourself are a huge proponent of the stair stepping method where it’s just small steps at a time. What’s available to you? Don’t try to build the perfect contraption out the outset. It’s solve problems and work your way up with the resources you have, with the things you know. Solution focused rather than problem focused, rather than falling in love with your own coding or how you’re making software. Okay. So by 2016, we had three locations. We had managers at each location, which was rare for laundromats to actually have a whole full management structure that’s not just your family. So we’re a bit rare in that. Being a guest speaker at national laundry conventions and guest author in trade magazines for the laundromat industry and just getting involved and talking to other laundromat owners and realizing that a lot of these systems that I built and pieced together to help with managing our team across multiple locations, for you and me and probably most of the audience listening to this podcast, these are solutions that were not rocket science.
I mean, we were probably one of the first laundromats in Oklahoma to use QuickBooks Online back then when we made that switch from the QuickBooks desktop, or installing Dropbox on these point of sale system computers so that I can upload files like that week’s work schedule so the team could see it when they come to work. And realizing that all of these various systems that we had tied together, that central touchpoint for the team was the point of sale system because that was really where the laundry tenants are interacting with it. And it was something that was internet connected that I could upload things to, make changes to remotely. So the product became the point of sale system, not because I set out to sell that, but because it was something that could be packaged and allow me to put all these different solutions together for laundromat owners.
But most of our customer base of laundromat owners are people who are very smart in their own way and may have had past careers where it’s not uncommon to hear bank presidents or Wall Street executives to get into the laundry business because it was very appealing to them. But piecing together these different silos of information and building stuff to make it all talk to each other was just a bit far, a bit beyond them. They’re not central to what their business was. And so I realized, oh, that’s the business model. I can create a point of sale system and package these things together. So to that point, the point of sale system is a combination of the software and then also literally the actual hardware that we’re selling. And then also the training of laundry attendants and how to implement this in your store. So it’s the whole system, not just the software that was the solution.
And at that time, I didn’t know how to make software. The only thing I had written up to that point in time was our company website. And then also a little thing I made in Visual Basic for creating these bag labels for finished bags of laundry. That was about the extent of my coding experience, but it worked well enough.
Rob Walling: Visual Basic for the win. That’s great. Oh man. Scrappy as hell. I mean, MVP, stair step, whatever we call it, you figured it out and you cobbled it together. And then it’s like, oh, this is a viable business. I’m going to keep going.
Brian Henderson: Well, it’s even further than that. The software we were using at the time was kind of retail focused point of sale software, but it was something that I had found after a journey of spending maybe $12,000 of my dad’s money for the business on point of sale systems that didn’t work out for our business. So I’d become kind of a self-taught expert of point of sale systems for laundromats by that point in time. The software that we were using turns out that they actually did operate through a reseller type of network. And I put the feelers out there on some online forums for laundromat owners saying, “Hey, I’m thinking about making these point of sale systems available. You might be interested in it.” And I had actually collected payment from the first three customers before I was technically officially a seller of that software, but I knew what the price points were going to be.
I was waiting on the paperwork to come back saying, “Yeah, you’re approved.” The very first one was a laundromat about half hour away from us that we were on friendly terms with. And the guy was a former NSA agent and also an air traffic controller in a previous career. And so very, very serious, very interesting guy, very smart man. But he had built a laundromat and he said that he had found all the equipment they needed except for a point of sale system. And if I would sell him one just like what we were using in my family’s laundromats, then he would be customer number one. And that was around the same time I was thinking about creating this business. So I was like, okay. So I spent some time pricing computer hardware off on newegg.com or TigerDirect or whatever it was we were using at the time and came up with the price and collected that first check.
And then around that same time, put out the online forums message there and got a couple of the people interested. And so collected payment from them and got approved as that reseller and just one step at a time. And so I learned all these lessons about where do you buy computer hardware from? And how do you handle sales tax across state lines? Or do you pay sales tax? Or how’s that handled when you’re dealing with tangible goods? And I think it was the first 34 systems that I sold. I literally had all the computer hardware shipped to my house first. I was taking the computers out of the box, installing this, what was then desktop based software with MS SQL database type stuff, and taking forever to load and then packaging it all back up and driving it to the post office and shipping it off before I finally learned this whole world of wholesale suppliers and third party logistics.
And actually it turns out if you pay them a little bit, they’ll install software for you before they ship stuff directly. And so I didn’t know that that was a thing.
Rob Walling: You learn that as you go. Yeah.
Brian Henderson: But the hardware has morphed over time too, just based off of those experiences.
Rob Walling: What if you could go from an idea to your first real user in 30 days? Not a prototype, not a promise, but an actual working app. Today’s sponsor, Designli, will put that in writing. Here’s their CEO, Keith Shields.
Keith Shields: Thanks, Rob. Most founders burn months before a single user ever shows up. We’ll put version one of your app in your users’ hands by day 30 guaranteed. And if we miss that, your next month is free. We call it the Traction Lab. It’s a 90-day plan that takes you all the way from idea to your first paying customer. We start with a 30-minute call where you share your idea and we tell you exactly what we’ll build and what it costs with no surprises. We can promise all of this because of our people, not our tooling. You get a full senior team focused on getting you traction. A product owner, an engineering lead, a full stack developer, a senior UX designer, and a solutions architect. They use AI to ship faster, but senior engineers own every architecture decision and review every line of code. So the code is yours and it’s built to last.
To go from idea to revenue in 90 days, check out designli.co/gettraction. That’s D-E-S-I-G-N-L-I.co/gettraction.
Rob Walling: So I mean, you were super scrappy to get started and you were just figuring out like anybody would, but it’s oftentimes engineers or it’s entrepreneurs who just don’t say no. And they’re just like, “I know there’s a solution to this and I will figure it out.” And that’s kind of what you got to.
Brian Henderson: That’s it. My entire journey has been, “I’m going to figure it out. I have a direction I’m going. I’ll do small tests to kind of see what do I know, what do I not know? And then what’s available to me?” And later on, which we can get into it, actually developing our own software was a means to move on to the next level. It wasn’t that I set out to learn how to build software or be a developer. It was conducive to continuing to grow and scale and add on all these features. Yeah. It was just that continued commitment to chipping away at it.
Rob Walling: Yeah. So tell me about that. In 2020, you’re in the middle of COVID, and you really haven’t written much code. You’ve written some VB, it sounds like, but you decide to rebuild the bulk of the product on Bubble. Is this right? Walk us through that decision because you’re going all in on that, diving in with both feet.
Brian Henderson: Yeah. I’ve heard you express opinions about no-code tools. And there’s pluses and minuses to everything, absolutely just like anything else. But every other year, the laundry industry puts on what’s called the Clean Show. It’s a big trade industry show from vendors from around the world. And there’s like 20,000 attendees and 450 exhibitors. And it’s just crazy numbers, live demonstrations of laundry equipment and washers and dryers and the big guys, the linen companies with tunnel washers that are million dollar plus pieces of equipment that can continuously process thousands of pounds of laundry. And then there’s us, there’s Wash Dry Fold POS. We’re selling point of sale systems to laundromats there at our little booth. And it was the 2019 Clean Show when we had, I think it was six different vendors, different companies related to the laundry industry approach us saying, “Hey, we’ve been hearing things about you guys.
Everybody says you’re great. We want our stuff to integrate with your software. We want our products to talk to each other.” And these are things like laundromat payment systems. So think like a value loaded card that you go and pay for your washers and dryers with. They wanted that payment system to tie into our point of sale system over at the service counter, for example. And in addition to that, there were a couple of laundry delivery software companies. So they just specialized in tracking of the pickup and delivery. Two separate conversations, almost identical, telling us, “Hey, we’ve spent over the past 12 months, about $150,000 developing our own point of sale system. It’s no good. It’s crap. In fact, we’re throwing in the towel. Our customers have been waiting very impatient. Can we just send people your way for point of sale system? You send them our way for delivery features?” And it was two conversations like that.
One was $150,000, another $100,000, and they had nothing to show for it. And 12 months wasted time. So that was mid 2019, late 2019. And we had been thinking about to go further with our software, we wanted to build integrations. We had a number of features we wanted to add that are very just laundromat specific that would never get included in any other point of sale software. And then also ringing in our ears were these other companies that were kind of on a parallel journey to us saying that they had blown six figures on software development with nothing to show for it. And in fact, going to a semi-competitor saying, “Can you help us? Or can we just send people your way so we don’t lose them on this?” Because at the time we weren’t doing pickup and delivery features. We do now. So started searching for how could we do this?
How could we build it in a way, our own software that was cloud-based, that we had control of the development of it. We knew that there was a lot we needed to discover along the way. So it wasn’t like we had a perfect picture of what we needed to build. And as I started getting quotes from various different development houses and resources and even just looking at things on Upwork, which we had had a small experience with that before that went sideways, which we can talk about, about a developer just evaporating when you needed them. It’s like, okay, we’re going to throw six figures at developing this version one. And then what? If we don’t form our own development stuff in-house or at least get good rapport with a development house, what are we going to do? So all of that led us to discovering Bubble, which is one of the, if not the biggest no-code development platforms out there for making web apps with minimal coding.
And then also there’s a coaching service called Coaching No Code Apps. Gabby Roman and Kristen Young, hi, if you’re watching. They really specialized in helping business owners or people with an idea for making a web app and how to spend like a 90 day sprint on building your MVP with it. And then more importantly, if you have aspirations on it growing and scaling, they had their built to scale program where it was teaching you those fundamentals of database design and all that, that can scale elegantly over time. And so that was probably the best return on investment we could have ever made. I won’t say how much it was, but it was several thousand dollars for that course. But within just a few months, I feel that we got about 10X return on that investment. And then many times of that ever since then. And so it was late 2019 when I went through that course.
And then early 2020 when I was really getting into working on it and developing it. And then March 2020, everything shut down because of COVID. And so by that point in time, I had pretty much resigned from the family business back in 2018 to just focus on the point of sale system business because it was growing so much. And we literally had several sales deals in that month of March 2020 that just fell flat because everybody was just kind of taking a let’s wait and see stance to anything for the business. And so over that summer, had a lot of downtime and basically became a software developer myself over that summer. And it was the late of 2020 when we actually launched our cloud-based solution that we built in-house with literally hundreds of improvements from that prior software we’ve been using. And if you look at revenue charts of a company from that time, this is just a clear inflection point because we had a successful business as a reseller of hardware, as a reseller of other software.
But when we took the reins and developed our own software and built these integrations with the integration partners and were able to just regularly take feedback from customers and just bake it right into the software, or if we had any sort of hardware or technical issues that we can then just circumvent completely by building better solution in the software so we never have to solve that tech support issue again, then it was just a clear inflection point. We’ve grown multiples of times since then in revenue.
Rob Walling: Sounds like a great choice. And I believe that given that you’re doing a million ARR, that you are probably running the largest no-code app that I know of in terms of a SaaS app. Everyone, it’s interesting with no code, especially this was before all the AI and vibe coding stuff, but I think no code’s great and has its place. It can do some things. It’s a tool. There are some no-code maximalists though who are just like, no, it can do everything that code can do. It’s like, no, that’s not true. And there are no downsides. Or AI platforms, so does everyone else. And it’s like these are not true statements you’re saying.
Brian Henderson: It’s yes, and it’s design choices. It’s a tool just like AI is a tool that can do a lot of amazing things. But when all you have is a hammer, then everything looks like a nail. And when all you know is AI, then there’s that. If all you know is coding, that’s another approach there. And then if all you know is no code tools, then you can run into that.
Rob Walling: Here’s the other issue I have with it though, is the folks who really pro no-code have been like, “No, no, no. There’s all these SaaS apps built on no code.” And I would go check them out and it’s like, “Hey, they were either really, really small, like doing a few thousand a month.” And it’s like, “Oh, that’s cool. But these are not what we’re talking about.” And then they’d be like, “No, here’s one.” And it’s doing a million or two million a year and I go check it out. It wasn’t a SaaS app. It was like an agency that was using no code software to help onboard customers and stuff. And it’s like, that’s a thing. Right.
Brian Henderson: Productized service.
Rob Walling: Type of thing. Yeah, that type of thing. So anyways, I think you guys though, I mean, you are true SaaS, so I think you might be the biggest one that I know of. I want to ask you though, if you were starting from scratch now with AI coding tools the way they are, how would you think about Bubble and how you did it versus AI assisted development?
Brian Henderson: Well, one of the cool things about Bubble is that I guess you could describe it as a low code solution. If you want to go pure no code, you can, but they very cleverly, very smartly built it so that you can extend it with JavaScript and other type functions and build your own plugins for it. Or you can even purchase plugins that others have made for it to add functionality. So one of the best case in point is, and I’ll answer the question about AI and how this dovetails. This ties into it. I’m on that path here. So with the point of sale system, there’s a lot of hardware you interact with such as a receipt printer, a cash drawer, label printer, weight scale, credit card reader, barcode scanner, lots of hardware. And very appropriately, typically software running in a browser, a web app does not have access to hardware connected to your computer.
And that’s by design. That’s a very wonderful and very good thing for security for browser-based software. Typically, you don’t want that accessing hardware you have connected to your computer. That could be disastrous if you went to a website that wanted to just hijack things. But for a point of sale system, you need to be able to press a button and a cash drawer kicks open. So how do you deal with that? We found some software that is a third party program that runs on the client’s computer that can be interacted with via JavaScript in the browser. And so there’s some action that happens on the screen. It runs some JavaScript and then we’re interacting with the hardware. And so it’ll print a receipt without having to use the Google Chrome print dialogue window or anything like that. And coincidentally, a cash drawer is typically controlled through a receipt printer.
So we send some command to the receipt printer and that kicks open the cash drawer. So that’s an example where that little bit of code, just enough, not a whole solution that we crafted, but just enough to add the extra bit of functionality helped. So here’s the really cool thing. With no code tools like Bubble, you can iterate and very quickly build and test solutions with the small lean team to make sure you’re solving the right problems first, get feedback and then improve that. And then now with some of these AI tools, you can go a step further and you can build your own plugins without needing to know how to code JavaScript or whatever language you’re needing to do. But because it’s tied into that no-code ecosystem, for the majority of the logic of the workflow of your application, a normal human can actually read it.
And so we’re more and more adopting AI tools for our software development that play nice with Bubble. And case in point, just recently we needed a better solution for PDF generation. And one of our developers realized like, oh, this is a perfect use case for having AI build our own PDF generator plugin on the server side as we’re generating invoices and receipts to be able to email them to laundromat customers. And so we just whipped that up within a week or two and it’s great. So now we have the best of both worlds of some of the power of AI tools for development, but then leaning on the strengths of platforms like Bubble where they’re handling a lot of the heavy lifting in terms of server management, privacy rules, security. The AI tool we’re currently using the most. It’s called BuildPrint by a company called Not Quite Unicorns by George Collier, which Not Quite Unicorns should be a band name.
It really sounds like a really good band name, but it’s an AI tool, kind of third party that tacks on to Bubble and allows you to interact with it using a lot of the modern AI development tools that have gotten all the buzz while still leaning on the strengths of using a platform like Bubble. And we were very much the poster child for Bubble of you can start whether you just have a few customers or whether you’re enterprise and you have thousands of daily users and all that, and you can work your way up on the subscription plans and the platforms. And so we started off with just the very basic and regularly moved our subscriptions on up. And then it was March of 2023 when we switched over to their dedicated server hosting enterprise level of subscription. And eventually doing that is more stability.
It does cost more, but our app hasn’t been down for what, three and a half years now, like ever. And so that’s nice. And somebody else is doing all the watching and safeguarding of that to make sure that that stays where it’s supposed to be. So in terms of the trade-off in there, that was worth it to us because again, we didn’t set out to be software. Well, we didn’t set out to be coders, but rather we set out to build software to solve problems because it served the business and our customers, and that was the best method to do that.
Rob Walling: I want to switch it up and talk about hardware because obviously you have these POS systems. It’s just like a cash register type thing, or it’s probably a tablet these days. I imagine it’s a computer.
Brian Henderson: That’s evolved over time.
Rob Walling: Yeah, I bet it has. What I want to hear though is specifically, [VERIFY: “A&R” — unclear who Rob is referencing] had talked a couple episodes ago about now having hardware as a component of a SaaS is a valuable moat. Do you see it that way as well as someone who’s operating a business like this?
Brian Henderson: I do. I really do. The point of sale software was not the whole solution. We’ve really focused on being a point of sale system. And we discovered early on that just trying to sell the software by itself and the customer goes and sources the right hardware, trying to find the right hardware for their store was difficult. Part of the solution that we sell is that we’ve sourced commercial grade equipment, computers and touch screens and printers and all that, that will survive a harsh commercial environment. Laundromats are really, really hard on computers, especially ones that have fans in them. Lots of lint in the air. You literally have to take the computer out and dust it off with some cans of compressed air to get the lint out of the computer. It’s bad. It’s rough. And there’s water and there’s humid environments can be sometimes. And the very first few systems that we sold back in 2016, it was a separate touchscreen monitor and a separate tower.
And one of my first customers, she was in New Jersey and I was talking to her on the phone trying to walk her through how to set up her system remotely. She did not know how to connect a monitor to the computer. It was an utterly foreign concept to her. And I realized, oh, this is bad. If I’m hoping to help laundromat owners across the country set up point of sale systems entirely remotely and talk to them on the phone, then I need something that they can simply pull out of the box and plug it in and start getting value out of it almost immediately. And so that quickly led us to finding all-in-one solutions that has the touch screen and the computer hardware all in just the monitor basically. And for a long time, we even sold a unit that had also the receipt printer built into the base of the thing.
So it was literally the computer, the screen and the receipt printer all installed in one unit and they just plug in power and internet and that was that. So that was an important part of it.
Rob Walling: So as we’re approaching time, I have one more question for you that I’d like to hear about, and it’s about competition. You entered this space when it was nascent, non-existent, potentially literally the first entrant. And now venture capital has come into the category. And I believe you told me or producer Ron that your main competitor has raised $220 million in VC since 2021. So my question to you as the final kickoff here, because I know that there are other bootstrappers in the audience who have had to deal with this, what is that like for you? What does it look like day to day to compete against that kind of a war chest as a completely bootstrapped company?
Brian Henderson: There’s two thoughts about it. One is a little bit of remorse in terms of not just playing in a wide open ocean anymore. I’ve joked before that all I want is an uncontested monopoly. I don’t think that’s too much to ask. But at the same time, I do recognize that competition does drive innovation. It helps you avoid complacency and it has been healthy for the market and the industry. I used to be a lot more opinionated about the right way to run laundromats when I was younger. And likewise, I used to be a lot more opinionated about the right way to build a SaaS company and run a tech startup when I was back in my 20s. I’ve just turned 40 not too long ago. And so I recognize that there are a lot more ways to be successful in this world and that these things can live alongside each other.
On one hand, the fact that a competitor has raised so much money is very validating that, yeah, hey, there is a market here. I found something. There is an industry here that needs to be served. On another hand, it can be intimidating, the fact that they’ve raised so much. And it’s been fascinating to observe how people interpret venture capital funding as some type of measurement of validity of what that company in particular is doing as if they’ve got something special. Obviously I’m a little bit biased and I don’t think that what they’re doing is special, but they are very skilled at getting investors. That is their power is getting buy-in from them. And they are making a play for an entire industry. When you talk about total addressable market, we at Wash Dry Fold POS, we’re very focused on laundromats that have drop off laundry services and/or pickup and delivery.
And they do a certain volume of that service in addition to their self-service income. Whereas this competitor is really talking about, well, all laundry in the United States, whether it’s at home or in apartment laundry rooms or laundromats, then they’re using those numbers for the total addressable market. And so you see them needing to burn through these investments and getting into things like lending for laundromats, wanting to build stores or building out self-service payment systems in addition to point of sale system and serving people who are trying to start a pickup and delivery business out of their home using just the residential washer and dryer in addition to a full laundromat with staff and a service counter and infrastructure and all that too. So they’re making kind of a different play. And the thing that lets me rest easy at night and gives me confidence is the fact that we have been bootstrapped.
We don’t have a burn rate or a runway that a funded startup would have. And we don’t have a mandate to burn through cash like somebody trying to build a unicorn would have. And we’ve been operationally profitable since day one. And so it’s to our advantage that our churn rates. I’m remembering a time that Ian and I had a consultation call with you and we were telling you about some of our churn rates and longevity of our customers. And you’re just like, ah, man.
Rob Walling: Kill for that.
Brian Henderson: Kill for it.
Rob Walling: Yeah.
Brian Henderson: Anyway, we’re designed and built to be here indefinitely. And I feel an obligation to our customers. They build their operations around using our software as core to how they’re running their laundromats. And so building a company that is tried and true based off of real feedback, it’s built to operate for the long run, has stability and security, and building up quite a war chest of funds to last through really any situation. I feel an obligation, a responsibility to do that rather than a venture-backed company that is like burn as much cash as you possibly can, buy your way into the market and go big or go bust. That’s just not for me, which is why I’ve been a listener to Startups for the Rest of Us for the past 10, 15 years. Yeah. So the net result has been that we’ve benefited from it because this competitor has spent a lot of money on market education.
And we’ve shifted over the years. We’ve been at it long enough. We’ve seen a shift from people being product or solution unaware to they’re typically looking for a point of sale system for the laundromat and preferably a cloud-based one. And so they’re coming in a bit more informed. And I think that we’ve benefited from the millions of dollars that this competitor has pumped into advertising in the market. And then when they stumble and fall and aren’t as good of a solution, then they go looking for another point of sale system. And so we’ve benefited from that as a net result. So that helps.
Rob Walling: That’s cool. And then when they go out of business, you can buy their assets for pennies on the dollar. I won’t say it’s inevitable because it’s not, they could succeed. But yeah, when someone raises that much money in a space like this, it’s a long shot they’re taking for sure, which is the nature of venture capital.
Brian Henderson: Yeah. I remembered something I was going to say about hardware earlier, and that was the advantage of selling the hardware upfront. And then on the long tail, having the software subscriptions and the payment processing kind of on the long tail. So typically in terms of customer acquisition costs, the amount that you’ve spent to acquire that customer in advertising dollars or however you’re going about marketing to them and literal buy-in from your customers. We sell them the hardware upfront for a few thousand dollars depending on what equipment they get. And that covers our initial setup and training costs for that customer. We have a wonderful customer success manager named Chelsea based out of Kentucky who was a former manager of a chain of eight laundromats. And so she knows the business inside and out, who helps get them set up and make sure they have the right hardware.
