Episode 778 | Pricing Pilot Projects, Niching Down, Skipping Stairsteps, and More Listener Questions (A Rob Solo Adventure)

Rob Walling:
Being an entrepreneur is making calculated gambles. When I hear de-risk that feels like hedging. It feels like, well, I’m going to have a contingency. The contingency is to pivot. The contingency is if there’s not enough demand that you either figure out how to generate the demand, or if the niche isn’t big enough or the market isn’t big enough or the total reachable market isn’t big enough, then you expand later. You are listening to startups. For the Rest Of Us, this is the podcast that focuses on helping founders build incredible businesses that don’t make a dent in the universe, but might just change your little corner of it. And while you’re building that incredible business and maybe you bootstrap it, maybe you raise funding, it kind of doesn’t matter. You’re not sacrificing your freedom, your purpose, your relationships, your sanity, your mental health in order to grow it. 

It’s not growth at all costs, but it’s build incredible businesses that provide us with an incredible life and also improve the lives of those around you. I’ve been recording this podcast for more than 15 years. This is episode 778, and today I’m going to be answering listener questions, some great questions in the queue. And if you have a question you’d like me or me and a guest to answer in a future episode, you can go to startups For the Rest Of Us dot com and click ask a question. In the top nav audio and video questions tend to go to the top of the stack, although this time it looks like I have a question from X Twitter and also more advanced questions tend to go to the top of the stack rather than how do I get started? Early stage stuff today is going to be a mix. 

It’s going to be fun. We’re going to have a great time. Before I dive into my first question, I want to tell you about MicroConf Connect. It is the best paid community for bootstrapped and mostly bootstrapped SaaS founders in the world. You can add to MicroConf connect.com if you want to check it out because building a startup can be lonely and if you join Connect, you’re going to be surrounded by like-minded founders. This is our extension of our MicroComp Hallway track. In addition to the forums, the conversations, the dms, you get access to live events. So for example, on June 19th, which is next week, Matt Haman is a sales expert and he’s going to be doing a one hour session about using LinkedIn as a sales channel. And it will be a live virtual event, meaning you can join via, I dunno what a Zoom or whatever we use, but you’re there in real time and you can ask questions if you want to apply because we do not let everyone in. 

We are pretty quick on the draw to not let folks in who are trying to infiltrate and let’s say reduce the value of the community by them trying to sell stuff or being whatever. You get the idea. We try to keep the quality of the participants and the quality of the conversation very high. We have a full-time moderator who is making sure it’s the best community. It can be MicroConf connect.com if you want to check it out. And with that, let’s dive into our first question, which this one is actually a thank you and some feedback about TinySeed Tails.  

Speaker 2:
Hey Rob, long time listener. I just wanted to say thank you for the TinySeed Tails. I’ve been a long time listener for a couple of years now. I don’t have a startup of my own. I would love to have one, but I don’t. And the tiny details just showed me how much uncertainty there is behind a business. A business that has been backed by you guys, a business by a person that sounds like they have an idea of what they want to do and they still cannot find product-market fit, which is really, really helpful. I love all of your episodes, I love listening to them. I love listening to all of your guys’ experience and what you go through and suggestions, but tiny details showed me even for a person like that and for a company like that, how much unknown there is. I’m the type of person that’s interested in it. 

I work as a project manager and a product manager depending on the company, on the project, but I love coding. I’m very interested in that, but I still, I don’t have a startup because I have no idea what to do. I’m having trouble finding the problem to solve. And listening to these episodes with you, and I’m blanking on the name of the founder, I’m sorry, in the fourth season, it’s just eyeopening even for somebody that they thought they know what they wanted to do and what problem they wanted to solve, it’s still so much uncertainty. So just a huge thank you. And if you can do three founders per season, that’d be great. I absolutely love the TinySeed Tales. So yeah, a huge, huge, huge thank you for those episodes. Love hearing those, looking forward to new ones. And if you can find more founders to follow and update us on their progress, I would listen to it until I die. Thank  

