Bootstrapped Web - Why is SaaS hard?

Why is SaaS hard?

Aug 30, 2024 - 50m 51s

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Today:

Why makes SaaS more difficult than other business models? Rosie first customers! Brian's pricing experiment update. Training businesses. AI waves. Profitability at $1-2m. College Football. US Open Tennis.

Brian's stuff:

Brian's "One Month MVP" service
Brian's SaaS, Clarityflow
Brian on Twitter: @casjam
Brian on Threads: @brian.casel

Jordan's stuff:

Jordan's company, Rosie
Jordan on Twitter: @jordangal
Jordan on Threads: @jordangal

Discover more and add this to your library.

Join us in the (free) Bootstrapped Web community on Ripple.fm

Today:

Brian's stuff:

Brian's "One Month MVP" service
Brian's SaaS, Clarityflow
Brian on Twitter: @casjam
Brian on Threads: @brian.casel

Jordan's stuff:

Jordan's company, Rosie
Jordan on Twitter: @jordangal
Jordan on Threads: @jordangal

Sponsors, Brands, and Products

Ripple.fm

Join us in the free Bootstrapped Web community on Ripple.fm

One Month MVP

Brian's 'One Month MVP' service

Clarityflow

Brian's SaaS, Clarityflow

Hey Rosie

Jordan's company, Rosie

AI-Generated

College Sports Excitement

The episode kicks off with hosts Brian and Jordan celebrating Brian's plans to attend a Michigan football game, embracing the excitement of being national champs. They humorously discuss their expected spending on team swag and family outings, creating an upbeat atmosphere.

Tennis and the U.S. Open Experience

Brian shares his recent experience at the U.S. Open tennis tournament in New York, reflecting on the unique energy of the event and the thrill of watching top-tier players from close proximity. The discussion highlights the vibrant atmosphere of the tournament and how it feels distinctly New York, particularly with the high prices and social hierarchies present.

New Beginnings with Back-to-School

Both hosts express a sense of renewed focus and energy with the arrival of the back-to-school season. Brian discusses how having uninterrupted time in his home office allows him to concentrate better on work and tackle new business resolutions.

Business Milestones: Rosie’s Paying Customers

Jordan reveals the exciting news that his company, Rosie, has converted trial users into paying customers, marking a significant milestone. The discussion revolves around customer acquisition and the importance of understanding the entire user funnel for future growth.

Experimentation in Pricing Strategies

The conversation shifts to Brian's recent pricing experiment, where he eliminated the free trial option for his service. Insights from this experiment suggest a potential uptick in revenue, prompting Brian to reconsider the future direction of his pricing strategy.

Shifting Focus from SaaS to Training Businesses

Jordan discusses his evolving mindset around launching a SaaS business, expressing hesitation about investing time in such models due to market saturation and competition. He explores the potential of pursuing a training business instead, emphasizing the growing demand for skill-building in technology, especially as AI reshapes job roles.

The Future of Work and AI Integration

A key theme emerges as Brian and Jordan contemplate the workforce's future, highlighting the rising need for tech-savvy employees in non-tech industries. They predict a trend where more businesses will seek to integrate technology, creating opportunities for training around those technologies.

- The excitement of college sports can make family outings memorable, especially after a championship win.
- Experiencing major sports events like the U.S. Open can provide thrilling moments and unique atmospheres that are integral to the sports culture.
- The back-to-school season offers an opportunity for renewed focus and productivity, especially for parents running businesses.
- Converting trial users into paying customers is crucial for business growth, and understanding customer needs can enhance retention strategies.
- Business owners should continuously experiment with pricing strategies to understand their market better and to maximize revenue.
- The challenges faced in launching traditional SaaS businesses may lead entrepreneurs to consider other viable and potentially lucrative business models.
- As AI technology evolves, businesses will increasingly require knowledgeable employees who can leverage such tools, indicating a shift in workforce needs.

Transcription

Brian, it's Friday and today, today we head to Ann Arbor.

Oh, you do.

We go to the big house.

We're gonna be insufferable national champs.