And so it’s covering her costs and her time for all of that. And then the customer acquisition cost is covered. And so we hit the ground running with each customer already profitable and moving forward. And so now that we have the chain of laundromats more than covering lifestyle and technically we make more money from the laundromats than we do from the software company at this moment, which is really cool. And they’re some of the top performing laundromats in the country. And we’ve converted Wash Dry Fold POS to a C Corp for tax reasons a few years ago, and we’re motivated to keep cash within the business. And so now we’re in a spot where we’re going to be kind of pouring fuel on the fire to continue on with that growth. Yeah. So that’s an advantage of selling the hardware, having that thing you’re selling in the front, whether that’s a setup and training session or if that’s the literal physical hardware, make profit upfront, cover your customer acquisition cost, and then do what you can to keep them a subscriber for the long term.
Then that’s worked out really well for us. And it’s led to a very low amount of churn and allowed us to continue growing in a profitable way from the very start.
Rob Walling: Builds a great business for sure. Brian Henderson, folks want to keep up with what you’re doing. Washdryfoldpos.com. And where are you on the internet? LinkedIn? I know you’re not doing much on X Twitter.
Brian Henderson: I’m technically on LinkedIn. That’s probably the best way to reach me, just Brian Henderson. And I sometimes forget that it exists. I’m not on it too often. I’m very much a Facebook guy too. I was in college when it came to our campus back in the day. So that’s the level I’m at. I remember everybody being excited and talking to each other on the sidewalk saying, “Hey, we’re getting Facebook, getting Facebook at our college.” So we are focused on growing, so we are looking for more sales and marketing people to join our team. So if you’re in Oklahoma, give us a shout out and we’d love to talk to you.
Rob Walling: Sounds great, man. Thanks again for joining me on the show.
Brian Henderson: Thank you.
Rob Walling: Thanks again to Brian for coming on the show. I enjoyed that conversation and just the unique journey that he and his co-founder have traveled building their SaaS company. So thank you for listening this week and every week. This is Rob Walling signing off from episode 844.
So it’s a great story. I think you’re going to enjoy it. Before we dive into that, I want to give you an early heads up for TinySeed Accelerator applications. They’re going to be opening in early September. As you know, TinySeed is one of the best accelerators in the world for B2B SaaS. And it’s an effort my co-founder and I started eight years ago now, and we have raised just shy of $60 million. We’ve invested in 217 B2B SaaS companies. If you’re an early stage founder doing between $500 MRR and say $40,000 of MRR, and you want the perfect amount of funding, an amazing world-class community, mentors and advice, you should head to tinyseed.com/program. You can check out all the details and get on the mailing list to get notified as soon as applications are open. Applications are open for one week, and then we’ll be doing interviews a couple weeks after that.
Tinyseed.com/program. And with that, let’s dive into my conversation with Brian. Brian, welcome to Startups for the Rest of Us.
Brian Henderson: Hey.
Rob Walling: It’s great to have you on, man. So with your co-founder, you run a business called Wash Dry Fold POS. And the H1 is a laundromat POS system and laundry software. Lower cost, better performance. I’ve been to a laundromat before, but I’m not sure I fully understand what your software does. Do you want to give listeners an idea of what the business is?
Brian Henderson: Yeah. Usually the first response I get when I say I make software for laundromats, I get kind of a glazed over response from people and they say, “Oh, I didn’t know that laundromats needed software or technology.”
Rob Walling: I believe when you and I met at MicroConf, because you’ve been to a few MicroConfs, you told me, and I remember thinking, the initial reaction in my head was, “Oh, cute. This must be like a tiny, teeny weenie, a little business.” And then you told me you guys have done a lot of business and I was like, “Holy shit, this is great.” So yeah, I interrupted you. Keep going with that.
Brian Henderson: Well, I mean, it’s nice to be kind of a big fish in a small pond. The laundromat industry is one that flies under the radar a great deal. People don’t think about laundry, but it is universal and it is forever. So to date, we’ve sold over 1,300 systems, point of sale systems to laundromats in all 50 states. So we have subscribers all over, not just local to where I am. In fact, we work almost entirely remotely and we just serve the laundromat vertical. And another kind of reaction I get from people when I say our name is Wash Dry Fold POS. Most people don’t know what POS means. It stands for point of sale. So think like a cash register point of sale system at the service counter at a laundromat where the sales transactions occur. So in broad terms, it’s that spot where you have a combination of hardware and software for recording sales transactions.
And then it’s grown into a lot more than that over time, but that is kind of the initial starting point there. There’s something like 30,000 laundromats in the United States total. And that’s all sizes, huge ones, tiny ones, self-serve only. Others like who we serve that have drop off laundry services where there are laundry tenants at the store. You can leave your laundry there with them. They’ll use those washers and dryers in the laundromat to clean your laundry and then you come pick it up when it’s ready. And then an increasingly growing sector, especially since COVID and all of that, is the pickup and delivery side of business. That is a quickly growing section in the laundry industry where people just have laundry picked up from the front door. And then a day or two later or even later that day, it comes back. It’s all nice and clean and you can just put it away and you’re completely free of doing that chore.
And so laundromats all over the country have found that as a growing source of revenue and expanding the reach beyond just where they’re physically located.
Rob Walling: I’d imagine you’ve built modules or segments in your software that handle that for them.
Brian Henderson: Yeah. Well, I mean, that’s a prime example, one of those moments when an industry pivots or shifts. And so then you have a fairly mature product and then all of a sudden you have to shift gears to add on something or make some changes in order to keep up with what people are asking for. And that was one of the biggest shifts in market demand over the years that we’ve encountered.
Rob Walling: And can you give us an idea of where the business stands today?
Brian Henderson: Yeah. It wasn’t too long ago that we finally passed the seven figure mark for our ARR. And so –
Rob Walling: Congrats.
Brian Henderson: Yeah. It’s incredible. We’ve got a team of seven people. And so part of our story is how we’ve been able to grow as much with a pretty lean team. And then getting ahead of ourselves on the story here is a few years ago, the business was so successful. I was able to use revenue that we had to then purchase a chain of three laundromats that my parents had established. And so we run the two companies in parallel. We’ve got the chain of laundromats in addition to our software that serves laundromats all over the country. So it’s this nice virtuous cycle of the two sides feeding each other in features and experience and field testing and all that.
Rob Walling: That’s cool. Eating your own dog food.
Brian Henderson: Yeah, for sure.
Rob Walling: So seven figures of revenue, seven folks, you’ve done it over about 10 years and you’re bootstrapped. Is that right? You haven’t raised any funding.
Brian Henderson: Entirely. Yeah. Oh yeah. Hope and a prayer. No. So my folks started their first store, Liberty Laundry in Broken Arrow, Oklahoma next to Tulsa in 2005. And then opened up their second store in 2010 and then third store in 2014. I came on board kind of as a full-time manager in 2010, helping grow those stores and helped design and build that third location. But by 2016, wanted to have a business of my own, had been involved in the laundromat industry for some time, knew that there was a need for technology solutions for managing multiple laundromats. There just wasn’t anybody serving that. And so yeah, $100 to open up a business checking account is about the only money that we’ve put into it. The rest has been self-funded by the business. Yeah, open up that business account so I then go spend the money on filing for an LLC and all that.
So that’s it.
Rob Walling: Well, so take me back to 2016. So your family owned a few laundromats, as you’ve mentioned, and you decided to solve a problem they had yourself. And I’m just curious how that came about. Was there literally no other software on the market that could do this?
Brian Henderson: So the story actually kind of goes back to 2011 when just shortly after we had opened our second store and going from one location to two, managing multiple locations, realized that there needed to be some systems to help make sure that things were working the way they needed to in the store without me having to be physically present at each location. And back then, really the only software for point of sale systems for laundry services was just dry cleaning software. And dry cleaning and laundromats are two separate things. Kind of similar industry, but they’re very different businesses and the processes you need. For dry cleaning, it’s a lot of individual garment tracking and racking systems. And when they actually process the dry cleaning items, they put everybody, all people’s stuff together on one machine all at one time, which I think is disgusting, but I’m not involved in dry cleaning.
So I can have opinion about it. Whereas with laundry services and laundromats, orders are kept separate from each other. Typically, only one person’s laundry goes into one machine at a time and they’re washed separately. So it was pretty common for laundromats in this era, if they were going to computerize anything, because most places just used carbon copy triplicate tickets and cash registers back then, you would use dry cleaning software, if anything at all. It was the infancy of Square. I don’t recall if Square was available then or not. It was right near the beginning anyway. And so if you were to go with something like that, then that was another alternative, but that’s more of just generic retail point of sale. So the downside with doing that is there were a lot of features that you didn’t need as a laundromat owner that were dry cleaning specific, and then not enough that were laundromat specific.
And I can talk about that all day if you’d like. I don’t know if it’s relevant to the audience, but for example, most wash dry fold laundry services are priced by the pound. So put your laundry in a bag or hamper on a big weight scale and then it’s priced per pound. Whereas most dry cleaning has not done that. That’s done per individual garment and all that. So having an integrated weight scale, for example, is one thing that was typically lacking for most solutions at the time.
Rob Walling: Yeah, that makes sense. And for the first few years though, you were like a value added reseller of other people’s hardware and software. Is that right? What did you learn from that?
Brian Henderson: Well, yeah, let’s get into that. I mean, you yourself are a huge proponent of the stair stepping method where it’s just small steps at a time. What’s available to you? Don’t try to build the perfect contraption out the outset. It’s solve problems and work your way up with the resources you have, with the things you know. Solution focused rather than problem focused, rather than falling in love with your own coding or how you’re making software. Okay. So by 2016, we had three locations. We had managers at each location, which was rare for laundromats to actually have a whole full management structure that’s not just your family. So we’re a bit rare in that. Being a guest speaker at national laundry conventions and guest author in trade magazines for the laundromat industry and just getting involved and talking to other laundromat owners and realizing that a lot of these systems that I built and pieced together to help with managing our team across multiple locations, for you and me and probably most of the audience listening to this podcast, these are solutions that were not rocket science.
I mean, we were probably one of the first laundromats in Oklahoma to use QuickBooks Online back then when we made that switch from the QuickBooks desktop, or installing Dropbox on these point of sale system computers so that I can upload files like that week’s work schedule so the team could see it when they come to work. And realizing that all of these various systems that we had tied together, that central touchpoint for the team was the point of sale system because that was really where the laundry tenants are interacting with it. And it was something that was internet connected that I could upload things to, make changes to remotely. So the product became the point of sale system, not because I set out to sell that, but because it was something that could be packaged and allow me to put all these different solutions together for laundromat owners.
But most of our customer base of laundromat owners are people who are very smart in their own way and may have had past careers where it’s not uncommon to hear bank presidents or Wall Street executives to get into the laundry business because it was very appealing to them. But piecing together these different silos of information and building stuff to make it all talk to each other was just a bit far, a bit beyond them. They’re not central to what their business was. And so I realized, oh, that’s the business model. I can create a point of sale system and package these things together. So to that point, the point of sale system is a combination of the software and then also literally the actual hardware that we’re selling. And then also the training of laundry attendants and how to implement this in your store. So it’s the whole system, not just the software that was the solution.
And at that time, I didn’t know how to make software. The only thing I had written up to that point in time was our company website. And then also a little thing I made in Visual Basic for creating these bag labels for finished bags of laundry. That was about the extent of my coding experience, but it worked well enough.
Rob Walling: Visual Basic for the win. That’s great. Oh man. Scrappy as hell. I mean, MVP, stair step, whatever we call it, you figured it out and you cobbled it together. And then it’s like, oh, this is a viable business. I’m going to keep going.
Brian Henderson: Well, it’s even further than that. The software we were using at the time was kind of retail focused point of sale software, but it was something that I had found after a journey of spending maybe $12,000 of my dad’s money for the business on point of sale systems that didn’t work out for our business. So I’d become kind of a self-taught expert of point of sale systems for laundromats by that point in time. The software that we were using turns out that they actually did operate through a reseller type of network. And I put the feelers out there on some online forums for laundromat owners saying, “Hey, I’m thinking about making these point of sale systems available. You might be interested in it.” And I had actually collected payment from the first three customers before I was technically officially a seller of that software, but I knew what the price points were going to be.
I was waiting on the paperwork to come back saying, “Yeah, you’re approved.” The very first one was a laundromat about half hour away from us that we were on friendly terms with. And the guy was a former NSA agent and also an air traffic controller in a previous career. And so very, very serious, very interesting guy, very smart man. But he had built a laundromat and he said that he had found all the equipment they needed except for a point of sale system. And if I would sell him one just like what we were using in my family’s laundromats, then he would be customer number one. And that was around the same time I was thinking about creating this business. So I was like, okay. So I spent some time pricing computer hardware off on newegg.com or TigerDirect or whatever it was we were using at the time and came up with the price and collected that first check.
And then around that same time, put out the online forums message there and got a couple of the people interested. And so collected payment from them and got approved as that reseller and just one step at a time. And so I learned all these lessons about where do you buy computer hardware from? And how do you handle sales tax across state lines? Or do you pay sales tax? Or how’s that handled when you’re dealing with tangible goods? And I think it was the first 34 systems that I sold. I literally had all the computer hardware shipped to my house first. I was taking the computers out of the box, installing this, what was then desktop based software with MS SQL database type stuff, and taking forever to load and then packaging it all back up and driving it to the post office and shipping it off before I finally learned this whole world of wholesale suppliers and third party logistics.
And actually it turns out if you pay them a little bit, they’ll install software for you before they ship stuff directly. And so I didn’t know that that was a thing.
Rob Walling: You learn that as you go. Yeah.
Brian Henderson: But the hardware has morphed over time too, just based off of those experiences.
Rob Walling: What if you could go from an idea to your first real user in 30 days? Not a prototype, not a promise, but an actual working app. Today’s sponsor, Designli, will put that in writing. Here’s their CEO, Keith Shields.
Keith Shields: Thanks, Rob. Most founders burn months before a single user ever shows up. We’ll put version one of your app in your users’ hands by day 30 guaranteed. And if we miss that, your next month is free. We call it the Traction Lab. It’s a 90-day plan that takes you all the way from idea to your first paying customer. We start with a 30-minute call where you share your idea and we tell you exactly what we’ll build and what it costs with no surprises. We can promise all of this because of our people, not our tooling. You get a full senior team focused on getting you traction. A product owner, an engineering lead, a full stack developer, a senior UX designer, and a solutions architect. They use AI to ship faster, but senior engineers own every architecture decision and review every line of code. So the code is yours and it’s built to last.
To go from idea to revenue in 90 days, check out designli.co/gettraction. That’s D-E-S-I-G-N-L-I.co/gettraction.
Rob Walling: So I mean, you were super scrappy to get started and you were just figuring out like anybody would, but it’s oftentimes engineers or it’s entrepreneurs who just don’t say no. And they’re just like, “I know there’s a solution to this and I will figure it out.” And that’s kind of what you got to.
Brian Henderson: That’s it. My entire journey has been, “I’m going to figure it out. I have a direction I’m going. I’ll do small tests to kind of see what do I know, what do I not know? And then what’s available to me?” And later on, which we can get into it, actually developing our own software was a means to move on to the next level. It wasn’t that I set out to learn how to build software or be a developer. It was conducive to continuing to grow and scale and add on all these features. Yeah. It was just that continued commitment to chipping away at it.
Rob Walling: Yeah. So tell me about that. In 2020, you’re in the middle of COVID, and you really haven’t written much code. You’ve written some VB, it sounds like, but you decide to rebuild the bulk of the product on Bubble. Is this right? Walk us through that decision because you’re going all in on that, diving in with both feet.
Brian Henderson: Yeah. I’ve heard you express opinions about no-code tools. And there’s pluses and minuses to everything, absolutely just like anything else. But every other year, the laundry industry puts on what’s called the Clean Show. It’s a big trade industry show from vendors from around the world. And there’s like 20,000 attendees and 450 exhibitors. And it’s just crazy numbers, live demonstrations of laundry equipment and washers and dryers and the big guys, the linen companies with tunnel washers that are million dollar plus pieces of equipment that can continuously process thousands of pounds of laundry. And then there’s us, there’s Wash Dry Fold POS. We’re selling point of sale systems to laundromats there at our little booth. And it was the 2019 Clean Show when we had, I think it was six different vendors, different companies related to the laundry industry approach us saying, “Hey, we’ve been hearing things about you guys.
Everybody says you’re great. We want our stuff to integrate with your software. We want our products to talk to each other.” And these are things like laundromat payment systems. So think like a value loaded card that you go and pay for your washers and dryers with. They wanted that payment system to tie into our point of sale system over at the service counter, for example. And in addition to that, there were a couple of laundry delivery software companies. So they just specialized in tracking of the pickup and delivery. Two separate conversations, almost identical, telling us, “Hey, we’ve spent over the past 12 months, about $150,000 developing our own point of sale system. It’s no good. It’s crap. In fact, we’re throwing in the towel. Our customers have been waiting very impatient. Can we just send people your way for point of sale system? You send them our way for delivery features?” And it was two conversations like that.
One was $150,000, another $100,000, and they had nothing to show for it. And 12 months wasted time. So that was mid 2019, late 2019. And we had been thinking about to go further with our software, we wanted to build integrations. We had a number of features we wanted to add that are very just laundromat specific that would never get included in any other point of sale software. And then also ringing in our ears were these other companies that were kind of on a parallel journey to us saying that they had blown six figures on software development with nothing to show for it. And in fact, going to a semi-competitor saying, “Can you help us? Or can we just send people your way so we don’t lose them on this?” Because at the time we weren’t doing pickup and delivery features. We do now. So started searching for how could we do this?
How could we build it in a way, our own software that was cloud-based, that we had control of the development of it. We knew that there was a lot we needed to discover along the way. So it wasn’t like we had a perfect picture of what we needed to build. And as I started getting quotes from various different development houses and resources and even just looking at things on Upwork, which we had had a small experience with that before that went sideways, which we can talk about, about a developer just evaporating when you needed them. It’s like, okay, we’re going to throw six figures at developing this version one. And then what? If we don’t form our own development stuff in-house or at least get good rapport with a development house, what are we going to do? So all of that led us to discovering Bubble, which is one of the, if not the biggest no-code development platforms out there for making web apps with minimal coding.
And then also there’s a coaching service called Coaching No Code Apps. Gabby Roman and Kristen Young, hi, if you’re watching. They really specialized in helping business owners or people with an idea for making a web app and how to spend like a 90 day sprint on building your MVP with it. And then more importantly, if you have aspirations on it growing and scaling, they had their built to scale program where it was teaching you those fundamentals of database design and all that, that can scale elegantly over time. And so that was probably the best return on investment we could have ever made. I won’t say how much it was, but it was several thousand dollars for that course. But within just a few months, I feel that we got about 10X return on that investment. And then many times of that ever since then. And so it was late 2019 when I went through that course.
And then early 2020 when I was really getting into working on it and developing it. And then March 2020, everything shut down because of COVID. And so by that point in time, I had pretty much resigned from the family business back in 2018 to just focus on the point of sale system business because it was growing so much. And we literally had several sales deals in that month of March 2020 that just fell flat because everybody was just kind of taking a let’s wait and see stance to anything for the business. And so over that summer, had a lot of downtime and basically became a software developer myself over that summer. And it was the late of 2020 when we actually launched our cloud-based solution that we built in-house with literally hundreds of improvements from that prior software we’ve been using. And if you look at revenue charts of a company from that time, this is just a clear inflection point because we had a successful business as a reseller of hardware, as a reseller of other software.
But when we took the reins and developed our own software and built these integrations with the integration partners and were able to just regularly take feedback from customers and just bake it right into the software, or if we had any sort of hardware or technical issues that we can then just circumvent completely by building better solution in the software so we never have to solve that tech support issue again, then it was just a clear inflection point. We’ve grown multiples of times since then in revenue.
Rob Walling: Sounds like a great choice. And I believe that given that you’re doing a million ARR, that you are probably running the largest no-code app that I know of in terms of a SaaS app. Everyone, it’s interesting with no code, especially this was before all the AI and vibe coding stuff, but I think no code’s great and has its place. It can do some things. It’s a tool. There are some no-code maximalists though who are just like, no, it can do everything that code can do. It’s like, no, that’s not true. And there are no downsides. Or AI platforms, so does everyone else. And it’s like these are not true statements you’re saying.
Brian Henderson: It’s yes, and it’s design choices. It’s a tool just like AI is a tool that can do a lot of amazing things. But when all you have is a hammer, then everything looks like a nail. And when all you know is AI, then there’s that. If all you know is coding, that’s another approach there. And then if all you know is no code tools, then you can run into that.
Rob Walling: Here’s the other issue I have with it though, is the folks who really pro no-code have been like, “No, no, no. There’s all these SaaS apps built on no code.” And I would go check them out and it’s like, “Hey, they were either really, really small, like doing a few thousand a month.” And it’s like, “Oh, that’s cool. But these are not what we’re talking about.” And then they’d be like, “No, here’s one.” And it’s doing a million or two million a year and I go check it out. It wasn’t a SaaS app. It was like an agency that was using no code software to help onboard customers and stuff. And it’s like, that’s a thing. Right.
Brian Henderson: Productized service.
Rob Walling: Type of thing. Yeah, that type of thing. So anyways, I think you guys though, I mean, you are true SaaS, so I think you might be the biggest one that I know of. I want to ask you though, if you were starting from scratch now with AI coding tools the way they are, how would you think about Bubble and how you did it versus AI assisted development?
Brian Henderson: Well, one of the cool things about Bubble is that I guess you could describe it as a low code solution. If you want to go pure no code, you can, but they very cleverly, very smartly built it so that you can extend it with JavaScript and other type functions and build your own plugins for it. Or you can even purchase plugins that others have made for it to add functionality. So one of the best case in point is, and I’ll answer the question about AI and how this dovetails. This ties into it. I’m on that path here. So with the point of sale system, there’s a lot of hardware you interact with such as a receipt printer, a cash drawer, label printer, weight scale, credit card reader, barcode scanner, lots of hardware. And very appropriately, typically software running in a browser, a web app does not have access to hardware connected to your computer.
And that’s by design. That’s a very wonderful and very good thing for security for browser-based software. Typically, you don’t want that accessing hardware you have connected to your computer. That could be disastrous if you went to a website that wanted to just hijack things. But for a point of sale system, you need to be able to press a button and a cash drawer kicks open. So how do you deal with that? We found some software that is a third party program that runs on the client’s computer that can be interacted with via JavaScript in the browser. And so there’s some action that happens on the screen. It runs some JavaScript and then we’re interacting with the hardware. And so it’ll print a receipt without having to use the Google Chrome print dialogue window or anything like that. And coincidentally, a cash drawer is typically controlled through a receipt printer.