Rob Walling:
You. I would listen to it until I die. That is deep praise indeed. Thank you for that. Antonio. I’ve received a lot of positive feedback about that season of the most recent season of Tiny Sea Tales. If you skipped it because for whatever reason you didn’t want to listen to it, it is a profoundly impactful experience to listen to Colleen have some early success and then lose a co-founder and then scrape and claw. And I believe we recorded, what is it, eight or nine episodes over almost two years. Yeah, two years almost to the day. So you get to hear this long journey and you get to hear how it pans out In the end, if you want to hear 90 minutes of a similarly recorded show, it’s kind of just a single audio documentary. Head to startup stories podcast.com, and that was recorded over, I don’t even remember, 15 months with Derek Reimer and I when we were first starting Drip. 

And it is agonizing for me to listen to before we had product-market fit. And then it kind of jumps to where we do at a certain point and that is a similar journey, but perhaps with a different end result, really appreciate the positive words, the kind sentiments around it. Antonio and I plan to keep doing it. I mean, tiny Sea Tales is, I’ll tell you what, per audio minute, it is way more work than anything else that we do just because of the heavy editing and the voiceover and the production value of it. It’s also for me, there’s no instant gratification. So I get to record these things over the course of a year. The original idea was to do it over 12 months. Colleen’s adventure lasted a lot longer than that, but to record things for a year and not put them out in public is really hard for me. 

Where I get the dopamine rush is when I launch a book, when I launch a podcast episode, when I ship a YouTube video, that’s when I’m like, yeah, the world is consuming this now. And then I get to hear feedback and thoughts from people about it. So it’s actually really hard for me to do that, to wait and to have the delayed gratification. But I have heard from multiple TinySeed founders and investors that the reason they wanted to be part of TinySeed was because of what they heard on TinySeed Tales and they heard the struggles or the earlier seasons and they heard the victories of the earlier seasons just generally heard the thought process and it made it more human. So I plan to keep producing them and I’m glad that you have enjoyed this last season. The next season is almost halfway done, and so every couple months I sit down with victim slash subject of season five and fingers crossed, I would love to launch that in September of this year, in fall of this year to coincide with TinySeed applications opening. But it all depends. These are things we can’t predict. I literally don’t know if the startup is going to succeed when the season starts. And I don’t know how long the season is going to be because we don’t know when the story kind of trails off. When do you ride off into the sunset? It’s certainly hard to tell at the start and we will do our best to keep shipping those episodes. So thanks again for your voicemail, Antonio. My next question is about pricing and pilot projects.  

Speaker 3:
Hey Rob, it’s John from what, what is a highly visual low code financial business simulator? We make it easy for decision makers to visually ask and answer their gnarliest. What if business questions in seconds all without formulas or spreadsheets? Users can build out dozens if not hundreds if not thousands of what if scenarios all in real time and then analyze those trends in the data and make better business decisions for solutions. Quite novel, the tech was not easy to build and we’re flirting precariously with some of those category creation type problems that you’ve mentioned in the past. My background is the visual effects industry and our go-to market is targeting large visual effects studios that have this complex relationship between revenue and capacity planning. Artist resources are a huge expense and our solution proposes a better way to forecast artist resources, reduce over time and mitigate unnecessary or poorly timed hires. 

So my question is about pilots and how to think and not overthink them. For example, we’re pitching a pilot for one of the top five visual effects studios in the world right now. They did $120 million worth of work in 2022. They’ve got a thousand employees and I think we can help them save between two and $3 million a year once our tech is fully implemented. So we’ve proposed a phase pilot, we’re focusing on one office, a subset of projects so they can get a sense of the tech and help us build out more functionality. I subscribe to the theory that pricing should be 10% of the value the customer receives, and here the obvious benefit is that we’re going to get brand recognition from a top tier company. And I also don’t want to give away too much value in the process though we’re still bootstrapped and I’m trying to recapture some of those sum costs. So how would you think about pilot pricing something so different? This is an interesting that’s been slammed by their rider strike and they are cash sensitive right now. Thanks for everything you do, Rob. Appreciate it. Bye.  