Everyone's gonna be walking around with a chip on their shoulder.

It's gonna be beautiful.

Awesome, it's gonna be fun.

Beautiful.

The whole fam?

Whole fam, I expect to spend the same amount on swag and like Lulu Lem in like Michigan collab swag as I did for the entire weekend, but I'm prepared and I'm excited.

That's awesome.

Yeah, just a couple days ago I went with my dad to the U.S. Open, the tennis U.S. Open, at the day out there.

That's a good one.

It's great.

We went to the first round, which I love doing at the U.S. Open because you get to walk around to all...

It's a festival.

It's like, there's so many people.

We had tickets in the main stadium, Arthur Ash.

Okay.

It saw some good matches in there.

In the first round, you get to walk around to all these courts and wherever you want.

like we literally sat front row watching like number 12 in the world play number 20 and it's just the most incredible thing to see that close.

These guys are so crazy good.

Yeah, it's fun.

What I recall from the U.S. Open, I think I was the same situation, correct me if I'm wrong, but you have tickets to an event in the main in the Arthur Ashe season at a certain time, but then you just you can just walk around.

That's right.

There's like a day ticket and a night ticket, so we have the day.

We get there at like 11 a.m. We're there to like 5 p.m. And and you get You get seats in the stadium and you just and so there were like two Matches during the day that we popped in for like a set of one of the seats for during the day in the stadium in the stadium Okay, outside the stadium.

There's like 20 more courts.

What I remember wherever you want what I remember is how small the courts are Whether close.

Yeah, you're hanging out.

It's so weird.

You know because like you know, I've played tennis I'm not I'm terrible at it, but when I when I play like a tennis court feels like a tennis court It's it's kind of big, right?

Yeah, but when you're up close watching these pros and the court is surrounded by fans It makes it feel so small.

Yeah, cuz it's like these guys are out sitting at like 120 miles an hour on what feels like a ping pong table when you're that close Yeah, they're all such a weird experience and they make the court look small because they're gigantic athletes They're gigantic athletes.

They're hitting the ball like you can't see it.

It's unbelievable.

Awesome That's it.

That's a great like New York event too.

Feels very New York You're not in Manhattan, but it has a very New York vibe.

Yeah, everything is extremely overpriced and I mean that's New York.

We know.

Yep.

And then there's like a there's a hierarchy like that's where the rich people sit That's where the celebrity sit.

Yeah, this is where we sit.

There's there's the food court and then there's the restaurants and then there's like like we only allow the VIPs over here.

Yes, but they have good drinks, I remember.

Yeah, that's beautiful.

That's awesome, go for you, Dad.

It's great.

Yeah, it's a good time.

Nice, well, yeah, we're gonna go to Ann Arbor and then come back and have a nice Labor Day weekend.

To me, this weekend feels like business new years.

Like I get to restart the year next week, like with all my resolutions and my energy and focus and the kids are back at school.

That's what it feels like to me.

Yeah, this week my this is my kids first week back at school.

Oh, man.

It's it's so great to have like my house back From my damn kids.

Yeah, like just you know and also like You know my wife works in the school.

So she's okay It's it's so nice to like have the flexibility to work at home and be close to my family and see them off to school See them come back to school, but man.

I forgot how much I missed having this like like a six-hour period every day where this place is just mine.

Just hanging alone, working, doing my thing, you know?

More like an office, like I'm enmeshed in my home life.

Yes, exactly.

All right, well look, I gotta start off by just talking about something, okay, I gotta be honest, it caught a call to me by surprise, which makes me feel stupid, but the important thing is, Rosie has paying customers.

Yes.

We got, we, mm, strike, hit it, the bell rang somewhere out on the internet.

So this week was like the first like conversion from trial to paid?

No, it was last week.

I just didn't know.

Okay.

So that's the, that's the shameful part.

But besides that, in my mind, I mean, first of all, we've got, we've got a bunch of signs.

Hell yeah.

I didn't realize, but we look back at the month of August, there's a lot more signs than I expected.

Hell yeah.

and then some of them, you know, we have a 70 trial.