So we send some command to the receipt printer and that kicks open the cash drawer. So that’s an example where that little bit of code, just enough, not a whole solution that we crafted, but just enough to add the extra bit of functionality helped. So here’s the really cool thing. With no code tools like Bubble, you can iterate and very quickly build and test solutions with the small lean team to make sure you’re solving the right problems first, get feedback and then improve that. And then now with some of these AI tools, you can go a step further and you can build your own plugins without needing to know how to code JavaScript or whatever language you’re needing to do. But because it’s tied into that no-code ecosystem, for the majority of the logic of the workflow of your application, a normal human can actually read it.
And so we’re more and more adopting AI tools for our software development that play nice with Bubble. And case in point, just recently we needed a better solution for PDF generation. And one of our developers realized like, oh, this is a perfect use case for having AI build our own PDF generator plugin on the server side as we’re generating invoices and receipts to be able to email them to laundromat customers. And so we just whipped that up within a week or two and it’s great. So now we have the best of both worlds of some of the power of AI tools for development, but then leaning on the strengths of platforms like Bubble where they’re handling a lot of the heavy lifting in terms of server management, privacy rules, security. The AI tool we’re currently using the most. It’s called BuildPrint by a company called Not Quite Unicorns by George Collier, which Not Quite Unicorns should be a band name.
It really sounds like a really good band name, but it’s an AI tool, kind of third party that tacks on to Bubble and allows you to interact with it using a lot of the modern AI development tools that have gotten all the buzz while still leaning on the strengths of using a platform like Bubble. And we were very much the poster child for Bubble of you can start whether you just have a few customers or whether you’re enterprise and you have thousands of daily users and all that, and you can work your way up on the subscription plans and the platforms. And so we started off with just the very basic and regularly moved our subscriptions on up. And then it was March of 2023 when we switched over to their dedicated server hosting enterprise level of subscription. And eventually doing that is more stability.
It does cost more, but our app hasn’t been down for what, three and a half years now, like ever. And so that’s nice. And somebody else is doing all the watching and safeguarding of that to make sure that that stays where it’s supposed to be. So in terms of the trade-off in there, that was worth it to us because again, we didn’t set out to be software. Well, we didn’t set out to be coders, but rather we set out to build software to solve problems because it served the business and our customers, and that was the best method to do that.
Rob Walling: I want to switch it up and talk about hardware because obviously you have these POS systems. It’s just like a cash register type thing, or it’s probably a tablet these days. I imagine it’s a computer.
Brian Henderson: That’s evolved over time.
Rob Walling: Yeah, I bet it has. What I want to hear though is specifically, [VERIFY: “A&R” — unclear who Rob is referencing] had talked a couple episodes ago about now having hardware as a component of a SaaS is a valuable moat. Do you see it that way as well as someone who’s operating a business like this?
Brian Henderson: I do. I really do. The point of sale software was not the whole solution. We’ve really focused on being a point of sale system. And we discovered early on that just trying to sell the software by itself and the customer goes and sources the right hardware, trying to find the right hardware for their store was difficult. Part of the solution that we sell is that we’ve sourced commercial grade equipment, computers and touch screens and printers and all that, that will survive a harsh commercial environment. Laundromats are really, really hard on computers, especially ones that have fans in them. Lots of lint in the air. You literally have to take the computer out and dust it off with some cans of compressed air to get the lint out of the computer. It’s bad. It’s rough. And there’s water and there’s humid environments can be sometimes. And the very first few systems that we sold back in 2016, it was a separate touchscreen monitor and a separate tower.
And one of my first customers, she was in New Jersey and I was talking to her on the phone trying to walk her through how to set up her system remotely. She did not know how to connect a monitor to the computer. It was an utterly foreign concept to her. And I realized, oh, this is bad. If I’m hoping to help laundromat owners across the country set up point of sale systems entirely remotely and talk to them on the phone, then I need something that they can simply pull out of the box and plug it in and start getting value out of it almost immediately. And so that quickly led us to finding all-in-one solutions that has the touch screen and the computer hardware all in just the monitor basically. And for a long time, we even sold a unit that had also the receipt printer built into the base of the thing.
So it was literally the computer, the screen and the receipt printer all installed in one unit and they just plug in power and internet and that was that. So that was an important part of it.
Rob Walling: So as we’re approaching time, I have one more question for you that I’d like to hear about, and it’s about competition. You entered this space when it was nascent, non-existent, potentially literally the first entrant. And now venture capital has come into the category. And I believe you told me or producer Ron that your main competitor has raised $220 million in VC since 2021. So my question to you as the final kickoff here, because I know that there are other bootstrappers in the audience who have had to deal with this, what is that like for you? What does it look like day to day to compete against that kind of a war chest as a completely bootstrapped company?
Brian Henderson: There’s two thoughts about it. One is a little bit of remorse in terms of not just playing in a wide open ocean anymore. I’ve joked before that all I want is an uncontested monopoly. I don’t think that’s too much to ask. But at the same time, I do recognize that competition does drive innovation. It helps you avoid complacency and it has been healthy for the market and the industry. I used to be a lot more opinionated about the right way to run laundromats when I was younger. And likewise, I used to be a lot more opinionated about the right way to build a SaaS company and run a tech startup when I was back in my 20s. I’ve just turned 40 not too long ago. And so I recognize that there are a lot more ways to be successful in this world and that these things can live alongside each other.
On one hand, the fact that a competitor has raised so much money is very validating that, yeah, hey, there is a market here. I found something. There is an industry here that needs to be served. On another hand, it can be intimidating, the fact that they’ve raised so much. And it’s been fascinating to observe how people interpret venture capital funding as some type of measurement of validity of what that company in particular is doing as if they’ve got something special. Obviously I’m a little bit biased and I don’t think that what they’re doing is special, but they are very skilled at getting investors. That is their power is getting buy-in from them. And they are making a play for an entire industry. When you talk about total addressable market, we at Wash Dry Fold POS, we’re very focused on laundromats that have drop off laundry services and/or pickup and delivery.
And they do a certain volume of that service in addition to their self-service income. Whereas this competitor is really talking about, well, all laundry in the United States, whether it’s at home or in apartment laundry rooms or laundromats, then they’re using those numbers for the total addressable market. And so you see them needing to burn through these investments and getting into things like lending for laundromats, wanting to build stores or building out self-service payment systems in addition to point of sale system and serving people who are trying to start a pickup and delivery business out of their home using just the residential washer and dryer in addition to a full laundromat with staff and a service counter and infrastructure and all that too. So they’re making kind of a different play. And the thing that lets me rest easy at night and gives me confidence is the fact that we have been bootstrapped.
We don’t have a burn rate or a runway that a funded startup would have. And we don’t have a mandate to burn through cash like somebody trying to build a unicorn would have. And we’ve been operationally profitable since day one. And so it’s to our advantage that our churn rates. I’m remembering a time that Ian and I had a consultation call with you and we were telling you about some of our churn rates and longevity of our customers. And you’re just like, ah, man.
Rob Walling: Kill for that.
Brian Henderson: Kill for it.
Rob Walling: Yeah.
Brian Henderson: Anyway, we’re designed and built to be here indefinitely. And I feel an obligation to our customers. They build their operations around using our software as core to how they’re running their laundromats. And so building a company that is tried and true based off of real feedback, it’s built to operate for the long run, has stability and security, and building up quite a war chest of funds to last through really any situation. I feel an obligation, a responsibility to do that rather than a venture-backed company that is like burn as much cash as you possibly can, buy your way into the market and go big or go bust. That’s just not for me, which is why I’ve been a listener to Startups for the Rest of Us for the past 10, 15 years. Yeah. So the net result has been that we’ve benefited from it because this competitor has spent a lot of money on market education.
And we’ve shifted over the years. We’ve been at it long enough. We’ve seen a shift from people being product or solution unaware to they’re typically looking for a point of sale system for the laundromat and preferably a cloud-based one. And so they’re coming in a bit more informed. And I think that we’ve benefited from the millions of dollars that this competitor has pumped into advertising in the market. And then when they stumble and fall and aren’t as good of a solution, then they go looking for another point of sale system. And so we’ve benefited from that as a net result. So that helps.
Rob Walling: That’s cool. And then when they go out of business, you can buy their assets for pennies on the dollar. I won’t say it’s inevitable because it’s not, they could succeed. But yeah, when someone raises that much money in a space like this, it’s a long shot they’re taking for sure, which is the nature of venture capital.
Brian Henderson: Yeah. I remembered something I was going to say about hardware earlier, and that was the advantage of selling the hardware upfront. And then on the long tail, having the software subscriptions and the payment processing kind of on the long tail. So typically in terms of customer acquisition costs, the amount that you’ve spent to acquire that customer in advertising dollars or however you’re going about marketing to them and literal buy-in from your customers. We sell them the hardware upfront for a few thousand dollars depending on what equipment they get. And that covers our initial setup and training costs for that customer. We have a wonderful customer success manager named Chelsea based out of Kentucky who was a former manager of a chain of eight laundromats. And so she knows the business inside and out, who helps get them set up and make sure they have the right hardware.
And so it’s covering her costs and her time for all of that. And then the customer acquisition cost is covered. And so we hit the ground running with each customer already profitable and moving forward. And so now that we have the chain of laundromats more than covering lifestyle and technically we make more money from the laundromats than we do from the software company at this moment, which is really cool. And they’re some of the top performing laundromats in the country. And we’ve converted Wash Dry Fold POS to a C Corp for tax reasons a few years ago, and we’re motivated to keep cash within the business. And so now we’re in a spot where we’re going to be kind of pouring fuel on the fire to continue on with that growth. Yeah. So that’s an advantage of selling the hardware, having that thing you’re selling in the front, whether that’s a setup and training session or if that’s the literal physical hardware, make profit upfront, cover your customer acquisition cost, and then do what you can to keep them a subscriber for the long term.
Then that’s worked out really well for us. And it’s led to a very low amount of churn and allowed us to continue growing in a profitable way from the very start.
Rob Walling: Builds a great business for sure. Brian Henderson, folks want to keep up with what you’re doing. Washdryfoldpos.com. And where are you on the internet? LinkedIn? I know you’re not doing much on X Twitter.
Brian Henderson: I’m technically on LinkedIn. That’s probably the best way to reach me, just Brian Henderson. And I sometimes forget that it exists. I’m not on it too often. I’m very much a Facebook guy too. I was in college when it came to our campus back in the day. So that’s the level I’m at. I remember everybody being excited and talking to each other on the sidewalk saying, “Hey, we’re getting Facebook, getting Facebook at our college.” So we are focused on growing, so we are looking for more sales and marketing people to join our team. So if you’re in Oklahoma, give us a shout out and we’d love to talk to you.
Rob Walling: Sounds great, man. Thanks again for joining me on the show.
Brian Henderson: Thank you.
Rob Walling: Thanks again to Brian for coming on the show. I enjoyed that conversation and just the unique journey that he and his co-founder have traveled building their SaaS company. So thank you for listening this week and every week. This is Rob Walling signing off from episode 844.
Episode 843 | Success Patterns of $1M+ SaaS Founders
/
RSS Feed
Are you building systems for your team, or are you still the system?
In this episode, Rob Walling talks with Julien Marzouk, a former SaaS founder and coach who has worked with hundreds of seven and eight figure founders over the past decade. Julien breaks down six recurring patterns he sees in founders who scale past a million, from the identity shift of moving from operator to leader, to the visibility problems that get mistaken for lead problems.
Topics we cover:
- (2:59) – Why seven-figure founders seek coaching
- (5:50) – Coach versus mastermind, key differences
- (9:44) – Mindset shift to be coached well
- (12:05) – Pattern 1: Operator to leader
- (14:05) – Pattern 2: Doing too many things
- (18:17) – Pattern 3: The rescuing founder
- (21:45) – Pattern 4: Visibility disguised as leads
- (25:36) – Pattern 5: Action beats analysis paralysis
- (28:55) – Pattern 6: Clarity before AI agents
- (32:07) – What coaching at SaaS Institute involves
Links from the show:
- Tiny Summit | Cancun, Mexico · December 5-7, 2026 – Get On the Wait List
- TinySeed SaaS Institute
- TinySeed Mentors
- MicroConf Masterminds
- Julien Marzouk | LinkedIn
- Rob Walling (@robwalling) | X
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
Subscribe & Review: iTunes | Spotify
Rob Walling: Welcome back to another episode of Startups for the Rest of Us. I’m your host, Rob Walling. And in this episode, I talk with Julien Marzouk. He’s a former SaaS founder and now a SaaS coach. He’s been coaching for 10 years and has coached hundreds of founders. And in this episode, we dive into the success patterns that he’s seen across the seven and eight figure entrepreneurs he’s worked with. Before we dive into that conversation, if you are a seven or eight figure ARR SaaS founder, you might be interested in an event we are hosting this December. It’s called Tiny Summit. It’s a two and a half day high level knowledge sharing event exclusively for seven and eight figure ARR SaaS founders. And while this event will primarily be for SaaS Institute founders, we are opening a limited number of tickets to qualified founders who are outside of Institute.
If you’re doing millions in ARR, it is hard for you to find a group at your level, and this event will be just that. It’s a very small group retreat focused on founders sharing real behind the scenes knowledge on what’s working, building relationships with other successful entrepreneurs, and taking a step away from the day-to-day to figure out the next big picture moves. It’s going to be at one of the top resorts in Cancun, December 5th through the 7th. If you’re already part of SaaS Institute, hit us up in Slack. But if you’re listening to this and you think, if I want to get together in a room, I’m going to be there. There’ll be a few folks you have heard on this podcast, and we’re going to have a great time masterminding, talking, troubleshooting. If you are not in SaaS Institute, you can email tracy@tinyseed.com to get on the wait list.
And with that, let’s dive into my conversation with Julien about success patterns of one million ARR founders. Julien, welcome to Startups for the Rest of Us.
Julien Marzouk: Thanks, Rob. It’s a pleasure to be here.
Rob Walling: I want to talk to you today about coaching SaaS founders. We’re going to cover a few topics: why a SaaS founder, especially someone doing seven or eight figures, might need a coach. We’re going to talk about how to be coached well, what to look for in a coach. But I think the meat of this episode, and the part that I’m most interested in hearing and that I think the listeners will be as well, is to dig into your experience having coached dozens and dozens of seven and eight figure founders across that decade, the patterns that you see. And I’m assuming there’s some success patterns, maybe some anti-patterns here, but I really want to hear that out of your knowledge today. Sound good?
Julien Marzouk: Absolutely. Sounds great. Yeah, I’d be happy to. I think that’s a good opportunity for me to order what I’ve seen. It’s actually hundreds of founders over the years. I’m ashamed to say that. And yeah, happy to get started.
Rob Walling: Awesome. So I want to dive in starting with founders doing more than a million, and this is specifically SaaS folks. We’re not talking about folks with e-comm, and it is the focus of this podcast and my whole ecosystem. Why do founders above a million seek coaching? Why should they consider finding someone to help them?
Julien Marzouk: Absolutely fair question. Usually they’re done going about it alone. At this stage, they usually feel pretty lonely. If they’re around one to three million, isolated, and they want a thinking partner. They need help because usually their life has become miserable. And overall, they need to change something. They realize that the way they’ve been doing it is not working anymore. In one sentence, even though they don’t say it like that, what they feel is: what got me here won’t get me there, to 10 plus million.
Rob Walling: And another thing that I’ve seen, I’m curious what you think about this, is there’s so much content for people starting up, for people doing five or 10K a month, for people doing a little less content if you’re doing 50K a month, 600K a year. When you get into seven figures, and I’m guilty of this too, the audience is just so small for that content. So the stuff that I’ve created, or we at TinySeed and MicroConf have created, for later stage folks, whether it’s on YouTube or whether we create actual products we sell, they just don’t get nearly the uptake, because there’s so few people that want that content. So as a result, there’s not a lot of content for folks at that stage. And it seems like customization. It feels to me like everyone in the early stage has very similar problems. How do I find an idea, validate it?
Do you see this, that the problems themselves get further and further apart, such that a generalized course is potentially a lot less valuable to someone doing a million, five million ARR?
Julien Marzouk: Yeah, absolutely. It’s also a much, much smaller group of people who get there, right? As you said. So the content is also according to the audience. And yeah, I think we’ll get into it. I’m happy to talk a little bit about what I’m seeing. You do see different scenarios, different cases that play into the different strengths of the founders. So you do have a range of different scenarios and different challenges that arise. Though I do think that we can extract, as you said at the beginning, key patterns that are very helpful to be aware of when you get to that stage.
Rob Walling: So answer me this, because I can imagine someone thinking, “Well, I’m in a peer group. I’m in EO, or I’m in a MicroConf mastermind, or a mastermind of my own making.” Why isn’t that enough, and what does a coach offer beyond that structure?
Julien Marzouk: A coach, ideally a good coach, someone who’s actually going to help you at this stage, has both domain expertise and coaching expertise. Meaning that they are able to both ask you the right questions based on what’s going on in the business, but they’re also able to recognize patterns, patterns that they’ve seen because they’ve talked to dozens, as you said, or hundreds of people in that same situation. That’s number one. Number two is a coach is not an operator, not just an operator. Meaning that usually when you’re mentored by an operator, they’re super strong technically, and they’re going to be able to help you basically do what they did. But if you want to help someone play to their strength, then that’s a little bit of a different game, because the path that worked for you might not work for someone else, because we have different strengths and you come to entrepreneurship from different journeys.
Some are sales experts, some are great marketers, some are amazing product people and developers. So if you have someone that is exactly like you, then great. But for all the other cases, having this actual skill of coaching is going to unleash much more.
Rob Walling: Yeah. And we’ve seen that with the SaaS Institute, for folks who don’t know. Obviously I’ve mentioned SaaS Institute on the podcast before. It’s our premium coaching program for seven and eight figure ARR SaaS founders. And we have both masterminds and one-on-one coaching. You are one of our coaches at Institute. And there’s a very specific reason that we structured it that way, because I’ve been building software, well, geez, I’ve been building software since I was eight years old. I’ve been building SaaS for almost 20 years, but I’ve been building audiences for 20 years, and I’ve been building communities for like 16. And I’ve been in masterminds, one is still going, that’s like 15 years old. And the difference between that, I’ve seen both across our accelerator when we launched it seven years ago and my experience of being in masterminds versus having a coach one-on-one who’s really digging in with me, asking the questions, often not even giving me direct guidance, but asking me the questions that make me guide myself.
Asking, how do you get more data out of that? The coach may not know how I get more data to make this decision, but they know when to switch that topic and go pretty direct. Sometimes you can get in a mastermind with someone who’s a good coach and you’ve lucked out, you’ve lucked out. It is by far the exception, by far the exception. And that’s, I think, the difference.
Julien Marzouk: I just wanted to take the opportunity to say how I love how the SaaS Institute is structured, because I do believe that you need both. You need the community with peers that you can relate to, that are going through the same things. It’s not the same type of conversations, right? You’re going to get value from their journeys and things that they have worked out, and that’s great, but the community is extremely valuable. I mean, I’m not going to have to convince you here. The combo with the coaching is, I believe, a great combo that the SaaS Institute nailed.
Rob Walling: Well, that’s good to hear, because we feel like we’ve been doing this for a while and helping a lot of founders, obviously with 350 something founders in our accelerator, and then the tens of thousands of founders that have found community in MicroConf. So before we dive into the patterns that you’ve seen across these hundreds of founders you’ve coached, I just want to briefly talk about, if you were to look for a coach, and obviously you and I believe in the SaaS Institute, but if someone’s listening to this, they know me well enough to know that I don’t just shill my own stuff. I think what we’ve built is great. I always try to build the best thing on the market, but sometimes people might want to go somewhere else to get a coach. So we’re keeping this general. If you’re a SaaS founder and you desire to find a coach, and you want to be coached well, what’s the mindset shift that founders need to embrace, I guess, to get the maximum benefit?
Julien Marzouk: That’s a great question. I don’t think you go into coaching to be validated, or even to be just told what to do. That’s not really the way to start. I think getting into coaching, you need to be willing to be uncomfortable. You need to be willing to be challenged. And yeah, you need to be able to act in between sessions, because eventually the coach is not going to do the work for you. The founder still has to do the work. So if you want to really leverage the relationship with your coach, you need to be ready to execute in between sessions, because those are the ones that make the most out of it. After six months engagement between a founder that has been executing consistently and someone who is just getting started, you see the difference. It’s important that the founder understands that they still own the agenda, even though the coach will help them prioritize and identify the biggest bottlenecks and then zero in on the priorities.
What happens in between sessions matters so much that they need to come back and say, “This is what happened. This is what’s on my to-do list,” and take it from there. And maybe last but not least is being okay with being wrong. It’s important, both for the coach and for the founder.
Rob Walling: I think those are good things for founders to do whether they have a coach or not. Willingness to be wrong, you know what I mean? It’s just good advice.
Julien Marzouk: Absolutely.
Rob Walling: All right. Let’s dive in. You said you gathered a few patterns for me. I think maybe we’ll get through six or seven depending on time, but let’s just dive into the first pattern that you’ve seen across folks that you’ve coached.
Julien Marzouk: The first one, which is really at this stage the defining moment, is the operator who hasn’t become a leader yet. Basically at one to three million, the founder is the growth engine. They’re the ones who’ve built the growth, who’ve been doing it all. The problem is that in order to get to 10 million, it needs to change. They need to be able to remove themselves from the equation, to build the system, to empower their team, in order for the business to run without them, ideally. That’s the goal. And so what’s tricky is you have very often an identity shift that needs to happen, because what got them here, being a great salesperson, being a great developer, being a great marketer, there is self-worth tied to it. And so you’re basically asking them, what’s been your greatest strength? What got you all this success? Now actually get rid of it.
We don’t want it anymore. You need to be able to put your focus on a different system and on your people, and to build a machine that can run without you. And that’s a big deal. That’s a big deal for them, because it’s basically who they are at this point. And it takes a second. This is something that you can surface very often. In the first session, I do a time audit, very big picture, but I take the six functions and I’m like, okay, how much of your time do you spend in each function? Just a rough percentage. Every time there’s a function that’s beyond 40% in time spent, in sales, product, marketing, you know it’s going to be a topic and it’s going to take some work for them to actually let go.