Rob Walling:
Thanks for that question, John. I like that you called out the charging 10% of the value theory. I think that’s a good rule of thumb. It’s not something that you have to adhere to, but it’s a great starting point. And if you’re going to save ’em two to 3 million a year and you charge 200,000 to 300,000 a year, it feels kind of fair and that’s a nice contract size. There are a couple schools of thought on pricing pilots. See, I’m a believer for sure that you should be charging for them because as opposed to just comping it, which is not anything that you indicated. Some founders are so desperate to get the business that they want to try to give it away. And there’s so many problems with that. Number one, you can waste a bunch of time. And number two, they don’t have any skin in the game and people don’t value what they don’t pay for generally. 

And so again, you didn’t say any of that, but I’m doing this for listeners who think, well why wouldn’t I just comp this pilot project pricing? I mean my default is to usually start with how you would price it if it wasn’t a pilot project, how much value do you think you’ll save them at just one office? And so if that number is a hundred thousand dollars or $200,000, then you charge 10 or $20,000 a year, right? I guess that’s talking annual probably how I think about it now then there’s are we doing a bunch of custom work for them? Because we may want to charge that separately. We may want to say, Hey, there truly is some integrations and some stuff we’re going to do that we don’t need for future customers or we don’t think we will. And so then you can do one-off stuff for that. 

We’re going to charge you a hundred bucks an hour or just a fixed price, $10,000 one time to do all this work for you in addition to the 10 or 20,000 a year. Now, if instead they’re giving you a bunch of guidance and you’re going to build a bunch of features that you think other companies are going to use, you can do one of two things. You can charge ’em a discounted rate for that. You can say, Hey, I’m going to charge you half. Or usually it’s about half, right? So if it’s like $10,000 worth of work, but I think I can reuse it, we’re going to charge you five grand to get it done and to be number one in the priority list to be number one on our roadmap. In essence, the thing I think about is who’s getting more value out of this? 

Or is it an even value exchange potentially that you get not only input to your roadmap, you get to have this customer zero that you really are building it for, but they also are going to get a lot of value and you’re both going to have to invest time into it. They have to invest time into the implementation, into working with you. And then you of course are investing the time to build out what needs to happen. And then the other thing I think about with the pilot project is the reason it’s called a pilot project and it’s not just a contract, is that the idea is it should lead somewhere. So that’s part of the conversation I’d be having. And it’s not that you need a written commitment, that’d be perfect, but it’s going to be really hard to get that. But it’s getting that verbal commitment of if this works, our expectation is we’re going to keep rolling it out. 

If this does everything you need it to do, we’re going to be rolling it out. And so that’s why it’s called a pilot is it is the tip of the spear, right? Or it’s the wedge that gets you into a company that then proves your value to this large company and proves to them that you are reliable and that you can in fact produce the results that you’ve promised. So that’s such a big thing of it. And the way I think about it is, let’s say you do the pilot and it works and they move forward to implementing you across the entire company or you do the pilot and it doesn’t work. In both cases, I want to feel okay about the pricing. If this is the only work I ever do for them, and they basically say, you know what? We don’t have the budget or it didn’t work, or leadership change or whatever else happens, they go out of business. 

I don’t particularly want to be in a position where I’m thinking to myself, oh man, we just did a bunch of work for free. We just ate a bunch of money. I underprice this because I thought that we were going to get all this work because that’s not a sure thing. So even if it’s not my most profitable pricing I ever implement, that’s fine. It doesn’t need be a huge cash cow, but I want to minimize the regret as I’m going to grind through this pilot. A lot of pilots can be kind of grinding and a lot more work than you think. I want to feel okay about the work that my team and I are putting into it. So that’s probably the high level overview of how I would think about pricing pilots. Thanks to that question, John. Hope it was helpful. My next question is from Twitter from Kenny Alami several months ago, well, geez, it was almost a year ago now. 