So a bunch converted and we have paying customers.

Now here's the thing.

Are you okay?

Like we historically don't like share too many numbers and stuff, but like what can you share?

Maybe this is an off-air conversation, but like in terms of like revenue and number of customers and all that.

Revenue, I actually don't know.

But we got about a hundred signups for the month.

What is the price points that you're offering?

We're only offering one price point right now, 49 bucks a month.

So then some number of those are paying 49 now.

Yeah, that's right.

And so I think the bulk of the conversation business-wise in this podcast will be about like the different faces of the funnel for us.

Of course, yeah.

And I think and that's why I have actually been pretty strict about it.

Anything that falls outside of my current focus on the current phase of the funnel, I kind of don't think much about.

And conversion to paid is a few steps down the funnel and I honestly have not given it much thought.

And that's why I kind of called me by surprise and I was like, oh, I guess some of these might have converted and I look and I'm like, oh my God, we've paying customers, I missed it.

Now we're professionals so we can be honest about this stuff.

Just because they're paying does not mean they're using it successfully and have adopted it.

Like two different things.

Yeah.

Yes.

So I would say thumbs up.

We have paying customers TBD on usage and churn it like again later down the funnel.

And what this proves I think at this point is that um yeah like you said like it's not like um like it still remains to be seen like how much they're actively using it how long they're going to stay and retention and and all that but like it does prove at the very least, I think more than this, but at the very least that Rosie is offering a solution to a problem that definitely exists, that people will click ads and go to and sign up and then actually pay for because they're actively seeking a solution to something.

Yes.

They want something.

Yeah, I think nail in the head.

That's the most important thing out of this month.

And it's more than that.

Like they liked what they saw at the free level and they still continued down the funnel with Rosie before moving on to something else?

Yeah, yeah, and I don't think we should over index the importance of them converting to paid.

The most important thing is actually that we got about 100 signups and people, I mean, they went through the signup process and they got set up and that's kind of where we should stop in terms of like patting ourselves on the back.

But the more important thing for the next phase of the funnel, the activation and conversion part of the funnel is that we feel like we have a pretty clear picture of what people need in order to solve the problem that they're coming in with.

Yes.

So we've been doing the early stage dance of basically anyone we talk to.

We're like, we're gonna extend your trial because this feature that you're asking about is coming out next week.

So let's make sure you have at least a week with the feature to make sure that it's right for you.

Yeah.

Interesting sort of like a quick update.

I wasn't going to talk about this today but actually with clarity for I talked about last week how I'm doing that pricing experiment.

Okay.

Here in the month of August.

And what you were just saying about like, oh, I didn't even realize like people were converting a little of sort of a version of that happened for me with you know cuz I think we talked a week ago and I was three weeks into the experiment of where we have no more free trial and we're just charging up front and and it was in three weeks ago it was in that gray area where like all right we have a handful of conversions on this new offer.

What does that mean?

Like, is it, it seems like it's less than what we would have gotten before with a trial.

But now that we're a week later and we're about four weeks into this, like, there's been a few more conversions.

And now I'm looking at the numbers for the month.

And like, this was an up month.

Like, it definitely was an up month in terms of MRR increase and we had lower churn this month but the experiment is not complete yet but I think now what's different from last week is like now I think I'm willing to give it another month before I make any changes.

You took a step back and have a slightly different perspective or perspective that takes into account a bit more than just how many signups have come in, how many have...

I think last week and it was hard it was hard to think about it last week because I was like And it's it's not a complete failure.

It's not like we have zero conversions here But it doesn't seem like a whole lot So I was leaning toward like all right.

This was like a one-month experiment that I'm probably gonna cut around September 1st um Now a week later just looking at the numbers August looks like a generally positive month compared to previous months like like, you know, if we were like fully plateaued, like this, this could be the start.

If this repeats, if this, if August were to repeat a number of months, then this could be the start of a nice growth.

Oh, wow.

But, but it could just be some, it could, I don't know, that's been the story, like, so, so now, and leaning more towards like, okay, let's not end the experiment just yet.