Rob Walling: Love it. I’ve seen it myself. I echo it. Let’s talk about number two.
Julien Marzouk: I think a lot of people will recognize the pattern, and not just founders, but founders at this stage specifically. It’s doing too many things at once. So you get on a session, one of the first sessions, and you realize that founders run five growth initiatives in parallel. And when you start questioning, like, but are you sure that you will be able to bring them all to fruition, and how come it’s taken so long? It’s very difficult for them to let go, because they think that it’s saying no. No, I’m not going to do this. And actually the reframe is, we’re not saying no, we’re just saying not now. It’s about sequencing. And very often you see many different ICPs, different types of clients that founders are pursuing, even sometimes different sales motions, different acquisition channels. And there’s one tool that I want to share with your audience that I found very helpful to help them focus.
And the way it’s useful is because there’s no subjectivity about it. It’s basically math. It’s the sales velocity equation. I don’t know if you’ve used that before, but basically you take every segment. So let’s say I have this client, for example, compliance SaaS that sells into banks. It was going after national banks, regional banks, and community banks, and mostly regional and community. And the thing is, when we compare the sales velocity, the pipeline, the conversion rate, the sales cycle, and the deal size, he spent a lot of time on the regional banks because they were 70K per deal versus the community banks that had, I think, something like 30K per deal. The thing is, the sales cycle for the regional banks was seven months versus one month for the community banks. So basically spending more time on the community banks after six months means basically 10 times the revenue.
It’s just math. And so we’re not saying we’re never going to do the regional banks. We’re just saying right now, the best use of your time is on this channel, these ICPs, this motion, and these are the numbers to back it up.
Rob Walling: So as a coach, let’s say that you see this and you can see that there’s an issue. How do you help, or do you help, guide the founder? Do you do it through questions? Is it the Socratic method? Or are you kind of like, “Hey, there’s a blind spot over here,” and you just direct, like, “Have you considered this?” What would it be like to be in a session with you and have you realize that?
Julien Marzouk: I think there’s the myth of the coach is not supposed to give guidance. They’re supposed to only ask questions. I believe that for founders at this stage, it’s actually very important to be able to wear both hats: to be able to be really asking questions, getting them to clarity and to their own understanding of the problem, but also in some situations, give your own opinion and experience on something and share what you think. But labeling it as such, being very clear, “Here, I’m going to tell you what I think. You should do this, because these are all the reasons, and I’ve seen it before, and you’re going to get faster.” This is, I would say, you have to balance both hats. But overall, I wouldn’t say it’s a problem in session. I would say founders welcome the guidance very often. I would say the trap is indeed to not allow for the space for the founder to actually be creative and find their own solutions based on all the amount of information that they have, because the founder has much more information than the coach.
They’re in the business. They have more data points. So I think you have to kind of hold both those truths at the same time.
Rob Walling: All right. Let’s dive into our next one. Am I counting right? Is this the third?
Julien Marzouk: It is the third.
Rob Walling: Number three. Yeah. Talk me through it.
Julien Marzouk: The rescuing founder. The rescuing founder is basically, team members come to him with problems, him or her. And they think it’s faster, and very often it is short term, to just take the problem and solve it themselves. They’re not going to take time to actually work the problem with the team member in order for them to still own the problem. And the thing is, when you do that, what you’re actually doing is you’re teaching your team members to bring you problems instead of solutions. And so you cannot grow like that. Basically, you are just in this loop where you are still the bottleneck. And so a few things that are extremely helpful here. The first one that I love, that I use very often, is the 10/80/10 rule. Basically just get involved in the first 10% of the task and the last 10% of the task.
The 80% in the middle are your team member’s responsibility. So be there to help frame it, scope it out, share, be clear on the standards of expectation, and then be there at the end to actually get the project, the deliverable, where you want it to be. This one has been helpful with clients. The second one is basically creating a system that fosters accountability, that requires an operating rhythm. So a weekly cadence. I like the model of one priority per week, three commitments on this priority, and then a scorecard to measure it. Very simple, very clear. And you do need tools in order to create delegation. Otherwise, it’s very hard for a founder from nothing to create a new system. So those tools I actually very much rely on in my work with clients, because it gives them something that they can do to start the transition.
Rob Walling: I was so guilty of this one. So guilty of all the ones you’ve mentioned, and my guess is, of all the ones that you mentioned, this is probably the one that I did the hardest as I was coming up. Because here’s the thing, I like helping people. I like solving problems. I enjoy it. Even in my personal life, one of my kids, the battery on their car ran out the other day, and I just loved being like, “Oh, here’s the AAA number. You call this and they’ll come charge it, and then come to the house and I’ll look at it.” And then their phone broke and I would just come to the house and I’ll figure it out. You know what I mean? That actually gives me juice, to help my friends and my family. But my stuff and business is not good.
It’s not good. I was Mr. Swoop-In, and I was like, “Well, obviously I’m a founder, so I can solve all these problems.” And it really burned me out. And as you said, it taught my team to just come to me with everything. And it was not good for growing the org. By the time we were 10 people, this is with Drip, I was basically still making all the decisions, and everyone, “Well, let’s see what Rob thinks about it.” Everything. And that was my fault. So it really resonates for me to hear you talking about this.
Julien Marzouk: I hear you. I think we all can, to different levels. It’s just, you get finally in a place where you can do things. And, as you, I do love to be helpful and to be of service. But yeah, that’s the path. Pattern three.
Rob Walling: Let’s do number four.
Julien Marzouk: This one is actually maybe the, actually, I think it might be the most common one I see. Let’s see what you think about it. Have you seen it before? It’s the visibility problem disguised as a lead problem. Let me tell you more. How many clients come to a session and say, “We need more leads”?
Rob Walling: Most. Yeah.
Julien Marzouk: Most, right? And then you ask a few questions and you realize they don’t know which channel produces the best customers. They don’t know the percentage that converts. They don’t know where prospects drop in the funnel, who expands, who churns. So they actually don’t know where’s the bottleneck, what’s to fix. And it’s understandable. When growth slows, the instinct is just to add more marketing, more sales, more tools. Actually, in most cases, it’s getting the information: where things break, where do we need to focus? Just today I talked to a client and we’ve been working together for many months, but he came, same thing. I need more leads. Growth has slowed. We start working together and realize that he has a churn issue, turnover issue within his sales teams, sales conversion rate. And we start popping up the hood, and he actually needs more technicians to deliver on his product to avoid churn.
The scripts of his sales teams are not good. They need to be improved. The compensation of his sales team is not ad hoc. So in just six months, because I’ve actually asked him to find out those data recently, the LTV to CAC ratio went from high twos to four in six months, just by doing the work on those. And so those were actually the highest priorities for him, not more leads.
Rob Walling: Yeah. And that is something that often, as a founder, when you’re so close to the metal, you may not be able to see that yourself. And that’s where having a co-founder, having a mastermind, having a coach, having a therapist, depending on the type of therapist they are, usually not a therapist because they’re not going to know business well enough, but that is where you can’t see the forest for the trees when you’re so close to it. I still do this today. I do this today. I have my network of really close founder friends who really understand me, who I can go to and say, I know that I need help with this thing. And here’s the thing, here’s the reason it works for me. I don’t have a coach right now, but it works for me because I feel like I’m pretty good at identifying.
I’ve been a founder forever. And I’m pretty good at identifying when I do actually need the outside help. For a lot of people, they aren’t good at identifying when they need the outside help. So unless you have that monthly or twice monthly meeting with a coach, you’re not really asking yourself the whole time, do I need advice on this? Do I need a different point of view? And you can be stuck without knowing you’re stuck.
Julien Marzouk: 100%. And I’m obviously sharing this from a place of love, and it’s not about pointing fingers here. I’ve done all those things. Had my business in New York for six years. I’ve been the bottleneck, been focused on the leads, been rescuing teammates. I’ve done them all. So it’s exactly how you said it. When you’re close to the action, when you just have your nose in it day in, day out, the pressure, the expectations, it’s difficult to have that visibility. Almost impossible if you don’t have the right forum for it.
Rob Walling: Let’s dive into number five.
Julien Marzouk: Number five is the emotional reality of it all. Something that comes up very often. I don’t know if you’ve heard it before, but founders tell me, most days I feel both encouraged and discouraged. This is something that comes back very often. And I think that’s a very important reframe: you don’t solve uncertainty with more thinking. You solve uncertainty through action. The founders who keep moving, they try to stick with momentum, keep executing. And that’s how the emotional regulation happens in the best way and the fastest way. The ones that stop executing because of uncertainty and just get caught up in the thinking loop, it’s usually getting worse. And I thought, yeah, that was worth actually one spot in this list.
Rob Walling: Yeah. I mean, the number one thing Einar and I talk about when we’re asked about TinySeed founders, who succeeds, who doesn’t? Generally, the people who succeed, they do a lot of things and they’re right more often than not. Not all the time, but they’re right. They can be right 60% of the time, but they just do a lot of stuff. And they’re not flailing. I mean, there’s people that do a lot of stuff on their ADHD, launching 12 products in 12 minutes. And that’s not what I mean. I mean, focusing, having some type of game plan, but it’s like everything they do with a sense of urgency. And they don’t sit around analyzing everything to death. They take action to gather more data, to then take action, to gather more data, to then take action. And oh, I just discovered the data now is that the YouTube channel is working, that LinkedIn is working, that that cold outreach via whatever avenue, via Twitter DMs, is working, because I didn’t sit there and talk to ChatGPT about it for three hours and then think about it and ask everyone for advice for three days.
I just started sending some cold DMs one day, and suddenly I realized that one out of 20 that I sent got a response. You know what I mean? It’s this action bias, towards action over sitting around. Analysis paralysis is something that strikes so much of us, especially builders, especially makers, especially developers, because action is scary, and the safe, secure, comfortable thing is building, writing code, another feature. I want to think about the product. I want to build a product, because it is fun. That’s my favorite part. That’s why I get into this. But the scary part, the hard part, is taking action and getting out there.
Julien Marzouk: 100%. Short learning loops. Short learning loops, right? Do something, result, let’s iterate. And it’s very useful. I think founders at this stage, they don’t want general advice. They’re drowning in advice. They want to be able to have something actionable, and usually to identify what’s the highest leverage path to their next stage. And that’s usually action, short learning loops.
Rob Walling: All right. Last one. Let’s look at number six.
Julien Marzouk: Number six, I wanted to pick something that was related to this new AI era. And it’s tricky because obviously there’s so much going on, and it’s in every conversation that I have. One thing that I wanted to highlight is the shiny object syndrome. So very often the response to AI with the founders I work with is, I’m going to build a ton of agents. I’m going to build agents to do this, to do that. Agents, agents. Make no mistake, agents are great. I love them. But there are a number of things that sometimes need to happen before. And the first biggest challenge that I see at this stage is, if you don’t have clarity on your ICP, the use case that works for you, how your GTM is designed, you’re going to be crushed by AI. AI punishes fuzzy positioning and rewards clarity. It rewards words like ROI, clear deliverables.
And some founders don’t have that yet, and they can’t capture the right data if they don’t have clarity on their ICP, on their use case. So they cannot leverage AI for their own product. So there’s a lot of work already there to be done. GTM first. Number two, a lot depends on SEO still. And you probably saw SEO is declining across the board. So usually before setting up a new agent, what channel do you want to develop to counterbalance the decrease of SEO? This needs to be intentional. And then last but not least is really the information flow. So there’s an opportunity to simplify everything with AI before adding more agents. A lot of how GTM organizations are structured is you will have SDR, AE, manager, you will have some RevOps, some enablement. The thing is, if everybody is connected to the same information in real time and leveraging AI, well, there’s a lot you don’t need anymore, actually, because information is just flowing.
And so I think it impacts how organizations work, and that’s a big deal. It’s really like you can keep a tight team and get a lot done. And agents, they’re there for everybody. Just make sure that those fundamentals of your business are secure before adding complexity.
Rob Walling: Awesome. Thanks for sharing those today, man. I think they’re going to be really helpful for the listeners. And listener, if you found value in any one of those or all of them, feel free to reach out to us on X/Twitter. I’m @robwalling. And Julien, what’s your handle?
Julien Marzouk: I’m at Julien Marzouk on LinkedIn.
Rob Walling: Perfect. On LinkedIn. Yep. And we will get that in the show notes. One final question before I let you go. What does working with you at SaaS Institute actually look like, if someone was wondering?
Julien Marzouk: Yeah. It’s one session every two weeks, plus the community. We get started with the first priority that’s going to have an outsized impact on your business. We create one priority, three commitments until the next session. And if we need to add more, if we need to involve more team members, we can do that. But the relationship with the founder, biweekly, that’s the foundation of the coaching, together with, obviously, the community of the SaaS Institute.
Rob Walling: Very nice. Folks want to keep up with you, Julien Marzouk on LinkedIn. Thanks again for joining me today.
Julien Marzouk: It’s my pleasure. Thank you for having me.
Rob Walling: Thanks again to Julien for coming on the show. And if you feel like Julien or another coach could be helpful to you, and you’re doing at least a million in ARR and you’re running a B2B or B2C SaaS company, you should head to saasinstitute.com and check out what we have to offer. Thanks for listening this week and every week. This is Rob Walling signing off from episode 843.
If you’re doing millions in ARR, it is hard for you to find a group at your level, and this event will be just that. It’s a very small group retreat focused on founders sharing real behind the scenes knowledge on what’s working, building relationships with other successful entrepreneurs, and taking a step away from the day-to-day to figure out the next big picture moves. It’s going to be at one of the top resorts in Cancun, December 5th through the 7th. If you’re already part of SaaS Institute, hit us up in Slack. But if you’re listening to this and you think, if I want to get together in a room, I’m going to be there. There’ll be a few folks you have heard on this podcast, and we’re going to have a great time masterminding, talking, troubleshooting. If you are not in SaaS Institute, you can email tracy@tinyseed.com to get on the wait list.
And with that, let’s dive into my conversation with Julien about success patterns of one million ARR founders. Julien, welcome to Startups for the Rest of Us.
Julien Marzouk: Thanks, Rob. It’s a pleasure to be here.
Rob Walling: I want to talk to you today about coaching SaaS founders. We’re going to cover a few topics: why a SaaS founder, especially someone doing seven or eight figures, might need a coach. We’re going to talk about how to be coached well, what to look for in a coach. But I think the meat of this episode, and the part that I’m most interested in hearing and that I think the listeners will be as well, is to dig into your experience having coached dozens and dozens of seven and eight figure founders across that decade, the patterns that you see. And I’m assuming there’s some success patterns, maybe some anti-patterns here, but I really want to hear that out of your knowledge today. Sound good?
Julien Marzouk: Absolutely. Sounds great. Yeah, I’d be happy to. I think that’s a good opportunity for me to order what I’ve seen. It’s actually hundreds of founders over the years. I’m ashamed to say that. And yeah, happy to get started.
Rob Walling: Awesome. So I want to dive in starting with founders doing more than a million, and this is specifically SaaS folks. We’re not talking about folks with e-comm, and it is the focus of this podcast and my whole ecosystem. Why do founders above a million seek coaching? Why should they consider finding someone to help them?
Julien Marzouk: Absolutely fair question. Usually they’re done going about it alone. At this stage, they usually feel pretty lonely. If they’re around one to three million, isolated, and they want a thinking partner. They need help because usually their life has become miserable. And overall, they need to change something. They realize that the way they’ve been doing it is not working anymore. In one sentence, even though they don’t say it like that, what they feel is: what got me here won’t get me there, to 10 plus million.
Rob Walling: And another thing that I’ve seen, I’m curious what you think about this, is there’s so much content for people starting up, for people doing five or 10K a month, for people doing a little less content if you’re doing 50K a month, 600K a year. When you get into seven figures, and I’m guilty of this too, the audience is just so small for that content. So the stuff that I’ve created, or we at TinySeed and MicroConf have created, for later stage folks, whether it’s on YouTube or whether we create actual products we sell, they just don’t get nearly the uptake, because there’s so few people that want that content. So as a result, there’s not a lot of content for folks at that stage. And it seems like customization. It feels to me like everyone in the early stage has very similar problems. How do I find an idea, validate it?
Do you see this, that the problems themselves get further and further apart, such that a generalized course is potentially a lot less valuable to someone doing a million, five million ARR?
Julien Marzouk: Yeah, absolutely. It’s also a much, much smaller group of people who get there, right? As you said. So the content is also according to the audience. And yeah, I think we’ll get into it. I’m happy to talk a little bit about what I’m seeing. You do see different scenarios, different cases that play into the different strengths of the founders. So you do have a range of different scenarios and different challenges that arise. Though I do think that we can extract, as you said at the beginning, key patterns that are very helpful to be aware of when you get to that stage.
Rob Walling: So answer me this, because I can imagine someone thinking, “Well, I’m in a peer group. I’m in EO, or I’m in a MicroConf mastermind, or a mastermind of my own making.” Why isn’t that enough, and what does a coach offer beyond that structure?
Julien Marzouk: A coach, ideally a good coach, someone who’s actually going to help you at this stage, has both domain expertise and coaching expertise. Meaning that they are able to both ask you the right questions based on what’s going on in the business, but they’re also able to recognize patterns, patterns that they’ve seen because they’ve talked to dozens, as you said, or hundreds of people in that same situation. That’s number one. Number two is a coach is not an operator, not just an operator. Meaning that usually when you’re mentored by an operator, they’re super strong technically, and they’re going to be able to help you basically do what they did. But if you want to help someone play to their strength, then that’s a little bit of a different game, because the path that worked for you might not work for someone else, because we have different strengths and you come to entrepreneurship from different journeys.
Some are sales experts, some are great marketers, some are amazing product people and developers. So if you have someone that is exactly like you, then great. But for all the other cases, having this actual skill of coaching is going to unleash much more.
Rob Walling: Yeah. And we’ve seen that with the SaaS Institute, for folks who don’t know. Obviously I’ve mentioned SaaS Institute on the podcast before. It’s our premium coaching program for seven and eight figure ARR SaaS founders. And we have both masterminds and one-on-one coaching. You are one of our coaches at Institute. And there’s a very specific reason that we structured it that way, because I’ve been building software, well, geez, I’ve been building software since I was eight years old. I’ve been building SaaS for almost 20 years, but I’ve been building audiences for 20 years, and I’ve been building communities for like 16. And I’ve been in masterminds, one is still going, that’s like 15 years old. And the difference between that, I’ve seen both across our accelerator when we launched it seven years ago and my experience of being in masterminds versus having a coach one-on-one who’s really digging in with me, asking the questions, often not even giving me direct guidance, but asking me the questions that make me guide myself.
Asking, how do you get more data out of that? The coach may not know how I get more data to make this decision, but they know when to switch that topic and go pretty direct. Sometimes you can get in a mastermind with someone who’s a good coach and you’ve lucked out, you’ve lucked out. It is by far the exception, by far the exception. And that’s, I think, the difference.
Julien Marzouk: I just wanted to take the opportunity to say how I love how the SaaS Institute is structured, because I do believe that you need both. You need the community with peers that you can relate to, that are going through the same things. It’s not the same type of conversations, right? You’re going to get value from their journeys and things that they have worked out, and that’s great, but the community is extremely valuable. I mean, I’m not going to have to convince you here. The combo with the coaching is, I believe, a great combo that the SaaS Institute nailed.
Rob Walling: Well, that’s good to hear, because we feel like we’ve been doing this for a while and helping a lot of founders, obviously with 350 something founders in our accelerator, and then the tens of thousands of founders that have found community in MicroConf. So before we dive into the patterns that you’ve seen across these hundreds of founders you’ve coached, I just want to briefly talk about, if you were to look for a coach, and obviously you and I believe in the SaaS Institute, but if someone’s listening to this, they know me well enough to know that I don’t just shill my own stuff. I think what we’ve built is great. I always try to build the best thing on the market, but sometimes people might want to go somewhere else to get a coach. So we’re keeping this general. If you’re a SaaS founder and you desire to find a coach, and you want to be coached well, what’s the mindset shift that founders need to embrace, I guess, to get the maximum benefit?
Julien Marzouk: That’s a great question. I don’t think you go into coaching to be validated, or even to be just told what to do. That’s not really the way to start. I think getting into coaching, you need to be willing to be uncomfortable. You need to be willing to be challenged. And yeah, you need to be able to act in between sessions, because eventually the coach is not going to do the work for you. The founder still has to do the work. So if you want to really leverage the relationship with your coach, you need to be ready to execute in between sessions, because those are the ones that make the most out of it. After six months engagement between a founder that has been executing consistently and someone who is just getting started, you see the difference. It’s important that the founder understands that they still own the agenda, even though the coach will help them prioritize and identify the biggest bottlenecks and then zero in on the priorities.
What happens in between sessions matters so much that they need to come back and say, “This is what happened. This is what’s on my to-do list,” and take it from there. And maybe last but not least is being okay with being wrong. It’s important, both for the coach and for the founder.
Rob Walling: I think those are good things for founders to do whether they have a coach or not. Willingness to be wrong, you know what I mean? It’s just good advice.
Julien Marzouk: Absolutely.
Rob Walling: All right. Let’s dive in. You said you gathered a few patterns for me. I think maybe we’ll get through six or seven depending on time, but let’s just dive into the first pattern that you’ve seen across folks that you’ve coached.
Julien Marzouk: The first one, which is really at this stage the defining moment, is the operator who hasn’t become a leader yet. Basically at one to three million, the founder is the growth engine. They’re the ones who’ve built the growth, who’ve been doing it all. The problem is that in order to get to 10 million, it needs to change. They need to be able to remove themselves from the equation, to build the system, to empower their team, in order for the business to run without them, ideally. That’s the goal. And so what’s tricky is you have very often an identity shift that needs to happen, because what got them here, being a great salesperson, being a great developer, being a great marketer, there is self-worth tied to it. And so you’re basically asking them, what’s been your greatest strength? What got you all this success? Now actually get rid of it.
We don’t want it anymore. You need to be able to put your focus on a different system and on your people, and to build a machine that can run without you. And that’s a big deal. That’s a big deal for them, because it’s basically who they are at this point. And it takes a second. This is something that you can surface very often. In the first session, I do a time audit, very big picture, but I take the six functions and I’m like, okay, how much of your time do you spend in each function? Just a rough percentage. Every time there’s a function that’s beyond 40% in time spent, in sales, product, marketing, you know it’s going to be a topic and it’s going to take some work for them to actually let go.
Rob Walling: Love it. I’ve seen it myself. I echo it. Let’s talk about number two.