I said there’s a noticeable lack of intermediate and advanced questions on startups pod. Do you have any more advanced questions? And Kenny asks, how do you niche down to take advantage of industry knowledge and how do you de-risk the bet in case there is not enough demand? So first of all, I don’t think de-risk the bet. I think being an entrepreneur is making calculated gambles, and I think trying to, when I hear de-risk that feels like hedging. It feels like, well, I’m going to have a contingency. The contingency is to pivot. The contingency is if there’s not enough demand that you either figure out how to generate the demand, or if the niche isn’t big enough or the market isn’t big enough or the total reachable market isn’t big enough, then you expand later once you’ve tapped that out. What I don’t mean is once you’ve plateaued, because usually plateaus are not because you’ve tapped out your market, usually they’re because you have tapped out your present marketing expertise or you have only not really done very much marketing, which unfortunately is what a lot of the Indie Hecker folks on Twitter that I see saying, ah, I’m tapped out. 

And it’s like, oh, it’s because you thought building an audience on social media was going to be your marketing channel, and that is catastrophically misguided. So the bet is not something I’d particularly be doing in an early stage startup. There’s going to be a lot of risk in it. But the risk, here’s the thing, it’s not like you’re betting your house on it. The risk is that it doesn’t work and it’s some time and maybe some money. And the answer to that is as you get new information and you learn and you have more data, then again you pivot, you expand, you change it, you make these adjustments, these course corrections. This is something that experienced and successful founders do that inexperienced. And I’ll say the folks who I see, the founders who I see getting in their way over and over and over, are there ones that either don’t try stuff because they say, oh, it doesn’t work, or they try it and they don’t go all in and they don’t course correct. 

They try it and if it dosn’t work, they just quit. That doesn’t work. Ads words doesn’t work in 2025 SEO, it doesn’t work anymore. And in 2025, it just isn’t the thing. And it’s like, no, actually both of those things work. So does outbound sales. The playbook is not identical to what it was 10 years ago, but I’m invested in hundred and 24 B2B SaaS companies. Dozens of them are doing seven or eight figures, and there’s WP engine, which is what do we think the worth of them is? A billion. It’s a unicorn, right? And across all those companies, the successful ones are doing the stuff that I hear some people saying it doesn’t work in 2025. Well, if it doesn’t work, then how is it working for these companies that are growing? So all that said, de-risking course corrections, it’s what experienced founders do. 

Now, how do you niche down to take advantage of industry knowledge? Kind of hard to answer without specific. So I’m going to invent a contrived example. Let’s say that I have industry knowledge of electrical construction because let’s just say my dad worked in construction for 42 years and my older brother still works in it, and I worked in it for many, many, many years. I could think about any app, about an accounting app, about a booking link, like a scheduling link. I could think about a calendaring app, I could think about project management, I could think about anything. And then say for electrical contractors or more broadly for the trades, we think of the HVAC and electricians, your plumbers, your carpenters, your, your general contractors, any of these things could be narrowed down or niched down. And usually if I’m a bootstrap founder, I’m going to probably try to focus it on one of those, but I’m going to be open to others. 

I’m going to be open to where the interest is highest, right? I’m going to be looking for where the thing that I have in mind sparks that twinkle in their eye. I’m looking for when they have that moment of, wow, this could really help me in my business. And usually I’m not coming up with a solution. Usually I’m poking at a problem that they have, right? What problem does your idea solve? And for whom? Don’t tell me your idea. Tell me what problem it solves and for whom. That’s what I’m thinking about. And so the way I would niche down is probably to start pretty small and then kind of keep my ears open as to, oh, are there other verticals that are requesting this for me? There’s a TinySeed company right now that was serving one vertical of car dealerships and then rental car companies came about, and they have been looking at both of them now, and because they kept their head on a swivel and because they kept their ears open, and there’s a balance here, you can go too far and listen to everybody and be like, well, we’re going to have 20 ICPs. 