Let's give it at least another month, yeah.

and so because the other thing about this, there's a few factors.

One is that we are getting more traffic now that we weren't getting before.

So I am curious to know like how this traffic would convert if we were offering the free trial, which we're not right now.

But the other thing is that in August, some of those convert, some of the earlier from like the first two weeks were hangovers from the previous month.

Like they had, they did trial back in July And they just happened to convert in August, but everything from mid August on like we are still getting new conversions who did not go through a trial So that tells me like let's just give it another month and see That's tricky.

There's so many factors you can't tell which factors are important What did it what didn't do it because in September if we just continue and change nothing then We will have like a pure 30 days of like there've been no trials Let's just see how many customers we cut, you know.

One of the things I think we used to talk about, people used to talk about more often a few years ago, is A-B testing.

Yeah.

Right, like you're running an experiment, but you have a lot more traffic, so you have a lot more going on top of the funnel, it could be an opportunity to say, well, let's send half the people through this and half the people through that.

I find it rarely makes sense to actually set that up.

Yeah, and it's so complicated to do that for this type of pricing because you'd have to have like two different tactics like literally build two different bundles and we did build it in a way that it's easy enough for me to flip the trial back on whenever I want to but it's not easy to have like two parallel funnels.

Yes, yes.

We're about to have an opportunity for something like that because we're about to start sending all of the traffic from ads to a landing page.

That's totally separate from the home page and that so that the most important part of the experiment we're actually we're going to be consistent on both and that is the sign up process more than anything else.

Yeah, but it's been fun to build a landing page.

It's funny when you build a landing page and then you like things in the landing page more than your home page.

I mean, I feel like that's sort of natural because I think that landing pages by their nature, they're supposed to be very targeted and you're speaking to one customer.

So they are going to have very effective copy for that one customer, whereas the home page is sort of by design a little bit more general.

This is the product, this is the company.

Yes, very wide open.

Yes.

Yeah, I've had fun with the landing page part, and it feels much easier to experiment.

Like one of the experiments we will do because it's so reasonable to do is just cut the landing page off at the hero.

So there's a hero section and there's a whole bunch of stuff below it.

One of the experiments I want to run very quickly is just cut off the hero and just have nothing to do.

See if they just take action based on what they see.

Yes, headline sub headline graphic promise, you know, done.

That's been like a marketing design approach that I've always been in awe of but for whatever stupid reason I can't like I always want to give people more information and like but you see these high converting newsletter landing pages and sites where it's like they give you almost no information just sort of like a promise a headline and a button or an email field yeah and it's like to really learn more like you go further in.

I think that has a lot to do with where the traffic is coming from and how warm the traffic is, how much work is being done before that page.

But we just do not know.

And our ads are kind of very, they just point out the pain very clearly.

And so if you have that pain and then you get to the page and it promises to take that pain away, the most important thing in the last week that we've been working on is a new sign-up flow.

So we're almost done.

I think it looks great.

I have some concerns.

Okay, you should make some of that.

That's good.

Yeah, it goes from what we have now, which is a button, and you click on the button, you go to a page and that page is a registration page with an account, email and password, or a Google sign-up.

And now it is being flipped where it is a field with a button, and the field is your website URL, and you click the button, and the next screen you see is we are building your agent.

And then, you know, the little circles get filled in and takes about a minute, and that's what my worry is.

It's awesome to get people further into the funnel.

So it creates the agent, and the next page it automatically sends you to is preview your agent, and then you can listen to a few recordings of Rosie talking about your business.

And then if you like what you hear, then you hit claim my agent, and that's when you create an account.

So we'll let people go further in adding more value, but I'm worried about that second page.

If it takes 60 seconds to create your agent, I'm worried people are going to drop off.

Maybe they'll be really excited and think it's very cool.

Maybe they'll close the window.

I don't know yet.

It's funny.

I'm one of my MVP products that I'm working on for a client right now is It's got a, what you just described, it's got a very similar home page flow where they, the first step is they put their website into it and then we hit some AI queries and it comes, it's actually a pretty cool product.