Julien Marzouk: I think a lot of people will recognize the pattern, and not just founders, but founders at this stage specifically. It’s doing too many things at once. So you get on a session, one of the first sessions, and you realize that founders run five growth initiatives in parallel. And when you start questioning, like, but are you sure that you will be able to bring them all to fruition, and how come it’s taken so long? It’s very difficult for them to let go, because they think that it’s saying no. No, I’m not going to do this. And actually the reframe is, we’re not saying no, we’re just saying not now. It’s about sequencing. And very often you see many different ICPs, different types of clients that founders are pursuing, even sometimes different sales motions, different acquisition channels. And there’s one tool that I want to share with your audience that I found very helpful to help them focus.
And the way it’s useful is because there’s no subjectivity about it. It’s basically math. It’s the sales velocity equation. I don’t know if you’ve used that before, but basically you take every segment. So let’s say I have this client, for example, compliance SaaS that sells into banks. It was going after national banks, regional banks, and community banks, and mostly regional and community. And the thing is, when we compare the sales velocity, the pipeline, the conversion rate, the sales cycle, and the deal size, he spent a lot of time on the regional banks because they were 70K per deal versus the community banks that had, I think, something like 30K per deal. The thing is, the sales cycle for the regional banks was seven months versus one month for the community banks. So basically spending more time on the community banks after six months means basically 10 times the revenue.
It’s just math. And so we’re not saying we’re never going to do the regional banks. We’re just saying right now, the best use of your time is on this channel, these ICPs, this motion, and these are the numbers to back it up.
Rob Walling: So as a coach, let’s say that you see this and you can see that there’s an issue. How do you help, or do you help, guide the founder? Do you do it through questions? Is it the Socratic method? Or are you kind of like, “Hey, there’s a blind spot over here,” and you just direct, like, “Have you considered this?” What would it be like to be in a session with you and have you realize that?
Julien Marzouk: I think there’s the myth of the coach is not supposed to give guidance. They’re supposed to only ask questions. I believe that for founders at this stage, it’s actually very important to be able to wear both hats: to be able to be really asking questions, getting them to clarity and to their own understanding of the problem, but also in some situations, give your own opinion and experience on something and share what you think. But labeling it as such, being very clear, “Here, I’m going to tell you what I think. You should do this, because these are all the reasons, and I’ve seen it before, and you’re going to get faster.” This is, I would say, you have to balance both hats. But overall, I wouldn’t say it’s a problem in session. I would say founders welcome the guidance very often. I would say the trap is indeed to not allow for the space for the founder to actually be creative and find their own solutions based on all the amount of information that they have, because the founder has much more information than the coach.
They’re in the business. They have more data points. So I think you have to kind of hold both those truths at the same time.
Rob Walling: All right. Let’s dive into our next one. Am I counting right? Is this the third?
Julien Marzouk: It is the third.
Rob Walling: Number three. Yeah. Talk me through it.
Julien Marzouk: The rescuing founder. The rescuing founder is basically, team members come to him with problems, him or her. And they think it’s faster, and very often it is short term, to just take the problem and solve it themselves. They’re not going to take time to actually work the problem with the team member in order for them to still own the problem. And the thing is, when you do that, what you’re actually doing is you’re teaching your team members to bring you problems instead of solutions. And so you cannot grow like that. Basically, you are just in this loop where you are still the bottleneck. And so a few things that are extremely helpful here. The first one that I love, that I use very often, is the 10/80/10 rule. Basically just get involved in the first 10% of the task and the last 10% of the task.
The 80% in the middle are your team member’s responsibility. So be there to help frame it, scope it out, share, be clear on the standards of expectation, and then be there at the end to actually get the project, the deliverable, where you want it to be. This one has been helpful with clients. The second one is basically creating a system that fosters accountability, that requires an operating rhythm. So a weekly cadence. I like the model of one priority per week, three commitments on this priority, and then a scorecard to measure it. Very simple, very clear. And you do need tools in order to create delegation. Otherwise, it’s very hard for a founder from nothing to create a new system. So those tools I actually very much rely on in my work with clients, because it gives them something that they can do to start the transition.
Rob Walling: I was so guilty of this one. So guilty of all the ones you’ve mentioned, and my guess is, of all the ones that you mentioned, this is probably the one that I did the hardest as I was coming up. Because here’s the thing, I like helping people. I like solving problems. I enjoy it. Even in my personal life, one of my kids, the battery on their car ran out the other day, and I just loved being like, “Oh, here’s the AAA number. You call this and they’ll come charge it, and then come to the house and I’ll look at it.” And then their phone broke and I would just come to the house and I’ll figure it out. You know what I mean? That actually gives me juice, to help my friends and my family. But my stuff and business is not good.
It’s not good. I was Mr. Swoop-In, and I was like, “Well, obviously I’m a founder, so I can solve all these problems.” And it really burned me out. And as you said, it taught my team to just come to me with everything. And it was not good for growing the org. By the time we were 10 people, this is with Drip, I was basically still making all the decisions, and everyone, “Well, let’s see what Rob thinks about it.” Everything. And that was my fault. So it really resonates for me to hear you talking about this.
Julien Marzouk: I hear you. I think we all can, to different levels. It’s just, you get finally in a place where you can do things. And, as you, I do love to be helpful and to be of service. But yeah, that’s the path. Pattern three.
Rob Walling: Let’s do number four.
Julien Marzouk: This one is actually maybe the, actually, I think it might be the most common one I see. Let’s see what you think about it. Have you seen it before? It’s the visibility problem disguised as a lead problem. Let me tell you more. How many clients come to a session and say, “We need more leads”?
Rob Walling: Most. Yeah.
Julien Marzouk: Most, right? And then you ask a few questions and you realize they don’t know which channel produces the best customers. They don’t know the percentage that converts. They don’t know where prospects drop in the funnel, who expands, who churns. So they actually don’t know where’s the bottleneck, what’s to fix. And it’s understandable. When growth slows, the instinct is just to add more marketing, more sales, more tools. Actually, in most cases, it’s getting the information: where things break, where do we need to focus? Just today I talked to a client and we’ve been working together for many months, but he came, same thing. I need more leads. Growth has slowed. We start working together and realize that he has a churn issue, turnover issue within his sales teams, sales conversion rate. And we start popping up the hood, and he actually needs more technicians to deliver on his product to avoid churn.
The scripts of his sales teams are not good. They need to be improved. The compensation of his sales team is not ad hoc. So in just six months, because I’ve actually asked him to find out those data recently, the LTV to CAC ratio went from high twos to four in six months, just by doing the work on those. And so those were actually the highest priorities for him, not more leads.
Rob Walling: Yeah. And that is something that often, as a founder, when you’re so close to the metal, you may not be able to see that yourself. And that’s where having a co-founder, having a mastermind, having a coach, having a therapist, depending on the type of therapist they are, usually not a therapist because they’re not going to know business well enough, but that is where you can’t see the forest for the trees when you’re so close to it. I still do this today. I do this today. I have my network of really close founder friends who really understand me, who I can go to and say, I know that I need help with this thing. And here’s the thing, here’s the reason it works for me. I don’t have a coach right now, but it works for me because I feel like I’m pretty good at identifying.
I’ve been a founder forever. And I’m pretty good at identifying when I do actually need the outside help. For a lot of people, they aren’t good at identifying when they need the outside help. So unless you have that monthly or twice monthly meeting with a coach, you’re not really asking yourself the whole time, do I need advice on this? Do I need a different point of view? And you can be stuck without knowing you’re stuck.
Julien Marzouk: 100%. And I’m obviously sharing this from a place of love, and it’s not about pointing fingers here. I’ve done all those things. Had my business in New York for six years. I’ve been the bottleneck, been focused on the leads, been rescuing teammates. I’ve done them all. So it’s exactly how you said it. When you’re close to the action, when you just have your nose in it day in, day out, the pressure, the expectations, it’s difficult to have that visibility. Almost impossible if you don’t have the right forum for it.
Rob Walling: Let’s dive into number five.
Julien Marzouk: Number five is the emotional reality of it all. Something that comes up very often. I don’t know if you’ve heard it before, but founders tell me, most days I feel both encouraged and discouraged. This is something that comes back very often. And I think that’s a very important reframe: you don’t solve uncertainty with more thinking. You solve uncertainty through action. The founders who keep moving, they try to stick with momentum, keep executing. And that’s how the emotional regulation happens in the best way and the fastest way. The ones that stop executing because of uncertainty and just get caught up in the thinking loop, it’s usually getting worse. And I thought, yeah, that was worth actually one spot in this list.
Rob Walling: Yeah. I mean, the number one thing Einar and I talk about when we’re asked about TinySeed founders, who succeeds, who doesn’t? Generally, the people who succeed, they do a lot of things and they’re right more often than not. Not all the time, but they’re right. They can be right 60% of the time, but they just do a lot of stuff. And they’re not flailing. I mean, there’s people that do a lot of stuff on their ADHD, launching 12 products in 12 minutes. And that’s not what I mean. I mean, focusing, having some type of game plan, but it’s like everything they do with a sense of urgency. And they don’t sit around analyzing everything to death. They take action to gather more data, to then take action, to gather more data, to then take action. And oh, I just discovered the data now is that the YouTube channel is working, that LinkedIn is working, that that cold outreach via whatever avenue, via Twitter DMs, is working, because I didn’t sit there and talk to ChatGPT about it for three hours and then think about it and ask everyone for advice for three days.
I just started sending some cold DMs one day, and suddenly I realized that one out of 20 that I sent got a response. You know what I mean? It’s this action bias, towards action over sitting around. Analysis paralysis is something that strikes so much of us, especially builders, especially makers, especially developers, because action is scary, and the safe, secure, comfortable thing is building, writing code, another feature. I want to think about the product. I want to build a product, because it is fun. That’s my favorite part. That’s why I get into this. But the scary part, the hard part, is taking action and getting out there.
Julien Marzouk: 100%. Short learning loops. Short learning loops, right? Do something, result, let’s iterate. And it’s very useful. I think founders at this stage, they don’t want general advice. They’re drowning in advice. They want to be able to have something actionable, and usually to identify what’s the highest leverage path to their next stage. And that’s usually action, short learning loops.
Rob Walling: All right. Last one. Let’s look at number six.
Julien Marzouk: Number six, I wanted to pick something that was related to this new AI era. And it’s tricky because obviously there’s so much going on, and it’s in every conversation that I have. One thing that I wanted to highlight is the shiny object syndrome. So very often the response to AI with the founders I work with is, I’m going to build a ton of agents. I’m going to build agents to do this, to do that. Agents, agents. Make no mistake, agents are great. I love them. But there are a number of things that sometimes need to happen before. And the first biggest challenge that I see at this stage is, if you don’t have clarity on your ICP, the use case that works for you, how your GTM is designed, you’re going to be crushed by AI. AI punishes fuzzy positioning and rewards clarity. It rewards words like ROI, clear deliverables.
And some founders don’t have that yet, and they can’t capture the right data if they don’t have clarity on their ICP, on their use case. So they cannot leverage AI for their own product. So there’s a lot of work already there to be done. GTM first. Number two, a lot depends on SEO still. And you probably saw SEO is declining across the board. So usually before setting up a new agent, what channel do you want to develop to counterbalance the decrease of SEO? This needs to be intentional. And then last but not least is really the information flow. So there’s an opportunity to simplify everything with AI before adding more agents. A lot of how GTM organizations are structured is you will have SDR, AE, manager, you will have some RevOps, some enablement. The thing is, if everybody is connected to the same information in real time and leveraging AI, well, there’s a lot you don’t need anymore, actually, because information is just flowing.
And so I think it impacts how organizations work, and that’s a big deal. It’s really like you can keep a tight team and get a lot done. And agents, they’re there for everybody. Just make sure that those fundamentals of your business are secure before adding complexity.
Rob Walling: Awesome. Thanks for sharing those today, man. I think they’re going to be really helpful for the listeners. And listener, if you found value in any one of those or all of them, feel free to reach out to us on X/Twitter. I’m @robwalling. And Julien, what’s your handle?
Julien Marzouk: I’m at Julien Marzouk on LinkedIn.
Rob Walling: Perfect. On LinkedIn. Yep. And we will get that in the show notes. One final question before I let you go. What does working with you at SaaS Institute actually look like, if someone was wondering?
Julien Marzouk: Yeah. It’s one session every two weeks, plus the community. We get started with the first priority that’s going to have an outsized impact on your business. We create one priority, three commitments until the next session. And if we need to add more, if we need to involve more team members, we can do that. But the relationship with the founder, biweekly, that’s the foundation of the coaching, together with, obviously, the community of the SaaS Institute.
Rob Walling: Very nice. Folks want to keep up with you, Julien Marzouk on LinkedIn. Thanks again for joining me today.
Julien Marzouk: It’s my pleasure. Thank you for having me.
Rob Walling: Thanks again to Julien for coming on the show. And if you feel like Julien or another coach could be helpful to you, and you’re doing at least a million in ARR and you’re running a B2B or B2C SaaS company, you should head to saasinstitute.com and check out what we have to offer. Thanks for listening this week and every week. This is Rob Walling signing off from episode 843.
Episode 842 | What is the Future of SaaS in an AI World? (Rob Solo)
/
RSS Feed
Is SaaS dead now that AI can build an app in a weekend?
In this solo episode, Rob Walling gives his most definitive answer yet to the question flooding the internet: what’s the future of SaaS now that AI makes it easier than ever to build and copy a product? He breaks down the four most common claims that AI will kill Saas, and explains why the real SaaS apocalypse is coming for overpriced incumbents, not bootstrappers.
Topics we cover:
- (2:15) – What’s the future of SaaS with AI?
- (3:08) – Why “X is dead” predictions keep failing
- (5:12) – Claim 1: The self-hosting fantasy
- (11:39) – Claim 2: Anyone can clone your app
- (13:32) – Claim 3: Agents will do the work
- (16:34) – Claim 4: Infinite competition
- (18:02) – Which SaaS categories genuinely get squeezed
- (19:06) – The real apocalypse: Overpriced incumbents
Links from the show:
- MicroConf US ┃Austin, TX · April 18–20, 2027. Use promo code ROB50
- MicroConf Connect | Community for Bootstrapped SaaS founders
- Harris Kenny | LinkedIn
- Rob’s Weekly Newsletter
- The SaaS Playbook
- TinySeed
- Startups for the Rest of Us | YouTube
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
Subscribe & Review: iTunes | Spotify
Rob Walling: It’s another episode of Startups for the Rest of Us. I’m your host, Rob Walling. And in this episode, I talk about the future of SaaS in an AI world. And this topic has been floating around the internet as people are talking about SaaS being dead or asking if SaaS is going to exist in five years. And I’ve actually received multiple listener questions and I’ll read one of those in a second that’s asking this exact question. Before we dive in, I have a couple quick MicroConf announcements. First, Early Bird tickets for our next MicroConf are officially on sale. We’re heading to Austin, Texas, April 18th through the 20th of 2027 for three days of world-class talks, meaningful conversations with other founders, and some great excursions around the city. If you’re thinking about joining us, now’s the time to grab your ticket. Early Bird is the lowest priced ticket tier we’ll offer and the prices will only go up as we get closer to the event.
Plus, producer Sonya gave me the promo code Rob50, that’s Rob50, which gives listeners of this podcast an additional discount at checkout. MicroConf events consistently sell out and I expect Austin to be no different. Head to microconf.com/us and reserve your spot. Also, I want to let you know that if you’re a MicroConf Connect member, we’re going live next week with Harris Kenny, who you may remember from TinySeed Tales season five. Tracy Osborn is sitting down with Harris for a fireside chat and they’re going to talk about mindset and bias toward action, what that actually looks like day to day, how to know when to push through versus change course and the small habits that can pull you out of a funk. It’s the kind of conversation that you will not find anywhere else. And if you’re not a member, we’d love to have you. It’s at microconfconnect.com.
MicroConf Connect is the year-round version of our hallway track from our in-person events. It’s our vetted online community of founders having the kinds of conversations you can’t have with just anyone. These are the wins, the struggles, the, quote, “Am I the only one dealing with this?” moments. And live sessions like this one are just one of the perks. If you’re interested, microconfconnect.com to apply.
Let’s dive into the future of SaaS in an AI world. This question was a simple reply to my robwalling.com email. So if you go to robwalling.com/emails, you can sign up to receive a weekly email from me. And a reader responded and said, “What’s the future of SaaS companies now that AI makes it easier than ever to build and copy a product?” And this, as I said at the top, is a variation of questions I’m seeing all over the internet. And I have received other versions of this on this show. And so I really wanted to sit down today and try to give as much of a definitive answer as I can to this question. So what is the future of SaaS now that AI makes it easy to build and copy SaaS products? I’m going to start by giving a short answer in four words.
The future of SaaS is SaaS. And now I want to show you why. But before I do that, one rule for how to listen to anyone on this topic, including me, is to be very careful with anyone who tells you something is dead because we have heard this song before. In 2000 after the dot-com crash, the media told us the internet was done, over. Nothing left to build. They said this on the internet. I don’t know if you weren’t alive then or weren’t paying attention, it was so pervasive and just a given that the internet was never going to be worth anything. And then mobile and iOS were going to kill the web in, I don’t remember, ’08, ’09. It was going away. That didn’t happen. Then blockchain and Web3 were going to kill everything. I lost track of exactly what it was going to kill, but it didn’t happen.
Maybe the web, I don’t even remember. No code was going to kill software development. Everybody’s going to build their own apps. Nobody needs engineers. It didn’t happen. There are other examples. And now AI, the new technology is going to kill SaaS. So it’s the same song. It’s a new verse. Here’s the thing I see about people saying it. Most of them, not all of them, but I would say the vast majority, 80, 90 plus percent of them have never built a SaaS company. And actually, I wouldn’t be surprised if 95% of them have never built any company. Saying X is dead is a way to get free clicks. It’s a way to get eyeballs for declaring something outlandish and nobody comes back to check if you are right or wrong. So just be very careful. If you hear this message every day from some new chucklehead on the internet, they’re still a chucklehead.
Just because a lot of people are saying it doesn’t mean that they’re right. Calibrate accordingly. It’s social media. Pick who you’re going to listen to. Usually things are not dying or dead, but to be fair, there’s a real version of this argument and I break it down into four separate claims that I’m going to talk through individually. The first one is that everyone is going to self-host their own custom app that they either vibe code or build with AI. The idea here is that in addition to, let’s say you’re a SaaS company and you pay for SaaS subscriptions, that you’re going to vibe code or code all of those apps, custom host them. And maybe that the dentist down the street is also going to build their own practice management software and self-host it. So that’s kind of argument number one. Point number two is that any app can be replicated in a day.
I’ve heard people say in a week, in a month, in some short timeframe so that there’s no moat and that copying an app is free. The third claim is that agents are going to replace everything, that they’re going to do all the work and so we won’t need SaaS apps anymore. And the fourth claim is that AI is going to mean infinite competition, that everyone can build an app now. So there’s going to be 10,000 different email service providers and 5,000 different CRMs because everyone can vibe code one and that you’re actually going to have infinity competition so that you can’t possibly compete. And I’m going to take all four of those in order and talk through them and talk through why I don’t believe any of them is the death of SaaS and even why all combined they’re not going to kill SaaS. So let’s start with the custom app and self-hosting your own tools because I feel like this one’s relatively easy to knock down.
At MicroConf and TinySeed, for example, we pay for, and I’m going to just take a wild guess, 50 subscriptions, 50 SaaS products, Dropbox and Google Workspace and whatever else. Maybe it’s a hundred. It doesn’t really matter, but it’s a lot. Who in their right mind is going to AI code and host 50 SaaS apps? The idea that we would rebuild all of these ourselves is fucking insane. It would be a catastrophic use of our time. And that’s not just because we ourselves are not a software company. If we were a SaaS company, even if we were building software and that’s literally what we do, it’s still a catastrophic use of your time because you should be making far more money specializing in what you’re good at than reinventing 50 tools that already exist and work. I’ve said this on the show before. There are only two legitimate reasons to build your own versions of an app, like to vibe code it.
One is to save money and that’s only if it’s really expensive. Let’s say something is $10,000 a year, 20 grand a year, and you think you can cut that by 90% or 95%. The second one is customization. No app on the market does what you need it to do. So I want to talk through the saving money. It almost never holds up if you’re growing because you’ve heard me talk about this before and I’m about to record a voice sample that we can just copy paste into future episodes so I can stop saying this like a broken record. But if you are growing as a SaaS company by $1,000 of MRR in a month, we take that multiply by 12 to get the ARR growth, so 12,000. And if you were to sell at a 5X ARR multiple, that’s $60,000 of net worth that you created in a single month from $1,000 of MRR growth.
And if you sell at a 10X ARR multiple, which is ambitious, I will say that’s high, but I’m trying to give you the idea here. That’s $120,000. So ask yourself, should you spend 20, 40, 60, 80 hours coding something to save you $5,000 a year or $10,000 a year? Or should you put that time and energy into growing your SaaS top line by a thousand MRR to create that 60 or $120,000 of enterprise value? It’s not even close. Building to save money is a rounding error. It’s a bad decision next to just building your actual business. The only time I can think of when this might be worth it is if you’ve been flat for a very long time, your business isn’t actually worth that much and you really are kind of milking it for cash. Some people will do that. That’s the thing. Each of these times I’m going to say, oh, some people will do that.
And we don’t know how many some is. Is that 2%, 5%, 10% of companies? It’s a small number. This is not 80% of companies. So when we talk about building to save money, there’s going to be a small subset of companies that should do that. In addition, if we talk about building for customization, there will be a small subset of companies that do that, but not that many companies are going to want to build something and maintain it. That’s super customizable. I’m seeing some people do this with CRMs. Maybe that is a particular product category that gets hit really strongly, but is that going to happen to your email service provider? Are you going to really gear up all of the sending infrastructure to replicate an ActiveCampaign or a Drip or a Mailchimp? If it’s sending SMS messages, if it’s doing any type of just the complexity of all of this, it’s like, this is a bad decision.
(10:29): Don’t do it. And then the last piece of this is in this example, I’m talking about a lot of SaaS companies doing this and we know how to build software, but what about the construction firm and the dentist and the YMCA down the street or the gym, the martial arts dojo, the real estate agent, the psychologist or mental health clinic, the manufacturing company, the beverage factory? These are all examples by the way. Everything I’ve just said are examples of companies that TinySeed portfolio companies serve. Imagine those companies vibe coding and hosting their own app. They get to keep it secure. They get to keep it updated. They get to host it. They get to back it up. They get to own it forever, maintain it, add features. Do you think they want to do that to save, again, what’s the number? Five grand, 10 grand, 20 grand a year?