Or you can go too narrow and not listen and say, well, we’re only going to have one and keep our head down and not make any possibility that that’s going to happen. Not be open to it. Neither of those is probably correct. The hardest part, one of the hardest parts of being a founder is making hard decisions with incomplete information and all the information is incomplete, especially in the early days until you’re what at some number, 5 million, 10 million, a hundred million in annual recurring revenue. Everything’s incomplete. Even at those points, it’s still not super complete, but at least you have a more mature business. So in these early days, that’s how I’d be thinking about it is I niche down. My H one says I’m for this type of contractor, my sales conversations, my landing page, whatever I’m doing, is focused on a particular niche. 

If you think about the early days of Drip, I picked a couple of ICPs. One was SaaS founders. I had that reach and another quickly became information product and course creators. These days we call makers or the creator economy or whatever. That term didn’t exist back in 2012 when we started building it. But it quickly became apparent. I didn’t have a ton of reach into that second category, but really quickly realized it was a valuable market. Bloggers came along as well because bloggers in those course creators, there’s a lot of overlap. They’re not necessarily, it’s not a one for one Venn diagram, but there’s a lot of overlap. So I allowed, I guess, our number of ICPs to expand as I felt the demand. I felt the market pull from these different verticals. And while I didn’t have expertise really as a course creator, well, I had a little bit, right? 

I sold Micropreneur Academy, which was a membership site, and I’d sold books and stuff, but it isn’t how I identified for sure. And yet we could listen to them and listen to their feature requests and have solid conversations with them. Even though I knew SaaS so much more, it was still, I think, the right decision. I think it really helped accelerate our growth to be open to adding and expanding even early on our focus. So thanks for that question, Kenny. Hope it was helpful. My next question is from Mike about starting a business like Sidekick.  

Speaker 4:
Hi Rob. My name is Mike. I was listening to your interview with Mike Perham, the creator of Sidekick. I’ve been thinking of starting a similar business to Sidekick. I have a background in technology, been software doing software engineering for a long time, seen lots and lots of issues seeing a problem that I’d like to tackle. Let’s assume that I validated the problem with customer development conversations, Reddit, various tech communities, slack, discord, et cetera. I’m wondering, how would you approach starting a business like this? What would you focus on in the first six to 12 months? For example, I don’t have an audience similar to how Mike was present in the Ruby on rail space conferences, blog posts, et cetera, for quite a while before he launched Sidekick. Something I don’t have, and I know you preach against building an audience, this feels like it’s something that might require an audience, given that the core component is open source, but just wondering how would you go about starting this? What would you focus on and how would you think about charging money and when to start charging money? Thank  

Rob Walling:
You. So I want to start by saying trying to start a business like Sidekick is a little, it’s not exactly the same, but it’s a little like saying, I really want to go out and win the lottery today. There is a lot of luck involved, and it’s not to take anything away from Mike Perham, but on the episode, do you remember how many open source projects he launched that just didn’t get traction? The reason Sidekick works as a business is because he has this enormously successful, broadly adopted open source project. And if you had that today, you could turn it into a business. And so the question then is how do you get that? Now, I’ve never done that. I have talked to people and watched people who have done it, and usually there’s it. It’s unfortunate. Usually there’s a ton of luck involved. It’s shocking that I do think it’s a repetition. 

It’s like you got to get a bunch of shots on goal to do it. Now, with that said, what I’m not saying is build a hundred open source projects in a hundred days and launch. I do think there is some logic to this of research and thinking about where the other open source projects failing. This would be hard because there obviously are a ton already out there. And how do you find the gap in the market? I guess this is as hard as finding any idea, any type of business idea, but you said there’s a problem and you assume it’s validated. What were your first steps be? My first steps would be I want to launch an open source project that is going to get traction. And so I would look at every open source project that I know of that I’ve seen get traction, and I would study how they did it. 