I'll probably talk about it once they're okay with me talking about it live, but I'm not going to share what it is in case they don't want me to, but it's pretty cool because because it does that, and there is a step two where we have to wait for a result to come back, and then a step three where we do some analysis and run some stuff, but like part of it is like we're showing like a little animated spinner to say like, hey, our robots are working.

Uh-huh.

Is it tight?

Yeah, here we go.

Yeah.

Similar, but I've already gone paranoid about it and asked rock like, okay, see what you you to get that down.

Basically every second it takes, you know, beyond the first five seconds is a problem.

So we get it to 10 seconds, instead of 30, whatever it is, like we show progress nicely, but I don't know, it feels a little bit dangerous.

Yeah, yeah.

What else, man?

All right, I've got some high level thinking that I've been doing a lot lately and I'm starting to get, that I think a little bit more focused.

All right.

I'll try to make the sense of this without rambling on too much.

But all right.

So whoever's been listening to this podcast this year and for many years, you know that this year, 2024 for me has been a year of exploration to say the least.

I talked about the clarity flow stuff.

That's still running.

I've got a team running that.

We're doing those experiments.

We're shipping some features.

but clarity flows, you know, it's four years in.

And so I'm now moved on to thinking like, what's the next thing that I'm building here, you know?

And I've been jumping around.

I've been exploring and hacking on ideas.

I did the ripple idea.

I talked about sunrise dashboard.

It's something I've been playing around with programmatic SEO.

I've been, you know, earlier in the year, I was playing around with YouTube a lot and doing some video content.

and just exploring and just trying to be active, trying to get my wheels turning and trying to see what I can learn.

And, but, okay, and I think I've learned a lot, I also learned a lot through the consulting stuff, just in terms of what it means to offer this type of consulting, and then, generating a lot of byproducts in terms of development, tools and components and UI stuff.

All right, so, a lot of stuff, A lot of activity, a lot of analysis, a lot of thinking.

But I think that the thing that I'm now, the frustration that I'm trying to work through now is like, okay, I think it's time for me to pick a direction, pick something to commit to a longer term than just a month here or month there, right?

Something that I want to build, like I'm trying to figure out like, what is it that I truly want to commit to building for years, in terms of the next business, the next big asset that I want to grow, right?

Okay.

Not a small thing to just make money in short term, but like...

Yeah.

Folks.

There's probably going to have to be small steps that make money in the short term, but even whatever those little stair-stepping stone things are going to be, I don't want them to just be like random things like, hey, here's a thing, go buy it.

Maybe I can make a buck real quick.

It's got to be part of a larger strategy toward building a, I really want to commit to a mission of some kind that I'm fired up about that I can show up every day for years to build something.

Like that's what any great business asset is going to require, right?

Yes, years.

Um, and I, as frustrating as this year has been with being so unfocused, I think I needed a home alone to close the window.

Landscaping time.

I think I needed this year and I'm happy that I've been able to take the time to explore or try to learn a lot about what I truly want to sink my time into, I think, all right, one idea that I want to talk about here that's really on my mind is just the concept of SaaS, right?

You know for years that I, like you and like probably a lot of listeners of this podcast, I've been on the quest to make a SaaS business work.

And for me personally, I know this This is not the case for most of us here, but for me, I think I'm finally just like fully letting go of that dream a little bit, and just really understanding for me why I don't think it's wise or ideal or optimal for me to just pick a SaaS business idea and commit to that for however long.

I think that's smart.

Let's get into that.

And I have a specific, how you got there?

The thing on that, when I consider all these different business ideas, why is it that I've had a hard time choosing a SaaS idea and saying, yes, I am so fired up about this idea, and this opportunity, and this evidence that I see around this opportunity, that I'm willing to put in many months to see this through, right?

Like, I have not been able to get myself to that point about any single SaaS idea.

I have plenty of SaaS ideas that I see opportunity with that I think would work fantastically well for someone who wants to do them.

But every time I start to think and game out each of these ideas, it's like even if it's successful, even if it gets first customers, it's still such a long road to make it work and it also requires a lot of just like almost like magical thinking to think that like you're going to be able to get out of the desert on this, and you're not going to waste a year or more on this idea.