They don’t. So that is my rebuttal to the self-hosting fantasy. I think a lot of us on the internet who are technical think a lot of people are going to do things that they really don’t want to do. Claim number two is that anyone can clone your app in a day. And here’s the dirty secret about copying an app. People could always clone your app. This isn’t new. With Drip, we had competitors from, I don’t know, month five after we launched. Every app that I’ve ever built has been copied. In fact, almost every company I’ve built has been copied, including MicroConf and TinySeed. Cloning the software was never the hard part. Getting someone to know you exist, to trust you with their business, to switch off what they’re already using and to stay for years is the hard part. AI writes the code. It does not write your distribution.
It does not do your marketing no matter what people on the internet think. It does not build your brand. It does not build your reputation. It does not build your customer relationships. A clone with little or no distribution is a folder on someone’s laptop. It always was. The moat was never the code. It was everything you added to the code. I’ve been saying this on the show for 16 years. AI has just made the obvious part the lowest risk part of building. It’s made it faster. So notice what that means. The founders who are panicking are the ones who thought their code was the moat. I hope you don’t think your code is the moat or have ever thought it was a moat. I literally called this out four years ago in The SaaS Playbook and I said false moats in SaaS are features, meaning code.
They’re false moats. You think they’re a moat, but anyone can replicate your features. AI just allows them to do it a little bit faster. So the founders who were panicking are the ones who thought their code was the moat. They were already in trouble. AI did not create this problem. It just exposes it and maybe makes it a little worse for those folks who aren’t willing to learn how to market and sell. Claim number three is that agents will just do the work. So this one’s more interesting. And the honest answer for me is that agents are going to do some of the work. We come back to this some. How much is that? Is it 2%, 5%, 10%? Agents are not going to do 80% of the work on their own. Some workflows will get absorbed into agents. That’s a real thing. If the product was the workflow, meaning a thin layer moving data from A to B, an agent might eat it.
So there is a class, a category of apps that is probably going to get absorbed by agents. Now people are going to pay for agents. So if we say SaaS is dead, but agents, which are just software, are going to now be something that you pay for on a recurring basis, that still fits my definition of SaaS. My definition of SaaS is subscription software where software provides the bulk of the value and an agent is still just SaaS. So it’s literally like taking money from one bucket, putting it in bucket B, but those two are still in bucket C. They’re both all contained in a bigger container. That’s how this looks. People will still pay for that. They don’t want to build all their own agents. In addition, agents are only going to eat some of these workflows. I believe most workflows will not get absorbed.
And the reason is because agents have to act somewhere. The dentist’s agent still needs a system of record, patient data, scheduling, billing, insurance, compliance. They want it to be durable. They want it to be secure. They want it to be accountable and they don’t want to lose data or break the law. And an agent floating in space is useless to them because it needs a backend to act on. So agents aren’t going to kill SaaS. They need SaaS. They actually increase the demand for good APIs, whether it’s CLIs, MCPs, however we want to look at it. Yeah, I get it. There’s some uncertainty these days. But underlying those is still going to be a lot of SaaS that has structured data that’s a reliable system of record. So for a whole category of SaaS, agents are actually going to be a boon, going to be an accelerant, not something that slows them down.
The future to me is not agents instead of SaaS, it’s agents on top of SaaS. And there are going to be a lot of SaaS founders who are going to build agents into their own SaaS. So it just becomes part of the SaaS subscription. I think it’s going to be a very common model. So if I owned an email service provider, I should probably let other agents interact with it, but should I also build one inside of my own SaaS and potentially charge for it, include it in my subscription, whatever I do? Yeah, probably. And whether they’re using my agent with my product or an external agent, somebody still has to own and run the thing underneath and that’s SaaS and that someone is going to get paid. The fourth claim is that there’s going to be infinite competition. So why should I even start?
So everyone can code an app now and there’ll be a thousand email service providers or 10,000. Why should I start one? How do you even compete? Two answers of course are it was never about building. It’s always been about distribution, which I’ve already said in point two above. The winners are always the ones who figure out how to market, sell, et cetera. But the second part of this is that I don’t know about you, but the vibe coded apps that I see, the competitors who come in on the, I’ll just say it’s like a get rich quick thing of like, oh, I can vibe code an app, so I’m going to vibe code an ESP because there’s a lot of them. They just seem to drop off the face of the earth very quickly. The people spinning up an app over the weekend with no idea what they’re doing on the tech side, they’re the least experienced entrepreneurs.
They’re the least experienced people in the market. They don’t know how to get traction. They don’t know how to sell. They don’t know how to support customers. And the vast majority of them I think are going to quit the moment it gets hard because they’re doing it because they think it’s easy. So that’s not the competition I would be scared of. It’s the competition that I think is going to evaporate. More apps getting built is not going to mean more companies getting built because those are two different things. So I’m not here to tell you that nothing is changing. That makes me the mirror image of the doomers. The extreme everything’s dead, everything’s going to change or nothing is going to change. Neither of those extremes make sense. Some things genuinely are going to get squeezed. Consumer and prosumer apps specifically I think are going to take a big hit because consumers and prosumers are so cheap and they’ll blow a weekend coding something, vibe coding it to kill what, $100 a year subscription.
And that of course is one reason I never focus on B2C. It’s more true now, not less. In addition, I think simple single feature utilities are going to take a hit. They’re just easy to vibe code. The app that someone pays nine bucks a month or 50 bucks a year or even nine bucks one time to convert a PDF to a JPEG or turns a ZIP into a RAR, or I had an SEO keyword tool called HitTail that was kind of, it was like one feature with a few screens. I think you could build that in three or four days now. If your entire product is one feature, I think you’re exposed. And I’m sure there are some specific categories of apps, maybe it is CRMs that take a big hit for whatever reason because they’re overpriced and because you want your own data. That could be a thing that happens.
But I do not see this happening across the board the way some people are claiming. In fact, here’s the part I think that the pundits or whoever’s mouthing off about this, the doomers, the keyboard warriors get backwards, like precisely backwards. They seem to think AI is going to kill all SaaS or that it’s going to kill the little guy. I think it’s the opposite. The real SaaS apocalypse is the big companies, the big incumbents. They’re the ones who have raised their prices so much, maybe a little too much because they have to grow every quarter for Wall Street. So they have bloat, they have legacy, they have a customer base that’s probably quietly resentful about the last three price hikes. Those are the companies that people are now motivated to replace and AI just lowered the cost of building that replacement. But in my opinion, if you’re a bootstrapper or small SaaS or an upstart, you don’t have that baggage.
You don’t have the bloat, you don’t have the legacy, you don’t have to grow forever every quarter. You don’t have a code base and a board demanding you to do stuff. You can move fast. You can price fairly and you can go straight at an overpriced incumbent that’s lost the plot. That’s not a threat to you. I think it’s a huge opportunity for early stage bootstrappers. I think it’s honestly one of the biggest opportunities in years. So I think that the haircut isn’t coming for the new startups. I think it’s coming for the big slow moving overpriced incumbents. And startups are actually, if anything, have better tools these days to get to market and compete with the big incumbents. So as I said at the top when I first started this answer, what’s the future of SaaS now that AI allows you to build anything in a weekend?
The future of SaaS is not fewer companies. It’s a higher bar and SaaS doesn’t need to become something else to survive it. Doesn’t turn into agents, doesn’t dissolve into everybody’s weekend side project. It stays what it is. The future of SaaS I believe is SaaS. And I do think that table stakes features are going to be commoditized faster than they ever have been. You can’t coast on a feature list anymore. You never really could, but it could buy you time. What’s non-copyable these days is what it always was. Owning a market, a brand, a distribution channel, and the trust that you earned by being there for years and keeping data safe, answering support, building a customer base that loves you. If your only asset has been code or features, be nervous. If you’re a commodity, your code just got cheap and so did your competitor’s code.
But if you are building a company, as I talk about on this show and have for 16 years, this is one of the best times there’s ever been to do it because the stuff you can’t copy, reputation, relationships, your network, your marketing channels, maybe even your audience matters more now I think than it ever has. And the incumbents who forget that are frankly about to find out. So the internet was not dead in 2000 and SaaS is not dead in 2026. The future of SaaS in this day and age is still SaaS. It just belongs to the people who are building real companies all along. So thanks for that question to all who have asked it. And I guess my hope for this episode is I hope you’ll listen to it and absorb it and use it as something to help quell some of the fears that you might be feeling and also to share it with someone the next time that they tell you that SaaS is dead and you ask them for their source and they say, “Oh, it’s some clown who’s never built a company.” It’s like, why would we listen to them?
Or they say it’s the public markets and we say, “Why would we listen to them? We’re not public SaaS companies.” And frankly, the public markets can be wrong. They are betting on the future, but they can be wrong. And I think that the bootstrappers are in a great position to take advantage of this. If you want to share this episode, obviously you can come to startupsfortherestofus.com and search for episode 842, or you can go to YouTube and search for it. And it does not include full video, but it is an easily shareable link. There are a lot of things that are changing and that scares some people. And when things change, some people think, “Well, that just means everything is dead and we’re just paving over the old and moving on with the new.” And I genuinely do not believe that’s the case. And it’s not just because I’ve been doing SaaS for almost 20 years now.
Because if there is a new thing, I’d be well poised to jump on it. And especially if that new thing is software that people charge subscriptions for, whatever it’s called, you know that I’m going to be talking about it and you know that I’m going to be paying attention and trying to bring everything that I learn about it to you on this show. So thanks for listening to me today, talking about the future of SaaS in an AI world. I appreciate you listening this week and every week. This is Rob Walling signing off from episode 842.
Plus, producer Sonya gave me the promo code Rob50, that’s Rob50, which gives listeners of this podcast an additional discount at checkout. MicroConf events consistently sell out and I expect Austin to be no different. Head to microconf.com/us and reserve your spot. Also, I want to let you know that if you’re a MicroConf Connect member, we’re going live next week with Harris Kenny, who you may remember from TinySeed Tales season five. Tracy Osborn is sitting down with Harris for a fireside chat and they’re going to talk about mindset and bias toward action, what that actually looks like day to day, how to know when to push through versus change course and the small habits that can pull you out of a funk. It’s the kind of conversation that you will not find anywhere else. And if you’re not a member, we’d love to have you. It’s at microconfconnect.com.
MicroConf Connect is the year-round version of our hallway track from our in-person events. It’s our vetted online community of founders having the kinds of conversations you can’t have with just anyone. These are the wins, the struggles, the, quote, “Am I the only one dealing with this?” moments. And live sessions like this one are just one of the perks. If you’re interested, microconfconnect.com to apply.
Let’s dive into the future of SaaS in an AI world. This question was a simple reply to my robwalling.com email. So if you go to robwalling.com/emails, you can sign up to receive a weekly email from me. And a reader responded and said, “What’s the future of SaaS companies now that AI makes it easier than ever to build and copy a product?” And this, as I said at the top, is a variation of questions I’m seeing all over the internet. And I have received other versions of this on this show. And so I really wanted to sit down today and try to give as much of a definitive answer as I can to this question. So what is the future of SaaS now that AI makes it easy to build and copy SaaS products? I’m going to start by giving a short answer in four words.
The future of SaaS is SaaS. And now I want to show you why. But before I do that, one rule for how to listen to anyone on this topic, including me, is to be very careful with anyone who tells you something is dead because we have heard this song before. In 2000 after the dot-com crash, the media told us the internet was done, over. Nothing left to build. They said this on the internet. I don’t know if you weren’t alive then or weren’t paying attention, it was so pervasive and just a given that the internet was never going to be worth anything. And then mobile and iOS were going to kill the web in, I don’t remember, ’08, ’09. It was going away. That didn’t happen. Then blockchain and Web3 were going to kill everything. I lost track of exactly what it was going to kill, but it didn’t happen.
Maybe the web, I don’t even remember. No code was going to kill software development. Everybody’s going to build their own apps. Nobody needs engineers. It didn’t happen. There are other examples. And now AI, the new technology is going to kill SaaS. So it’s the same song. It’s a new verse. Here’s the thing I see about people saying it. Most of them, not all of them, but I would say the vast majority, 80, 90 plus percent of them have never built a SaaS company. And actually, I wouldn’t be surprised if 95% of them have never built any company. Saying X is dead is a way to get free clicks. It’s a way to get eyeballs for declaring something outlandish and nobody comes back to check if you are right or wrong. So just be very careful. If you hear this message every day from some new chucklehead on the internet, they’re still a chucklehead.
Just because a lot of people are saying it doesn’t mean that they’re right. Calibrate accordingly. It’s social media. Pick who you’re going to listen to. Usually things are not dying or dead, but to be fair, there’s a real version of this argument and I break it down into four separate claims that I’m going to talk through individually. The first one is that everyone is going to self-host their own custom app that they either vibe code or build with AI. The idea here is that in addition to, let’s say you’re a SaaS company and you pay for SaaS subscriptions, that you’re going to vibe code or code all of those apps, custom host them. And maybe that the dentist down the street is also going to build their own practice management software and self-host it. So that’s kind of argument number one. Point number two is that any app can be replicated in a day.
I’ve heard people say in a week, in a month, in some short timeframe so that there’s no moat and that copying an app is free. The third claim is that agents are going to replace everything, that they’re going to do all the work and so we won’t need SaaS apps anymore. And the fourth claim is that AI is going to mean infinite competition, that everyone can build an app now. So there’s going to be 10,000 different email service providers and 5,000 different CRMs because everyone can vibe code one and that you’re actually going to have infinity competition so that you can’t possibly compete. And I’m going to take all four of those in order and talk through them and talk through why I don’t believe any of them is the death of SaaS and even why all combined they’re not going to kill SaaS. So let’s start with the custom app and self-hosting your own tools because I feel like this one’s relatively easy to knock down.
At MicroConf and TinySeed, for example, we pay for, and I’m going to just take a wild guess, 50 subscriptions, 50 SaaS products, Dropbox and Google Workspace and whatever else. Maybe it’s a hundred. It doesn’t really matter, but it’s a lot. Who in their right mind is going to AI code and host 50 SaaS apps? The idea that we would rebuild all of these ourselves is fucking insane. It would be a catastrophic use of our time. And that’s not just because we ourselves are not a software company. If we were a SaaS company, even if we were building software and that’s literally what we do, it’s still a catastrophic use of your time because you should be making far more money specializing in what you’re good at than reinventing 50 tools that already exist and work. I’ve said this on the show before. There are only two legitimate reasons to build your own versions of an app, like to vibe code it.
One is to save money and that’s only if it’s really expensive. Let’s say something is $10,000 a year, 20 grand a year, and you think you can cut that by 90% or 95%. The second one is customization. No app on the market does what you need it to do. So I want to talk through the saving money. It almost never holds up if you’re growing because you’ve heard me talk about this before and I’m about to record a voice sample that we can just copy paste into future episodes so I can stop saying this like a broken record. But if you are growing as a SaaS company by $1,000 of MRR in a month, we take that multiply by 12 to get the ARR growth, so 12,000. And if you were to sell at a 5X ARR multiple, that’s $60,000 of net worth that you created in a single month from $1,000 of MRR growth.
And if you sell at a 10X ARR multiple, which is ambitious, I will say that’s high, but I’m trying to give you the idea here. That’s $120,000. So ask yourself, should you spend 20, 40, 60, 80 hours coding something to save you $5,000 a year or $10,000 a year? Or should you put that time and energy into growing your SaaS top line by a thousand MRR to create that 60 or $120,000 of enterprise value? It’s not even close. Building to save money is a rounding error. It’s a bad decision next to just building your actual business. The only time I can think of when this might be worth it is if you’ve been flat for a very long time, your business isn’t actually worth that much and you really are kind of milking it for cash. Some people will do that. That’s the thing. Each of these times I’m going to say, oh, some people will do that.
And we don’t know how many some is. Is that 2%, 5%, 10% of companies? It’s a small number. This is not 80% of companies. So when we talk about building to save money, there’s going to be a small subset of companies that should do that. In addition, if we talk about building for customization, there will be a small subset of companies that do that, but not that many companies are going to want to build something and maintain it. That’s super customizable. I’m seeing some people do this with CRMs. Maybe that is a particular product category that gets hit really strongly, but is that going to happen to your email service provider? Are you going to really gear up all of the sending infrastructure to replicate an ActiveCampaign or a Drip or a Mailchimp? If it’s sending SMS messages, if it’s doing any type of just the complexity of all of this, it’s like, this is a bad decision.
(10:29): Don’t do it. And then the last piece of this is in this example, I’m talking about a lot of SaaS companies doing this and we know how to build software, but what about the construction firm and the dentist and the YMCA down the street or the gym, the martial arts dojo, the real estate agent, the psychologist or mental health clinic, the manufacturing company, the beverage factory? These are all examples by the way. Everything I’ve just said are examples of companies that TinySeed portfolio companies serve. Imagine those companies vibe coding and hosting their own app. They get to keep it secure. They get to keep it updated. They get to host it. They get to back it up. They get to own it forever, maintain it, add features. Do you think they want to do that to save, again, what’s the number? Five grand, 10 grand, 20 grand a year?
They don’t. So that is my rebuttal to the self-hosting fantasy. I think a lot of us on the internet who are technical think a lot of people are going to do things that they really don’t want to do. Claim number two is that anyone can clone your app in a day. And here’s the dirty secret about copying an app. People could always clone your app. This isn’t new. With Drip, we had competitors from, I don’t know, month five after we launched. Every app that I’ve ever built has been copied. In fact, almost every company I’ve built has been copied, including MicroConf and TinySeed. Cloning the software was never the hard part. Getting someone to know you exist, to trust you with their business, to switch off what they’re already using and to stay for years is the hard part. AI writes the code. It does not write your distribution.
It does not do your marketing no matter what people on the internet think. It does not build your brand. It does not build your reputation. It does not build your customer relationships. A clone with little or no distribution is a folder on someone’s laptop. It always was. The moat was never the code. It was everything you added to the code. I’ve been saying this on the show for 16 years. AI has just made the obvious part the lowest risk part of building. It’s made it faster. So notice what that means. The founders who are panicking are the ones who thought their code was the moat. I hope you don’t think your code is the moat or have ever thought it was a moat. I literally called this out four years ago in The SaaS Playbook and I said false moats in SaaS are features, meaning code.
They’re false moats. You think they’re a moat, but anyone can replicate your features. AI just allows them to do it a little bit faster. So the founders who were panicking are the ones who thought their code was the moat. They were already in trouble. AI did not create this problem. It just exposes it and maybe makes it a little worse for those folks who aren’t willing to learn how to market and sell. Claim number three is that agents will just do the work. So this one’s more interesting. And the honest answer for me is that agents are going to do some of the work. We come back to this some. How much is that? Is it 2%, 5%, 10%? Agents are not going to do 80% of the work on their own. Some workflows will get absorbed into agents. That’s a real thing. If the product was the workflow, meaning a thin layer moving data from A to B, an agent might eat it.
So there is a class, a category of apps that is probably going to get absorbed by agents. Now people are going to pay for agents. So if we say SaaS is dead, but agents, which are just software, are going to now be something that you pay for on a recurring basis, that still fits my definition of SaaS. My definition of SaaS is subscription software where software provides the bulk of the value and an agent is still just SaaS. So it’s literally like taking money from one bucket, putting it in bucket B, but those two are still in bucket C. They’re both all contained in a bigger container. That’s how this looks. People will still pay for that. They don’t want to build all their own agents. In addition, agents are only going to eat some of these workflows. I believe most workflows will not get absorbed.
And the reason is because agents have to act somewhere. The dentist’s agent still needs a system of record, patient data, scheduling, billing, insurance, compliance. They want it to be durable. They want it to be secure. They want it to be accountable and they don’t want to lose data or break the law. And an agent floating in space is useless to them because it needs a backend to act on. So agents aren’t going to kill SaaS. They need SaaS. They actually increase the demand for good APIs, whether it’s CLIs, MCPs, however we want to look at it. Yeah, I get it. There’s some uncertainty these days. But underlying those is still going to be a lot of SaaS that has structured data that’s a reliable system of record. So for a whole category of SaaS, agents are actually going to be a boon, going to be an accelerant, not something that slows them down.
The future to me is not agents instead of SaaS, it’s agents on top of SaaS. And there are going to be a lot of SaaS founders who are going to build agents into their own SaaS. So it just becomes part of the SaaS subscription. I think it’s going to be a very common model. So if I owned an email service provider, I should probably let other agents interact with it, but should I also build one inside of my own SaaS and potentially charge for it, include it in my subscription, whatever I do? Yeah, probably. And whether they’re using my agent with my product or an external agent, somebody still has to own and run the thing underneath and that’s SaaS and that someone is going to get paid. The fourth claim is that there’s going to be infinite competition. So why should I even start?
So everyone can code an app now and there’ll be a thousand email service providers or 10,000. Why should I start one? How do you even compete? Two answers of course are it was never about building. It’s always been about distribution, which I’ve already said in point two above. The winners are always the ones who figure out how to market, sell, et cetera. But the second part of this is that I don’t know about you, but the vibe coded apps that I see, the competitors who come in on the, I’ll just say it’s like a get rich quick thing of like, oh, I can vibe code an app, so I’m going to vibe code an ESP because there’s a lot of them. They just seem to drop off the face of the earth very quickly. The people spinning up an app over the weekend with no idea what they’re doing on the tech side, they’re the least experienced entrepreneurs.
They’re the least experienced people in the market. They don’t know how to get traction. They don’t know how to sell. They don’t know how to support customers. And the vast majority of them I think are going to quit the moment it gets hard because they’re doing it because they think it’s easy. So that’s not the competition I would be scared of. It’s the competition that I think is going to evaporate. More apps getting built is not going to mean more companies getting built because those are two different things. So I’m not here to tell you that nothing is changing. That makes me the mirror image of the doomers. The extreme everything’s dead, everything’s going to change or nothing is going to change. Neither of those extremes make sense. Some things genuinely are going to get squeezed. Consumer and prosumer apps specifically I think are going to take a big hit because consumers and prosumers are so cheap and they’ll blow a weekend coding something, vibe coding it to kill what, $100 a year subscription.