So I’d listen to all the other interviews with Mike. I would listen to, I don’t know, early interviews with Matt Mullenweg, if he did them, just pick an open source project that is wildly successful. Adam Wains, tailwind, CSS. There’s a ton of ’em out there. How did they get traction in the early days? There was probably some belief in the developer. Did most of these developers have some kind of audience before they launched it? I’m guessing they did. So in that case, you probably want to go against my advice. So my advice is not that you shouldn’t build an audience. I get misquoted on this a lot. My advice is all things being equal dollar for dollar, hour for hour building an audience is not anywhere near the best marketing approach that you can use to build a SaaS. I have seen so many people with large audiences fail miserably at SaaS and plateau and build that no one wants. 

There’s a curse of an audience that goes with it. I’ve talked about this stuff a bunch, but the idea, I’m not saying an audience is worth nothing. I have an audience, it’s very valuable. But the amount of time that I have spent since 2005, 20 years, my first blog post was in late 2005, and I blog hard hundreds of hours a year for six years. Then I’ve written five books. That’s all audience. Then the YouTube channel, 515 YouTube videos, 7 78 episodes of this podcast, plus Zen Founder on and MicroComp, on and on and on. Great. So now I have an audience. I’m not saying it’s not valuable, but there are shorter routes to marketing your SaaS product. So that’s really what I’m saying is the amount of time invested, you’d be better off getting better at other things. But when I say that, I’m saying for SaaS. 

So if you were doing info products for courses, I’d say build a audience. Absolutely. That’s a reason that why am I building an audience? Why do I have an audience? Because we sell SaaS info products, event tickets where I’m an accelerator. Were not SaaS. Similarly open source projects. If in fact most of the folks who today have amazingly successful open source projects, if they had some type of audience or respect or they were book authors in their particular technology or whatever it is, if that’s what they did, then I would try to copy their approach. If that’s the one that works the most, I’m not an expert on it. And so that’s where I have a tough time giving advice. If you’re asking me how do you start a SaaS, I can tell you I consider myself quite knowledgeable on that front. But starting an open source project, I dunno, how do you do that? 

That I would then go and certainly research that from there. Let’s just say you had a wildly successful open source project. When do you start charging? Well, I mean, I would start charging as soon as I could, right? You have paid add-ons support. The moment that big companies come knocking at your door and they start saying, Hey, where’s the enterprise support plan? It’s been a while since I talked with Mike about sidekick, but frankly, he’s criminally underpriced. He’s leaving a lot of money on the table, and he knows that. I believe I pointed that out in the interview, that it could be a much more lucrative business. It could be a larger business, and he gets to make that choice of keeping it to a single developer with no employees and to keep his pricing simple. And that’s the choice he makes. I would make different choices, but that’s okay. 

We don’t have to agree on this stuff. He can run his business in the way that he wants. But I would say to Mike the question her, be careful. We all want to start a business like Sidekick. I want to run a, I forget what this revenue is, 3 million, four, 5 million, no employees or whatever, single founder. I want a business like that too, but I am under no illusion that I could just go do that. That’s not just going to happen. It’s going to be a tremendous amount, not just of work. It’s going to be a ton of hard work, which usually I’m fine to put in. Obviously you need some skills. I think there’s going to be quite a bit of luck involved with it, and unless you do have that audience, audience could offset that. If you have more audience, you need less luck. Yeah, that part I’m not sure about. So I would just caution you on thinking it’s cool to have that goal, but I think it’s going to be quite the uphill battle to try to build a business like Sidekick because there just aren’t that many. So thanks for that question, Mike. Hope it was helpful. And my last question of the day comes from anonymous.  