Yeah.

I can't be convinced of that for any SaaS idea, and I think part of the reason for that, of course, it comes down to product market fit, why is product market fit so hard right now in SaaS?

I don't care who you are.

If you are starting a new SaaS in 2024 and you have not reached product market fit, but you know what I'm talking about.

This is the hardest thing to nail.

And so many people that nail it, there's so much luck involved.

It really doesn't feel like this reasonable, repeatable thing to like bet your years of your career on.

Dude, exactly.

And this week I'm thinking a lot about like, why is that so particularly hard in SaaS specifically?

Did you get any answers?

Here's an answer.

I think that it's not just about, it's true that SaaS is so much more competitive than it has ever been.

We know that.

We know that every category is hyper competitive now, every single one.

We also know that competition is coming even faster.

I talked about last week that it's so much faster and easier for anyone to spin up a new competitor in any space.

to discover something relatively not competitive that works and gets product market fit, it will be competitive faster than in the past.

Here's the new idea that I'm thinking about, or the new reason why I think it's hard.

It's, you do need to dominate your market, you have to really win your market for every single customer.

Like, it's great that you have competitors.

It's great like I think that's a good thing because it proves that there's activity there's there's a market there Like you're gonna have competitors.

That's fine that the existence of competitors shouldn't scare you off from any business But in SaaS but in particular for you to win each individual one customer You have to completely obliterate every single one of your competitors because because your customer is not gonna choose any of your competitors They're only going to buy from one and they're choosing you and and the switching costs aren't that high?

You're selling them on York on your solution, but I would say these days even more you're selling them on like hey Don't buy those 50 other SaaS competitors to mine Yeah, even though you could hurt about them from someone and you saw their advertising and And that is unique Like I hear that that's unique to SaaS right because think of every SaaS tool that you pay for you only buy one of them Like for clarity of flow, we pay for customer IO.

That's our email service provider.

We don't pay for any other ones.

Like we pay for one hosting provider.

We pay for one this, one that.

Like we're not gonna pay for the other ones.

But that's not true in other business models.

Like training, course businesses, educational businesses, coaching businesses, even consulting, like people buy multiple community businesses.

People buy and belong to multiple communities.

People buy many courses.

People hire many coaches over time.

Sometimes simultaneously like they hire many consultants.

Like you don't have to completely that that's why those businesses are easier to sell to customers.

Every business is hard in some way.

But like you don't have to dominate.

It's easier to unique.

these are to differentiate it's not as competitive in that same way where it's like a business expense that happens every month and therefore you choose one and you use it.

Yeah and it's like and it's like the buying the buying proposition on a SaaS business for any customer it's always you always have to get over the main objections are like well why don't I just do this or why don't I just use that like you don't have to get over that that objection with other business You only have to do that in SAT, it seems.

Yeah, okay, so here's the counter to that.

The normal argument against that is in categories where it's a regular take email, for example, right?

If you assume a very large number of businesses and a large portion of businesses online are going to use an email solution, you can battle your way into a niche and do things slightly differently and therefore, stake out a position, and because the market's so big, that position can still be worth pursuing.

Yeah, 100%.

Yes.

Right.

That's the logic of it.

In practice, the distribution of customer focus is extreme.

I mean, when I talk to RVCs, the only interesting thing is either winning the market or becoming number two at worst because everything congregates toward the very, very, very few at the top.

So if you want a bigger business, you have to win the market or be number two at worst.

But even all of that is like in the aggregate at the high level, like when you make sense logically in practice.

Look, you can still have a great business being the tenth most popular email service provider, or any SaaS.

I challenge what you mean by your business.

Well, like any bootstrapped business or low, like you could, like clarity flow is not setting out to be the biggest platform for coaches, but like we could have a solid business, hopefully someday if it were to get through these growth plateaus, right?

Sure.

Like, but part of the reason why there are growth plateaus is because there are competitors and there are there are always alternatives and it's easy enough for customers to switch to another one or just choose another one.