And that of course is one reason I never focus on B2C. It’s more true now, not less. In addition, I think simple single feature utilities are going to take a hit. They’re just easy to vibe code. The app that someone pays nine bucks a month or 50 bucks a year or even nine bucks one time to convert a PDF to a JPEG or turns a ZIP into a RAR, or I had an SEO keyword tool called HitTail that was kind of, it was like one feature with a few screens. I think you could build that in three or four days now. If your entire product is one feature, I think you’re exposed. And I’m sure there are some specific categories of apps, maybe it is CRMs that take a big hit for whatever reason because they’re overpriced and because you want your own data. That could be a thing that happens.
But I do not see this happening across the board the way some people are claiming. In fact, here’s the part I think that the pundits or whoever’s mouthing off about this, the doomers, the keyboard warriors get backwards, like precisely backwards. They seem to think AI is going to kill all SaaS or that it’s going to kill the little guy. I think it’s the opposite. The real SaaS apocalypse is the big companies, the big incumbents. They’re the ones who have raised their prices so much, maybe a little too much because they have to grow every quarter for Wall Street. So they have bloat, they have legacy, they have a customer base that’s probably quietly resentful about the last three price hikes. Those are the companies that people are now motivated to replace and AI just lowered the cost of building that replacement. But in my opinion, if you’re a bootstrapper or small SaaS or an upstart, you don’t have that baggage.
You don’t have the bloat, you don’t have the legacy, you don’t have to grow forever every quarter. You don’t have a code base and a board demanding you to do stuff. You can move fast. You can price fairly and you can go straight at an overpriced incumbent that’s lost the plot. That’s not a threat to you. I think it’s a huge opportunity for early stage bootstrappers. I think it’s honestly one of the biggest opportunities in years. So I think that the haircut isn’t coming for the new startups. I think it’s coming for the big slow moving overpriced incumbents. And startups are actually, if anything, have better tools these days to get to market and compete with the big incumbents. So as I said at the top when I first started this answer, what’s the future of SaaS now that AI allows you to build anything in a weekend?
The future of SaaS is not fewer companies. It’s a higher bar and SaaS doesn’t need to become something else to survive it. Doesn’t turn into agents, doesn’t dissolve into everybody’s weekend side project. It stays what it is. The future of SaaS I believe is SaaS. And I do think that table stakes features are going to be commoditized faster than they ever have been. You can’t coast on a feature list anymore. You never really could, but it could buy you time. What’s non-copyable these days is what it always was. Owning a market, a brand, a distribution channel, and the trust that you earned by being there for years and keeping data safe, answering support, building a customer base that loves you. If your only asset has been code or features, be nervous. If you’re a commodity, your code just got cheap and so did your competitor’s code.
But if you are building a company, as I talk about on this show and have for 16 years, this is one of the best times there’s ever been to do it because the stuff you can’t copy, reputation, relationships, your network, your marketing channels, maybe even your audience matters more now I think than it ever has. And the incumbents who forget that are frankly about to find out. So the internet was not dead in 2000 and SaaS is not dead in 2026. The future of SaaS in this day and age is still SaaS. It just belongs to the people who are building real companies all along. So thanks for that question to all who have asked it. And I guess my hope for this episode is I hope you’ll listen to it and absorb it and use it as something to help quell some of the fears that you might be feeling and also to share it with someone the next time that they tell you that SaaS is dead and you ask them for their source and they say, “Oh, it’s some clown who’s never built a company.” It’s like, why would we listen to them?
Or they say it’s the public markets and we say, “Why would we listen to them? We’re not public SaaS companies.” And frankly, the public markets can be wrong. They are betting on the future, but they can be wrong. And I think that the bootstrappers are in a great position to take advantage of this. If you want to share this episode, obviously you can come to startupsfortherestofus.com and search for episode 842, or you can go to YouTube and search for it. And it does not include full video, but it is an easily shareable link. There are a lot of things that are changing and that scares some people. And when things change, some people think, “Well, that just means everything is dead and we’re just paving over the old and moving on with the new.” And I genuinely do not believe that’s the case. And it’s not just because I’ve been doing SaaS for almost 20 years now.
Because if there is a new thing, I’d be well poised to jump on it. And especially if that new thing is software that people charge subscriptions for, whatever it’s called, you know that I’m going to be talking about it and you know that I’m going to be paying attention and trying to bring everything that I learn about it to you on this show. So thanks for listening to me today, talking about the future of SaaS in an AI world. I appreciate you listening this week and every week. This is Rob Walling signing off from episode 842.
Episode 841 | One-time Payments, Growing a Step 2 Business, Positioning, and More Listener Questions (Rob Solo)
/
RSS Feed
Should you keep pouring time into a business that will probably never be huge?
In this episode, Rob Walling answers listener questions about whether to keep growing a “step two” B2C business despite platform risk, when one-time payments make sense versus subscriptions, and how to price and position a Shopify app that needs custom implementation work.
Want to get your question answered? Drop it here.
Episode Sponsor:
What if you could go from idea to your first real user in 30 days?
Not a prototype, not a promise, but an actual working app. Designli will put that in writing.
Their TractionLab is a 90-day plan that takes you from idea to first paying customers. By Day 30, v1 of your app is in your users’ hands, guaranteed. Miss that deadline and your next month is free.
It starts with a free 30-minute call where you share your idea and they tell you exactly what they’ll build and what it costs. No surprises.
You get a full senior team: product owner, engineering lead, full-stack developer, senior UX designer, and solutions architect. They use AI to ship faster, but senior engineers own every architecture decision and review every line of code. The result is yours, and it’s built to last.
Go from idea to revenue in 90 days: designli.co/gettraction
Topics we cover:
- (2:06) – Growing a “step two” business
- (5:11) – Momentum vs. market size
- (9:16) – One-time payments vs. subscriptions
- (15:11) – Why recurring revenue teaches faster
- (18:22) – Mixing one-time and subscription pricing
- (20:28) – Pricing a custom Shopify app
- (22:31) – Building a $49 vs. $249 tier
- (24:47) – Protecting margin on custom work
Links from the show:
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
Subscribe & Review: iTunes | Spotify
Rob Walling: This is Startups for the Rest of Us. I’m Rob Walling. In this episode, I answer your listener questions, some really good listener questions today about one-time payments versus subscriptions, the positioning and pricing of a Shopify bundle, a question about a step two business, and more. I’m really excited to get back on the microphone today after an almost three-week break, as my wife, kids, and I went to Japan. We had a great time. It was our first trip there, and this is my first episode back recording. Before we dive into the episode, I want to tell you about TinySeed’s SaaS Institute. You’ve heard me say that being a founder means making hard decisions with incomplete information, but for most founders, you’re running a company this size for the first time. And as the decisions get bigger, so do the consequences. That’s where it helps to have a sounding board.
Someone who can tell you whether you’re on track or about to waste six months on the wrong thing. And that’s why we’ve built SaaS Institute. You get a dedicated coach who scaled B2B SaaS to eight figures, a mastermind of other founders at your stage, and direct access to experts in growth, sales, product, and finance. Everything you need to help break through your next plateau. Just ask James Rose, the founder of Content Snare. Here’s how he put it. “When I joined, we were at around 10 people, and the biggest problem was just trying to work out what was next. When you’re so close to the business, it’s easy to get stuck in your ways and develop blind spots, so I needed fresh eyes. My coach helped me solve that. Every month we’d work out the next most important thing, and when you’ve been going at it alone for a long time, it’s amazing to have a peer group whom you can ask questions of who’ve already solved this exact problem before.”
If you’re doing a million or more, and whether you’re B2B or B2C, we’d love to work with you. If you’re feeling a bit stuck like James was, head to saasinstitute.com to learn more and apply if it’s a good fit.
Let’s dive into my first listener question from James [VERIFY: “Gafer” – unsure of spelling]. James actually responded to an email that I sent out to my list, robwalling.com/emails. If you’re interested in getting a mostly weekly essay on thoughts that I have, a lot of which don’t appear in the other formats, don’t appear on YouTube, don’t appear in the podcast. It’s just deeper thought pieces around aspects of building, launching, and growing a startup. It does have a B2C element, but if you listen through it, you’ll realize why I decided to answer it. James says, “Hey Rob, longtime listener of the pod. I love it, and I’ve learned so much. The biggest problem facing me these days is determining how far to take my current business. I run a Discord bot called Apollo, which helps online communities organize events, and that’s at Apollo.fyi. In a lot of ways, this has step two written all over it.
B2C/prosumer, with perhaps a handful of businesses using it. Freemium, relatively high churn, about 6%, and a low price point, $6 a month, soon to be $8 a month. Despite all that, COVID was kind to my business, demand for online events was way up. I get about 200 people adding the app to Discord a day, and the app has strong virality built in.” He put that in quotes. If you read SaaS Playbook, I talk about strong and weak virality. I appreciated the nod. James says everyone who signs up for an event is interacting with the app, and that’s the viral loop. He tells me his MRR. I’m not going to disclose it here on the show. Suffice to say, it is more than a full-time income in the United States. Usually that mark I put at $10,000 a month, and he is a bit north of that.
And he says, “With a price hike next week, it should result in another 30 to 40% increase in MRR, as I am raising on my existing customers.” Price increases for the win. James continues, “I have more ideas for growth. I believe there is a market for a higher tier plan at $25 a month, and I know what I want to build for it. Expanding into ticketed/paid events is another idea. Reducing the value of my free plan is another. At the end of the day, I’m making more money than I would in a day job, and I’m primed to increase that even more, thanks in no small part to your excellent advice on navigating pricing. But there’s a not-so-quiet voice in the back of my head that’s always whispering to me about platform risk, consumer churn, and the fact that this vertical is never going to be a massive business.”
“In other words, it’s not B2B. I think a lot of this comes down to managing my own psychology,” which he also put in quotes. Sometimes I like it when people quote me back to myself. Other times it’s unnerving, when I’m like, “Oh, did I say that?” But James continues, “I think a lot of this comes down to managing my own psychology, and there’s a good chance I’m experiencing a lot of ‘grass is greener’ elsewhere, but it still weighs on me. Thanks so much for taking the time to answer this.” James and I had a little back-and-forth via email, and I got his permission to use his name and the app name on the show. Normally I would anonymize it if he and I hadn’t spoken about it in advance. Here’s the reason I wanted to answer this on the show: I have a pretty strong opinion about it.
A lot of the B2C/prosumer questions I get are about how to market it, and it’s things where it’s just like, don’t, just don’t do it. But James is onto something here. And so I wanted to take just a minute and give him, and you, my thoughts, so you can hear how I would think about this as a founder. Building something that gets traction is hard. If you’ve never done it, it’s really hard. If you’ve done it before, you forget how hard it is to get something into market and get new customers. Getting people interested from a cold start, no matter how much experience, backing, interest you have, it’s still hard, and it’s harder than you remember. So if I had something that had momentum, even if it was a B2C prosumer business, it was growing, and I still had more ideas, and that was the key sentence in this entire email, James says, “I do have more ideas for growth,” and then listed three ideas that I think are all perfectly possible, perfectly viable, that they might be able to grow this business by 50%, 100% in the next six to twelve months.
Every idea he mentioned, I was like, “Yeah, I would probably try that too.” So since you have those ideas, that’s the direction that I would lean. As always, you have to make your own choice based on the information you have, but it does feel to me like you want to keep going on this. I guess the worst case, there’s a couple of worst cases. One is you try all three of those things, you spend the next six to twelve months giving it your all, and it doesn’t grow a lick, and it just is flat, and then you get to choose what to do next. That doesn’t sound that bad. To me, that has asymmetric upside, because if they do work, you’re going to grow, and you are going to significantly increase the enterprise value, be generating more profit, have a more stable business that you can then use, if you decide to, to go start or acquire that step three business.
The other worst case, I think, is that platform risk bites you, and overnight you go to zero. Again, I would just evaluate the likelihood of that, and if it’s extremely low, then that’s a risk that I would learn to live with. So thanks for that question, James. I hope it was helpful. My next question is about one-time payments versus subscriptions, and Rory writes in. “Hey Rob, a longtime listener. I’ve been thinking a lot about pricing strategy for an MVP and wanting to get your take. I’m planning to launch a new product soon, and instead of going straight into a SaaS subscription, I’m considering starting with a one-time payment. The goal would be to test demand, gather real customer feedback, and better understand what users actually need before committing to ongoing delivery and a recurring model. Do you see merit in using a one-time purchase as a validation step before transitioning into a subscription later on?
Trying to avoid locking myself into a model that requires constant new value before I truly understand usage patterns. Also curious about your thoughts on offering both at the same time. Is there ever a good stage where a one-off option and a subscription can coexist without confusing positioning or cannibalizing revenue? Would love to hear your perspective if this makes it into listener mail. Thanks for all your insights over the years. The show has been hugely helpful.” I used to be extremely black and white about one-time payments, and it was basically 100% a hard no, because, A, I think a lot of early-stage entrepreneurs use it as an excuse. It’s much like a free plan. “Well, I’ll make a free plan just so people will use it and I can get feedback,” and that’s usually a big mistake. One-time payments, when you’re building a SaaS product that does in fact need ongoing delivery, and it is recurring, and it needs to be hosted, and maybe you need to build new features, maybe not, but ongoing support and all that, it just doesn’t make sense.
My definition of SaaS from seven or eight episodes ago was subscription software where software provides most of the value. This is not subscription. So the desire for founders to do free plans, to underprice their product, hey, nine bucks a month for something that should probably be a hundred bucks a month, and to try to do one-time purchases in the early days, I think, is a crutch. And so my reaction to this has usually been 100%, just don’t do it. The only time I would consider it is when there’s some other benefit to it, like you’re doing an AppSumo deal. That’s a one-time payment, but you get the marketing push and the explosive nature of that email list. I forget how big their email list is, hundreds of thousands. It’s a lot of people, and you can in fact do an AppSumo deal and learn from it.
You get a big chunk of cash from it, a big chunk. It can be tens of thousands of dollars, and you then get to have folks use it and get feedback. Ruben did this with SignWell, and as far as I remember, he does not regret it, and he had a ton of learning from that. But he didn’t just go out and do one-time payments and post on Twitter and build a launch list and do it himself, because there was no other benefit. So that’s been my traditional stance. However, I have, over the past several years, as I like to do, taken in new data. I’m not a politician who needs to never change their mind because they get called a flip-flopper. I take in new information as it comes, and I try to adjust my thinking based on what I’m actually seeing in TinySeed companies, in MicroConf companies, in listeners of this podcast, and in the broader, mostly bootstrapped ecosystem.
And I have seen examples of this working. Youform.com. I sat and watched Davis Baer and his co-founder start Youform as a one-time payment and build it into a successful subscription product. And they still have a free plan and a $29 and an $89 plan, and I was skeptical at the start, and then they made it work, and I was like, “Well, good for you.” And maybe there have to be rules of thumb. You know when Ruben comes on the show and talks about his rules of thumb for when freemium might actually work, right? When it might be a good idea. There are probably some around this, and I just haven’t done enough one-time payments, or had enough exposure to them, to know what the “rules of thumb” are for when you should probably use them. But I think one of them might be that it’s kind of like freemium, where you probably should have a huge market, probably should have some virality built into it.
And likely, this is the third one I’m a little iffy on, I’m coming up with it on the fly, but I feel like if you’re already in an extremely competitive space, which Youform of course is, it’s a form builder and there are hundreds of these, so that one’s maybe, maybe not. But I do think of a one-time payment, if you think about it, it’s kind of like a free model. You just happen to get a payment upfront, and then you have free users for the rest of your ever-loving life that you’re supporting, which is one of the reasons I don’t like it. What if you could go from an idea to your first real user in 30 days? Not a prototype, not a promise, but an actual working app. Today’s sponsor, Designli, will put that in writing. Here’s their CEO, Keith Shields.
Keith Shields: Thanks, Rob. Most founders burn months before a single user ever shows up. We’ll put version one of your app in your user’s hands by day 30, guaranteed. And if we miss that, your next month is free. We call it the Traction Lab. It’s a 90-day plan that takes you all the way from idea to your first paying customer. We start with a 30-minute call where you share your idea, and we tell you exactly what we’ll build and what it costs, with no surprises. We can promise all of this because of our people, not our tooling. You get a full senior team focused on getting you traction: a product owner, an engineering lead, a full-stack developer, a senior UX designer, and a solutions architect. They use AI to ship faster, but senior engineers own every architecture decision and review every line of code. So the code is yours, and it’s built to last.
To go from idea to revenue in 90 days, check out designli.co/gettraction. That’s D-E-S-I-G-N-L-I.co/gettraction.
Rob Walling: As I look through the reasons that Rory mentioned for doing this, Rory said the goal would be to test demand. Maybe, but can’t you do that with a subscription? It feels like you can test demand with a subscription. Gather real customer feedback, which, can’t you do that with a subscription? I did it with Drip. Most people do it with a subscription, right? And better understand what users actually need, which I still think you can do with a subscription, before committing to ongoing delivery and a recurring model. But you are committing to ongoing delivery in a recurring model, not a recurring payment model, but ongoing delivery. This has to be up next month, or else you’ve scammed those people. So just because they paid you once doesn’t mean you can shut it down in three months and be okay with it. I tell you what, it’s more kind to the users if they’re paying you monthly and suddenly you disappear, because at least then they haven’t paid you for a year’s worth of usage, or two years, or whatever you wind up charging for that one-time fee.
So those reasons, I don’t agree with. And if you have a launch list, which, look, most people don’t, because they don’t actually listen to the advice that we give, the grizzled, jaded SaaS veterans talk about, “You should do this,” and at least consider doing this, and go B2B, and raise your prices. And we write books, and do podcasts, and just, the amount of… and learn marketing, and do sales, and the amount of new folks coming in who just don’t listen, is extensive. It’s the vast majority. And so it’s unlikely you have a launch list. But if I had a launch list of 500, or 1,000, or 5,000 people, I would have a really tough time doing a one-time purchase model. Why not go recurring there? But Youform made it work, and I’m sure they’re not the only one. Now, is Youform survivorship bias?
Are there 99 others that tried one-time payments and never got anywhere? Well, maybe, I don’t know. And we can’t run a split test to say, “Would Youform be better off today if they hadn’t done the one-time payments?” We don’t know that. But I do know that they made it work, and it’s an interesting approach in the early days. I like doing things sometimes just to experiment. There’s a reason I did a book Kickstarter for The SaaS Playbook. A lot of people said, “Why are you doing a Kickstarter?” Almost nobody does nonfiction books that way. Very rare. I think Eric Ries has done two on Kickstarter, but very few examples of folks making it work. And I wanted to see what it was like, if there was asymmetric upside to it, if it would expand my audience, et cetera, et cetera. It was a fun and interesting experiment, and we did it for the exit strategy as well.
And I think for my next book, I’m probably not going to do a Kickstarter. It’s still in the works, but I think I’m going to just do pre-orders. But I learned what I wanted to from that experiment. So today, if you were to ask me, if I was launching a product, would I do one-time purchases? No, I would not. I would build something that had value that was ongoing, that I could charge people on a recurring basis, monthly or annual. Maybe they could prepay for something, but I want to gather that real customer feedback from people who are paying me on a recurring basis, and I want to test demand from people who are paying me on a recurring basis. And that’s probably a harder way to go in the early days, but I think you’re going to learn so much more, and so much faster.
With that said, Youform made it work, and I have seen other examples of folks specifically who offered both at the same time, which was something Rory proposed: one-time and subscription. And I’ve seen, I think we’ve even had some TinySeed companies come in and apply, and we told them the first thing was like, “You’ve got to get rid of that one-time deal.” They had a lifetime deal. We’ve had a few, and they had learned what they came to learn, but they left the one-time deal on. And we were like, “You’re already at 5K MRR, 10K MRR. By the time you get there, cut the lifetime, cut the one-time deal.” But it becomes addictive, because it’s a lot of cash, because you’re getting your whole lifetime value upfront. So I have seen folks do it and make it work. If I had a launch list of 500, or 1,000, or 5,000, and I was thinking about this one-time payment, I would maybe consider offering both, meaning one-time and subscription.
And the model that I think I’ve seen was, if it’s monthly $20 a month, then your lifetime is like two years, so maybe it’s $500, maybe slightly more, maybe it’s like one to two years. I’d have a tough time charging one year, for like $240, for a lifetime deal, but you get the idea. That’s just what I’ve seen in a handful of examples of this. So would I lean towards it? Would I advise entrepreneurs to do it? No, I think it’s probably an excuse, or a reason not to just do the hard work upfront. But as I said, I like to update my mental models. I’ve seen examples of this working, and I think it’s interesting today to think of it as a potential path, given how hard it is to get things off the ground and get noticed in the age of AI slop apps being slung out there by indie hackers all the time, and not just indie hackers, but just anyone AI-slopping and vibe-coding apps and throwing them out there.
It’s intriguing to think that this might be a tactic that could be an advantage. So thanks for your question, Rory. I hope that was helpful. And for my next question, comes from Robbie. Robbie asks, “I built a SaaS app that in most cases requires some custom development work to implement. What’s your recommendation in terms of pricing strategy and positioning? Do you, number one, position the app as the high-priced, premium, customized solution? Number two, cast the wider net and be the lower-priced solution anyone can use, and offer a consulting service for implementation? Or number three, some mix of both?” And Robbie actually did a good job of providing a bunch of context. It’s specifically a Shopify app, and he kind of summarized it with these questions. So I do have a bit more context, and even some proposals that Robbie gave. He said, “My gut instinct was to charge $49 a month across the board, which is what I’m doing now, and then charge a separate quoted project fee based on the specs if the client wants a custom front end. But I’m thinking about potentially using a higher-priced model, like $249 a month, and it’s more of a consultative selling proposition.
Like you said in your SaaS Pricing 101 section of the SaaS Launchpad course, SaaSLaunchpad.co. That way I can justify more cold outreach to agencies and merchants, and position it as a higher-end, more custom solution. Or I can provide two options, like one developer tier, $49 a month for just the tool, and an enterprise or agency tier at $249 a month. But I worry there isn’t enough differentiation between the two tiers, especially if I’m doing the front-end work as a quoted project fee.” So really it’s, do you do $49 a month and have the upfront fee, which, usually if it’s one-time work, I’m charging $500 to $5,000, some kind of mostly fixed price? Or I guess maybe you could also do custom quoted project fees, and if it’s one-time, then you do that, and then you have the price of the product. I will admit, though, I like this idea of having a $49 and a $249 tier.