Speaker 5:
Hey, Rob, wanted to start by thanking you for all the amazing stuff you’ve been doing in the Bootstrap community. I’m new to this community, but this idea of a bookshelf startup really resonates with me, and I’ve been loving all the content that I’ve been reading and listening to on your podcast. So I read on your stereoscopic blog posts, but have also heard you say in some more recent podcast episodes that you can potentially skip steps depending on your life circumstances. So this question is about that. So a little bit more about me. I’ve been working at a fan equivalent for a few years now, so nowhere near financially independent, but I do have a decent safety net. In addition, I do really actually really like my job at the product I’m working on. So I’m not in a rush to escape anything, but I do have that itch, that desire, that sickness, as you sometimes jokingly referred to it of entrepreneurship and wanted to build something on my own. 

So I’m curious how you would think about skipping steps in the stair step model if you would do that. So I guess the first question is how would you skip some of those first steps? Would you go straight to building a SaaS on the side as you worked your full-time job? Would you start by acquiring something small and less established, maybe like 10, 15, $20,000 kind of range just to learn that sales and marketing side of things, or would you do something else? And then the second part of the question is, what would you think next steps would be? If you were acquiring something small, what kind of businesses would you be looking for? Things like that. Thanks so much. Look forward to hearing your  

Rob Walling:
Answer. Thanks for that anonymous. It’s interesting. Yeah, whenever I have a framework, there’s always that question of, well, when should I not do it? Because certainly these frameworks, they don’t apply to exactly 100% of everyone all the time. There are exceptions. But I do find that there are fewer exceptions than a lot of people think. And most of us, I see this a lot with TinySeed companies where I’ll come out with like, Hey, in general, you want to do this certain thing, or you should think about your pricing this way. And some founders perpetually think, well, I’m a snowflake. My business is so unique that I should skip this, or I should not do the years of grinding, or mine’s not going to take hard work. It’s just going to be luck skill or whatever. And folks have that. And I’m not saying that’s necessarily the case here, but I do want to caution you against that. 

There’s a reason that I say the things I do. It’s not just whimsical. It’s not just because I want to sound smart. It’s because I have seen patterns develop across thousands, tens of thousands of entrepreneurs. And so when I think about the stereotip approach, do I literally mean that you have to start something in a walled garden in an ecosystem and then build up and then buy out your time and then do a SaaS? Well, of course not. There are other paths to it, but the stereotip approach allows you to build your skills, to gain experience, to get confidence in your abilities, to buy your own time, to have some money coming in. It’s just everything. Everything just builds and snowballs versus you certainly don’t learn launching 20 things and seeing what sticks. You learn that luck is the way to go or something. I mean, I’ve railed on this for a long time. 

So that approach, I don’t like the one of just jumping directly to building a SaaS is not the worst. I could see some people doing that. But what I see over and over on social media are people writing into this podcast is, man, this is so complicated, man, this is really hard. Now I built it. Now what? There are way more moving parts than I thought. And it’s like, yeah, that’s why the stairs step exists. That’s why the real purpose of the stairs temp approach is to get you the confidence and experience skills, time and money to be able to do that. Next thing that’s a little harder. So you’re not trying to eat an entire watermelon at once. You’re trying to eat it in small pieces. You’re not trying to boil the ocean you are trying to look for yet. Another analogy about how doing things that are too big or too complicated right from the start can be challenging. 

Now, does it mean that you won’t succeed if you don’t do the stress simple? Of course not. It doesn’t. You can get lucky and some founders have more confidence, experience, skills, time and money than others. And so maybe you can skip some steps, but that’s how I think about it. It’s not just about, let’s say you had half a million dollars in the bank and you own all your own time, therefore you can just burn it down and you have a little bit of money. Should you still skip the early stages? I mean, do you have the confidence, the experience and the skills to build, launch market support, grow, manage engineers, do all these things to SaaS? If you’ve never done it, probably not. It’s really fucking complicated. I dunno how else to say how complicated and how hard it’s going to be if you’ve never done it. 