Yeah, and look, what I'm saying here is, look, obviously, there are incredible SaaS businesses to be had.

There still are.

It's still to me like probably like the Holy Grail business model.

It's fantastic.

We see it every day, people build and grow and sell SaaS businesses and it's incredible.

What I'm saying is, this is mostly speaking for me where I am at in my career and life and everything, it's like what it takes to start and bootstrap and kind of put all my eggs and that basket of like I've got to I've got to find a SaaS idea to make work.

It's just that to me like I'm the more I think about this like there are other business models in the world where people with my skill set and my strength and weaknesses and I could I could build a fantastic business another way doesn't have to be a SaaS.

Okay I like you opening up in in this way on on the mindset and like the type of business to pursue, what I, I don't think it happens that often.

Greats ass businesses are actually not that common.

There are a lot of them, does not mean they're that common.

Think about the web of people that you know, how many great businesses are there?

Not that many, and my real problem, a real problem is our definition of a great business, it's bullshit.

A million two million dollars a year is not a great business, it's a million bucks in this economy is, I hate that the cap or what is considered by us to be a great business is really not.

It's really hard, you have to keep running forever, you have to sprint.

You can't just go on vacation and rest on your laurels and have your business keep growing because other people run it for you.

I do think that a million, a two million a year is still a pretty life changing business for most people.

I agree.

A, very hard to get there.

Yes.

That's it.

You're stealing the top, like 1% once you get there.

Right, and when you get there, how much are you actually taking home?

Out of a $2 million a year business that's growing and needs to be fed with customer support and success and marketing.

most people, the margin, sure, gross margin, I have to cost a good soul, looks amazing because it's just hosting.

But how much is actually being brought home?

Right, this is that conversation I had before.

Well, okay, like Rob, it's a while back, remember I just wanna finish this because it's stuck with me.

I remember being at like 10 or 20 K a month with Card Hook and Rob was at like 100 or 150 K a month with drip.

And I was like, dude, how much profit are you taking?

And he was like, are you kidding me?

You can't, if you want to take profit, you're consciously putting a weight on your business and slowing it down, and you have to make the trade off.

And I was like, in my back of my head, I was like, that's crazy.

When I'm at 100K, I'm gonna be banking.

And he was like, you let me know when you get there.

It's not how it really looks.

And he was 100% right.

Okay, I don't like it.

I don't like selling ourselves short.

I don't like seeing all this other stuff out in the economy.

I hear you.

Such better potential.

If I were about to, if I were to start a new business tomorrow, I don't think it would be.

It definitely wouldn't be SaaS.

Yeah.

I don't even know if it would be online.

I think I'd rather go to the SBA and put 10% down and acquire a local business for three million bucks and try to make it better with my digital skills and outsourcing to the Philippines and doing all this stuff that we know that's more modern than the person is running the $3 million painting business, knows.

Totally.

And I think there's more money to be made there.

I think I mostly agree with everything that you're saying, about a, call it a million to $2 million business, especially in the world of SaaS.

And I don't think that this is for every SaaS, but yeah, probably for most of them, you're not very profitable.

You're gonna be growing the team at that point, you're gonna have server costs, you have customer support costs, sales and marketing costs to remain competitive because it is hyper competitive.

and you do need, and so like, yeah, I could easily see how most SaaS businesses who cross a million or two million, like, I do, well, okay, they might not be like crazy, like beyond belief profitable, but the people working in those businesses, the founding team, like they're making a good income, like you're not, you're getting paid a full market salary at that point.

Number one.

Yes.

Which none of us are actually after is the goal.

Exactly.

But the other point that I'll make is that, because look, my SaaS business is not in that range right now.

And I feel like I'm not even going to come close to the idea of having a sellable asset that I could have a life-changing exit from until I get to that one to two million or above level.

So once you do get to that one to two million above, then you're talking.

Then you're talking, then you know that what you are working on every day is something that in all likelihood you will have a life-changing exit from in the coming years.

If you own the company, unless you really come to me from, anywhere between two and 10 million dollars is a lot of money.