Of course I do, because that 249, it’s a bit of a dual funnel. It’s not… normally dual funnels I think of the higher end starting at, say, a thousand a month, so that you can justify cold outreach, because at 249 a month you cannot. But my rule of thumb is about 300 a month is the minimum for a one-call close, and somewhere around, what is it about, it’s about 800 a month, it’s about 10K ACV, is my minimum for thinking about cold and warm outreach. And so obviously neither of these are going to work for outreach, but to do one-call closes and more of, as you said, a consultative selling process, that 249 feels interesting. So I think my default would be to charge a consulting fee upfront, a separate quoted project-based fee, and also have that 249 tier. And the thing is, if you’re going to be doing custom quoted project fees for a $49 a month product, A, that needs to dramatically improve retention, which it probably will because it’s a custom design, but B, I want to be making good margin on that project fee.
Typically, with consulting services built on a SaaS, I’m fine to break even if I’m charging enough on the monthly recurring. If my annual contract value is $5,000 a year and up, and I have net negative churn because of the work I did upfront, am I willing to do a thousand dollars of work for $1,000? Yeah, I am, because I want to build the recurring SaaS revenue, and that’s where the real value in the business is. But if I’m selling a $49 a month product, I have a really hard time doing project work at breakeven. I want to probably double or triple my money. Meaning, if I were to pay a reputable contractor who I’ve worked with, who’s doing really good work, so they’re not some $10-an-hour resource, and if I’m paying them $500 to do a project, yeah, I want to charge between $1,000 and $2,000 for this, because there’s project management, and there’s client expectations, and there’s all the headache that goes along with this, if it’s for a $49 a month plan.
When I start thinking about your agency tier of 249, I’m a little bit more like, well, that’s decent money, it makes me more willing to do things a little cheaper, I guess. So, all things being equal, I really like having the 49 and 249 plans across the board, and figuring out a way to differentiate the two tiers, just whatever it is, through talking to customers and seeing use cases. And for every feature you build, think to yourself, “Should I only put this in the agency tier, the 249 tier,” and lean towards yes, unless you really need it as a kind of baseline product feature. So I like that. That’s just the business that I would want to build in this case, and then I would have the front-end work quoted as a project fee. Just having it at 249 with no $49 plan is also an option.
You do seed the bottom end of the market to folks, and in the early days I would be curious as to, well, do they churn at outrageous rates? Are they a pain to support? Do they need a lot of support? Is it worth it? I would be willing to experiment and try for a month, or three, or six, until I had enough data that I could make a decision to be like, “This is for the birds, I’m done with this.” Given it’s a Shopify app, I haven’t heard of many, and I’m not super versed in the ecosystem, but to start at 249 feels like a chunk of money in Shopify specifically. And so I don’t mind that lower-end plan of 49, as long as it’s not cannibalized by your 249. That’s a big if.
And as long as it’s something I’d be willing to cut if no one’s upgrading from 49 to 249, and the churn of the 49 is high. And if I deem that it’s just not worth it, I need to be able and willing to just cut it, and then I have a 249 and a 499, right? That’s what the business becomes. So I think you’ve got my general gist of how I’m thinking about it. I really appreciate you sending that question in, Robbie, with all the context. Hope it was helpful. So that’s it for another episode of Startups for the Rest of Us. Thanks so much for joining me as I get back on the microphone after a couple weeks on the road in Japan. Obviously the podcast kept going, because we ship every Tuesday since 2010, 52 shows a year, and I just had to record ahead a little to keep those in your earbuds every week.
Thanks for listening this week and every week. This is Rob Walling, signing off from episode 841.
Someone who can tell you whether you’re on track or about to waste six months on the wrong thing. And that’s why we’ve built SaaS Institute. You get a dedicated coach who scaled B2B SaaS to eight figures, a mastermind of other founders at your stage, and direct access to experts in growth, sales, product, and finance. Everything you need to help break through your next plateau. Just ask James Rose, the founder of Content Snare. Here’s how he put it. “When I joined, we were at around 10 people, and the biggest problem was just trying to work out what was next. When you’re so close to the business, it’s easy to get stuck in your ways and develop blind spots, so I needed fresh eyes. My coach helped me solve that. Every month we’d work out the next most important thing, and when you’ve been going at it alone for a long time, it’s amazing to have a peer group whom you can ask questions of who’ve already solved this exact problem before.”
If you’re doing a million or more, and whether you’re B2B or B2C, we’d love to work with you. If you’re feeling a bit stuck like James was, head to saasinstitute.com to learn more and apply if it’s a good fit.
Let’s dive into my first listener question from James [VERIFY: “Gafer” – unsure of spelling]. James actually responded to an email that I sent out to my list, robwalling.com/emails. If you’re interested in getting a mostly weekly essay on thoughts that I have, a lot of which don’t appear in the other formats, don’t appear on YouTube, don’t appear in the podcast. It’s just deeper thought pieces around aspects of building, launching, and growing a startup. It does have a B2C element, but if you listen through it, you’ll realize why I decided to answer it. James says, “Hey Rob, longtime listener of the pod. I love it, and I’ve learned so much. The biggest problem facing me these days is determining how far to take my current business. I run a Discord bot called Apollo, which helps online communities organize events, and that’s at Apollo.fyi. In a lot of ways, this has step two written all over it.
B2C/prosumer, with perhaps a handful of businesses using it. Freemium, relatively high churn, about 6%, and a low price point, $6 a month, soon to be $8 a month. Despite all that, COVID was kind to my business, demand for online events was way up. I get about 200 people adding the app to Discord a day, and the app has strong virality built in.” He put that in quotes. If you read SaaS Playbook, I talk about strong and weak virality. I appreciated the nod. James says everyone who signs up for an event is interacting with the app, and that’s the viral loop. He tells me his MRR. I’m not going to disclose it here on the show. Suffice to say, it is more than a full-time income in the United States. Usually that mark I put at $10,000 a month, and he is a bit north of that.
And he says, “With a price hike next week, it should result in another 30 to 40% increase in MRR, as I am raising on my existing customers.” Price increases for the win. James continues, “I have more ideas for growth. I believe there is a market for a higher tier plan at $25 a month, and I know what I want to build for it. Expanding into ticketed/paid events is another idea. Reducing the value of my free plan is another. At the end of the day, I’m making more money than I would in a day job, and I’m primed to increase that even more, thanks in no small part to your excellent advice on navigating pricing. But there’s a not-so-quiet voice in the back of my head that’s always whispering to me about platform risk, consumer churn, and the fact that this vertical is never going to be a massive business.”
“In other words, it’s not B2B. I think a lot of this comes down to managing my own psychology,” which he also put in quotes. Sometimes I like it when people quote me back to myself. Other times it’s unnerving, when I’m like, “Oh, did I say that?” But James continues, “I think a lot of this comes down to managing my own psychology, and there’s a good chance I’m experiencing a lot of ‘grass is greener’ elsewhere, but it still weighs on me. Thanks so much for taking the time to answer this.” James and I had a little back-and-forth via email, and I got his permission to use his name and the app name on the show. Normally I would anonymize it if he and I hadn’t spoken about it in advance. Here’s the reason I wanted to answer this on the show: I have a pretty strong opinion about it.
A lot of the B2C/prosumer questions I get are about how to market it, and it’s things where it’s just like, don’t, just don’t do it. But James is onto something here. And so I wanted to take just a minute and give him, and you, my thoughts, so you can hear how I would think about this as a founder. Building something that gets traction is hard. If you’ve never done it, it’s really hard. If you’ve done it before, you forget how hard it is to get something into market and get new customers. Getting people interested from a cold start, no matter how much experience, backing, interest you have, it’s still hard, and it’s harder than you remember. So if I had something that had momentum, even if it was a B2C prosumer business, it was growing, and I still had more ideas, and that was the key sentence in this entire email, James says, “I do have more ideas for growth,” and then listed three ideas that I think are all perfectly possible, perfectly viable, that they might be able to grow this business by 50%, 100% in the next six to twelve months.
Every idea he mentioned, I was like, “Yeah, I would probably try that too.” So since you have those ideas, that’s the direction that I would lean. As always, you have to make your own choice based on the information you have, but it does feel to me like you want to keep going on this. I guess the worst case, there’s a couple of worst cases. One is you try all three of those things, you spend the next six to twelve months giving it your all, and it doesn’t grow a lick, and it just is flat, and then you get to choose what to do next. That doesn’t sound that bad. To me, that has asymmetric upside, because if they do work, you’re going to grow, and you are going to significantly increase the enterprise value, be generating more profit, have a more stable business that you can then use, if you decide to, to go start or acquire that step three business.
The other worst case, I think, is that platform risk bites you, and overnight you go to zero. Again, I would just evaluate the likelihood of that, and if it’s extremely low, then that’s a risk that I would learn to live with. So thanks for that question, James. I hope it was helpful. My next question is about one-time payments versus subscriptions, and Rory writes in. “Hey Rob, a longtime listener. I’ve been thinking a lot about pricing strategy for an MVP and wanting to get your take. I’m planning to launch a new product soon, and instead of going straight into a SaaS subscription, I’m considering starting with a one-time payment. The goal would be to test demand, gather real customer feedback, and better understand what users actually need before committing to ongoing delivery and a recurring model. Do you see merit in using a one-time purchase as a validation step before transitioning into a subscription later on?
Trying to avoid locking myself into a model that requires constant new value before I truly understand usage patterns. Also curious about your thoughts on offering both at the same time. Is there ever a good stage where a one-off option and a subscription can coexist without confusing positioning or cannibalizing revenue? Would love to hear your perspective if this makes it into listener mail. Thanks for all your insights over the years. The show has been hugely helpful.” I used to be extremely black and white about one-time payments, and it was basically 100% a hard no, because, A, I think a lot of early-stage entrepreneurs use it as an excuse. It’s much like a free plan. “Well, I’ll make a free plan just so people will use it and I can get feedback,” and that’s usually a big mistake. One-time payments, when you’re building a SaaS product that does in fact need ongoing delivery, and it is recurring, and it needs to be hosted, and maybe you need to build new features, maybe not, but ongoing support and all that, it just doesn’t make sense.
My definition of SaaS from seven or eight episodes ago was subscription software where software provides most of the value. This is not subscription. So the desire for founders to do free plans, to underprice their product, hey, nine bucks a month for something that should probably be a hundred bucks a month, and to try to do one-time purchases in the early days, I think, is a crutch. And so my reaction to this has usually been 100%, just don’t do it. The only time I would consider it is when there’s some other benefit to it, like you’re doing an AppSumo deal. That’s a one-time payment, but you get the marketing push and the explosive nature of that email list. I forget how big their email list is, hundreds of thousands. It’s a lot of people, and you can in fact do an AppSumo deal and learn from it.
You get a big chunk of cash from it, a big chunk. It can be tens of thousands of dollars, and you then get to have folks use it and get feedback. Ruben did this with SignWell, and as far as I remember, he does not regret it, and he had a ton of learning from that. But he didn’t just go out and do one-time payments and post on Twitter and build a launch list and do it himself, because there was no other benefit. So that’s been my traditional stance. However, I have, over the past several years, as I like to do, taken in new data. I’m not a politician who needs to never change their mind because they get called a flip-flopper. I take in new information as it comes, and I try to adjust my thinking based on what I’m actually seeing in TinySeed companies, in MicroConf companies, in listeners of this podcast, and in the broader, mostly bootstrapped ecosystem.
And I have seen examples of this working. Youform.com. I sat and watched Davis Baer and his co-founder start Youform as a one-time payment and build it into a successful subscription product. And they still have a free plan and a $29 and an $89 plan, and I was skeptical at the start, and then they made it work, and I was like, “Well, good for you.” And maybe there have to be rules of thumb. You know when Ruben comes on the show and talks about his rules of thumb for when freemium might actually work, right? When it might be a good idea. There are probably some around this, and I just haven’t done enough one-time payments, or had enough exposure to them, to know what the “rules of thumb” are for when you should probably use them. But I think one of them might be that it’s kind of like freemium, where you probably should have a huge market, probably should have some virality built into it.
And likely, this is the third one I’m a little iffy on, I’m coming up with it on the fly, but I feel like if you’re already in an extremely competitive space, which Youform of course is, it’s a form builder and there are hundreds of these, so that one’s maybe, maybe not. But I do think of a one-time payment, if you think about it, it’s kind of like a free model. You just happen to get a payment upfront, and then you have free users for the rest of your ever-loving life that you’re supporting, which is one of the reasons I don’t like it. What if you could go from an idea to your first real user in 30 days? Not a prototype, not a promise, but an actual working app. Today’s sponsor, Designli, will put that in writing. Here’s their CEO, Keith Shields.
Keith Shields: Thanks, Rob. Most founders burn months before a single user ever shows up. We’ll put version one of your app in your user’s hands by day 30, guaranteed. And if we miss that, your next month is free. We call it the Traction Lab. It’s a 90-day plan that takes you all the way from idea to your first paying customer. We start with a 30-minute call where you share your idea, and we tell you exactly what we’ll build and what it costs, with no surprises. We can promise all of this because of our people, not our tooling. You get a full senior team focused on getting you traction: a product owner, an engineering lead, a full-stack developer, a senior UX designer, and a solutions architect. They use AI to ship faster, but senior engineers own every architecture decision and review every line of code. So the code is yours, and it’s built to last.
To go from idea to revenue in 90 days, check out designli.co/gettraction. That’s D-E-S-I-G-N-L-I.co/gettraction.
Rob Walling: As I look through the reasons that Rory mentioned for doing this, Rory said the goal would be to test demand. Maybe, but can’t you do that with a subscription? It feels like you can test demand with a subscription. Gather real customer feedback, which, can’t you do that with a subscription? I did it with Drip. Most people do it with a subscription, right? And better understand what users actually need, which I still think you can do with a subscription, before committing to ongoing delivery and a recurring model. But you are committing to ongoing delivery in a recurring model, not a recurring payment model, but ongoing delivery. This has to be up next month, or else you’ve scammed those people. So just because they paid you once doesn’t mean you can shut it down in three months and be okay with it. I tell you what, it’s more kind to the users if they’re paying you monthly and suddenly you disappear, because at least then they haven’t paid you for a year’s worth of usage, or two years, or whatever you wind up charging for that one-time fee.
So those reasons, I don’t agree with. And if you have a launch list, which, look, most people don’t, because they don’t actually listen to the advice that we give, the grizzled, jaded SaaS veterans talk about, “You should do this,” and at least consider doing this, and go B2B, and raise your prices. And we write books, and do podcasts, and just, the amount of… and learn marketing, and do sales, and the amount of new folks coming in who just don’t listen, is extensive. It’s the vast majority. And so it’s unlikely you have a launch list. But if I had a launch list of 500, or 1,000, or 5,000 people, I would have a really tough time doing a one-time purchase model. Why not go recurring there? But Youform made it work, and I’m sure they’re not the only one. Now, is Youform survivorship bias?
Are there 99 others that tried one-time payments and never got anywhere? Well, maybe, I don’t know. And we can’t run a split test to say, “Would Youform be better off today if they hadn’t done the one-time payments?” We don’t know that. But I do know that they made it work, and it’s an interesting approach in the early days. I like doing things sometimes just to experiment. There’s a reason I did a book Kickstarter for The SaaS Playbook. A lot of people said, “Why are you doing a Kickstarter?” Almost nobody does nonfiction books that way. Very rare. I think Eric Ries has done two on Kickstarter, but very few examples of folks making it work. And I wanted to see what it was like, if there was asymmetric upside to it, if it would expand my audience, et cetera, et cetera. It was a fun and interesting experiment, and we did it for the exit strategy as well.
And I think for my next book, I’m probably not going to do a Kickstarter. It’s still in the works, but I think I’m going to just do pre-orders. But I learned what I wanted to from that experiment. So today, if you were to ask me, if I was launching a product, would I do one-time purchases? No, I would not. I would build something that had value that was ongoing, that I could charge people on a recurring basis, monthly or annual. Maybe they could prepay for something, but I want to gather that real customer feedback from people who are paying me on a recurring basis, and I want to test demand from people who are paying me on a recurring basis. And that’s probably a harder way to go in the early days, but I think you’re going to learn so much more, and so much faster.
With that said, Youform made it work, and I have seen other examples of folks specifically who offered both at the same time, which was something Rory proposed: one-time and subscription. And I’ve seen, I think we’ve even had some TinySeed companies come in and apply, and we told them the first thing was like, “You’ve got to get rid of that one-time deal.” They had a lifetime deal. We’ve had a few, and they had learned what they came to learn, but they left the one-time deal on. And we were like, “You’re already at 5K MRR, 10K MRR. By the time you get there, cut the lifetime, cut the one-time deal.” But it becomes addictive, because it’s a lot of cash, because you’re getting your whole lifetime value upfront. So I have seen folks do it and make it work. If I had a launch list of 500, or 1,000, or 5,000, and I was thinking about this one-time payment, I would maybe consider offering both, meaning one-time and subscription.
And the model that I think I’ve seen was, if it’s monthly $20 a month, then your lifetime is like two years, so maybe it’s $500, maybe slightly more, maybe it’s like one to two years. I’d have a tough time charging one year, for like $240, for a lifetime deal, but you get the idea. That’s just what I’ve seen in a handful of examples of this. So would I lean towards it? Would I advise entrepreneurs to do it? No, I think it’s probably an excuse, or a reason not to just do the hard work upfront. But as I said, I like to update my mental models. I’ve seen examples of this working, and I think it’s interesting today to think of it as a potential path, given how hard it is to get things off the ground and get noticed in the age of AI slop apps being slung out there by indie hackers all the time, and not just indie hackers, but just anyone AI-slopping and vibe-coding apps and throwing them out there.
It’s intriguing to think that this might be a tactic that could be an advantage. So thanks for your question, Rory. I hope that was helpful. And for my next question, comes from Robbie. Robbie asks, “I built a SaaS app that in most cases requires some custom development work to implement. What’s your recommendation in terms of pricing strategy and positioning? Do you, number one, position the app as the high-priced, premium, customized solution? Number two, cast the wider net and be the lower-priced solution anyone can use, and offer a consulting service for implementation? Or number three, some mix of both?” And Robbie actually did a good job of providing a bunch of context. It’s specifically a Shopify app, and he kind of summarized it with these questions. So I do have a bit more context, and even some proposals that Robbie gave. He said, “My gut instinct was to charge $49 a month across the board, which is what I’m doing now, and then charge a separate quoted project fee based on the specs if the client wants a custom front end. But I’m thinking about potentially using a higher-priced model, like $249 a month, and it’s more of a consultative selling proposition.
Like you said in your SaaS Pricing 101 section of the SaaS Launchpad course, SaaSLaunchpad.co. That way I can justify more cold outreach to agencies and merchants, and position it as a higher-end, more custom solution. Or I can provide two options, like one developer tier, $49 a month for just the tool, and an enterprise or agency tier at $249 a month. But I worry there isn’t enough differentiation between the two tiers, especially if I’m doing the front-end work as a quoted project fee.” So really it’s, do you do $49 a month and have the upfront fee, which, usually if it’s one-time work, I’m charging $500 to $5,000, some kind of mostly fixed price? Or I guess maybe you could also do custom quoted project fees, and if it’s one-time, then you do that, and then you have the price of the product. I will admit, though, I like this idea of having a $49 and a $249 tier.
Of course I do, because that 249, it’s a bit of a dual funnel. It’s not… normally dual funnels I think of the higher end starting at, say, a thousand a month, so that you can justify cold outreach, because at 249 a month you cannot. But my rule of thumb is about 300 a month is the minimum for a one-call close, and somewhere around, what is it about, it’s about 800 a month, it’s about 10K ACV, is my minimum for thinking about cold and warm outreach. And so obviously neither of these are going to work for outreach, but to do one-call closes and more of, as you said, a consultative selling process, that 249 feels interesting. So I think my default would be to charge a consulting fee upfront, a separate quoted project-based fee, and also have that 249 tier. And the thing is, if you’re going to be doing custom quoted project fees for a $49 a month product, A, that needs to dramatically improve retention, which it probably will because it’s a custom design, but B, I want to be making good margin on that project fee.
Typically, with consulting services built on a SaaS, I’m fine to break even if I’m charging enough on the monthly recurring. If my annual contract value is $5,000 a year and up, and I have net negative churn because of the work I did upfront, am I willing to do a thousand dollars of work for $1,000? Yeah, I am, because I want to build the recurring SaaS revenue, and that’s where the real value in the business is. But if I’m selling a $49 a month product, I have a really hard time doing project work at breakeven. I want to probably double or triple my money. Meaning, if I were to pay a reputable contractor who I’ve worked with, who’s doing really good work, so they’re not some $10-an-hour resource, and if I’m paying them $500 to do a project, yeah, I want to charge between $1,000 and $2,000 for this, because there’s project management, and there’s client expectations, and there’s all the headache that goes along with this, if it’s for a $49 a month plan.
When I start thinking about your agency tier of 249, I’m a little bit more like, well, that’s decent money, it makes me more willing to do things a little cheaper, I guess. So, all things being equal, I really like having the 49 and 249 plans across the board, and figuring out a way to differentiate the two tiers, just whatever it is, through talking to customers and seeing use cases. And for every feature you build, think to yourself, “Should I only put this in the agency tier, the 249 tier,” and lean towards yes, unless you really need it as a kind of baseline product feature. So I like that. That’s just the business that I would want to build in this case, and then I would have the front-end work quoted as a project fee. Just having it at 249 with no $49 plan is also an option.
You do seed the bottom end of the market to folks, and in the early days I would be curious as to, well, do they churn at outrageous rates? Are they a pain to support? Do they need a lot of support? Is it worth it? I would be willing to experiment and try for a month, or three, or six, until I had enough data that I could make a decision to be like, “This is for the birds, I’m done with this.” Given it’s a Shopify app, I haven’t heard of many, and I’m not super versed in the ecosystem, but to start at 249 feels like a chunk of money in Shopify specifically. And so I don’t mind that lower-end plan of 49, as long as it’s not cannibalized by your 249. That’s a big if.
And as long as it’s something I’d be willing to cut if no one’s upgrading from 49 to 249, and the churn of the 49 is high. And if I deem that it’s just not worth it, I need to be able and willing to just cut it, and then I have a 249 and a 499, right? That’s what the business becomes. So I think you’ve got my general gist of how I’m thinking about it. I really appreciate you sending that question in, Robbie, with all the context. Hope it was helpful. So that’s it for another episode of Startups for the Rest of Us. Thanks so much for joining me as I get back on the microphone after a couple weeks on the road in Japan. Obviously the podcast kept going, because we ship every Tuesday since 2010, 52 shows a year, and I just had to record ahead a little to keep those in your earbuds every week.
Thanks for listening this week and every week. This is Rob Walling, signing off from episode 841.