You just don’t know. And I’m not saying that to toot my own horn or the horn of SaaS founders around the world. It is just one of the more complicated businesses you can build on the internet because building a content website or an email newsletter, there’s hard work that goes into that, but you grind, you get better. You can just do it. E-commerce is not as complex now. E-commerce a pain in the ass with products and physical things and maybe manufacturing, yeah, there’s things, but ask anybody who has tried to start a SaaS, even when they have multiple successful businesses under their belt, if they haven’t done SaaS before, it completely knocks them on their ass. In general, that’s what happens. And most people underestimate how hard it is, and that is the point of the stair set method. So should you skip? I don’t know. 

Probably up to you. Do I think people should acquire more businesses than they build? I do. And in fact, several of my early successes were actually acquisitions. And for years, I preached this to anyone who would listen and no one wanted to listen. It became this thing of like, well, I don’t want to buy it. Well, what if the code quality is low? Well, how do I know what’s good? Well, how am I taking a gamble away? I just want to build my own thing I really want and fine. I heard that enough. I listened to the market. I pivoted my approach. I pivoted my message from these early days. But I love acquisitions. If you can find, I mean, think about it. I made a million dollars from hit tail. I spent $31,000 on that thing, and all the revenue plus the exit sale price was a million dollars. 

It completely changed our life. It had like a 90% net profit margin too. It was just me with a couple of contractors I bought that I couldn’t have gotten there that quickly. It would’ve taken me years longer to build it and find product-market fit and do it, but I was able to acquire it.net invoice. I acquired that, and that changed my life, not in the way of, oh, it made us wealthy, but it showed me that I could really do this. And then I had the skills and I learned a ton talk about stair stepping. It really, it wasn’t part of an ecosystem because there weren’t these app stores back then, but it kind of just had SEO and then as the marketing channel, and that’s what I talk about with Stepping is you pick that one thing and it’s kind of got one marketing channel. 

So you’re not trying to learn all marketing, you’re just trying to learn support and product and shipping and maybe sales if you need. You’re learning these other things along the way and you’re kind of scaffolded with it. So done Invoices was great because it made three, I guess at a peak, it made five grand one month, but it was onetime sales. It wasn’t subscription. So in a lot of months between two and $4,000, and that made our house payment. Plus we didn’t have car payments, but you get the idea. It was just a lot of extra money for us. I was working full time at the time. Sherry was still in grad school. And so I like acquisitions and I think if you could jump to that point of acquiring a full blown SaaS and you have the money to do it, cool. The challenge with what you said anonymous in the voicemail is buying something for 20 or 30 K most of the time that those things are so early stages, there’s not much there. 

And so the fact that I bought Hizo for 30 K, it was doing two or three doing two grand a month, maybe. I don’t even remember, somewhere in that range. It was pretty early these days. If you buy something for 30 grand, I just don’t know if there’s going to be enough there to teach you anything. Or if it’s still this super pre-product market fit thing that’s done. We did a lifetime deal with Sumo and now we’re selling it. It’s like, do you have anything there? That’s the big thing I’d be thinking about. Is there enough here that A, I can learn from it. But B, I have actually improved my chance of success because the acquisitions that I’ve done and that I’ve seen work are the ones where it does have you in that product-market Fit range. Because finding product-market fit, if I’m going to build SaaS from scratch these days, it’s like, what? 

12 months, 18 months, 24 months is a long time. And if I can jump ahead to that, well, I’ve saved myself a ton of heartache and headache. That’s really the way I probably the only way I’d be thinking about it. So thanks for that question anonymous. I hope that was helpful. And thank you for listening to this episode of Startups. For the Rest Of Us, if you keep listening, all keep recording and be sure to send any questions you have into questions at startup For the Rest Of Us dot com. Or you can go to the website, click ask a question in the top. Navigation. It’s been amazing having you here today, this week, and every week. This is Rob Walling signing off from episode 778.