Yeah, a lot of money so once you've grown that to over a million You you are now working on a Fantastic asset that that's going to be great unless you really screw it up.

Yeah, and that's the dream everyone's chasing it I don't see nearly as many people reaching that goal.

Yeah as as as I would but I would also say and what I'm focused on right now like this week thinking about about where am I going to focus my effort, my business going.

I'm going to start my next business that I'm going to dump years of my life into.

I think that there are other businesses that could get to 1 to 2 million and above and be very profitable.

I'm thinking a lot about training businesses, community businesses, and templates and components, you know, building for, building for builders, you know, that kind of business 500,000 bucks a year, you're probably taking home 400, which again, that's a lot of money.

You can't sell that business for 5 million bucks.

Well, okay.

So, so here's another thing that I'm getting very interested in right now.

And I'm starting to like talk to a lot of people about this and try to learn.

Okay.

What I'm really interested, what I'm starting to set my sights on in terms of where where I think I'm gonna be really focusing for a long period of time going forward is, I think it's gonna be some kind of training business, educational business, but I'm not interested in it being like a solo creator who sells a course type of business.

Okay, I mean, those can be beautiful businesses, those can be beautiful, you know, the creators who do amazingly well, Well, it's a fantastic business.

Yeah, I think Aaron Francis is gonna make a million dollars here.

Oh, hell yeah, if he doesn't already.

Yep.

The, you know, I'm so inspired by those kinds of businesses, right?

The creator business, right?

But I'm thinking more about like, well, okay, shorter term, it's probably gonna look like templates, taking my UI stuff and selling it as like a template library.

That's probably like the next thing that I'm looking at and that's more of a short-term thing but I think it's a stepping stone to expanding out into a bigger company here that can be a training thing.

Like I remember I'm thinking more about like a training company with multiple instructors and and whether that's a team of instructors or we bring in like guest instructors and guest coaches to like feature them and they teach a course here and there and like having like a whole library of courses and community and so if I think about like here's a little pattern that I think back to like back when I started audience ops years ago when I had the it was the day I was sitting at microcomp in Vegas and it was like the day where I realized like oh there there could be a business in selling blog content as a productized service to clients and I was like I think there's an opportunity here I see a lot of people who have a need for this, but my personal rule for this is like, if this business is going to work for me as a business that I want to start, I cannot be the one writing the articles.

Like I'm not going to write articles for clients.

Like me, Brian, yes, if that's a requirement, then I don't want to do that business.

I agree.

And we business actually.

Yeah.

And so I never wrote a single article for a client, right?

But I built and sold that business.

It was super profitable for years, and then I sold it, and it was great.

And I did it through building a team and systems and processes.

And I sort of have that same mindset here.

If I'm going to build some form of a training company, I want to get really good at the system for researching, designing, building, deploying courses with other instructors, you know, bringing in outside instructors or building a core team of instructors, something like that, I don't know all the details and how that would work, maybe what the financial model might be or the licensing deals or royalties or whatever that might be, but like, that's sort of interesting to me.

And then you sort of pair that with templates, UI components, tools.

So I'm talking about like four builders, fellow builders.

And I think that's something that I could get fired up about.

And I could also see a path to like making this work as a profitable business without too much like magical thinking, you know, without like the desert.

without like hope of making it out of the desert a year from now, like the way that I would with any SaaS idea, this seems more attainable.

And at the same time, I could see a path to building a multi-million dollar business that can actually be sold in the future, which is, you know, like, let's not lie.

Like, that's definitely a goal of mine too.

That's the goal, hell yeah.

Yeah, the only thing I think the key thing that was wrong with the business model of services in general is that there's marginal cost for everything, and that's the enemy.

So anything having to do with training or courses or, you know, curriculum, that type of a thing, as long as you make it once, and then there's no additional marginal cost for each sale, then you have the right business model?

Yeah.

Yeah, I think that they're, I think with like real real is the wrong word, but what I mean is like these like scalable training Companies that I'm trying to study right now trying to learn a lot about them.

There are a few out there that are good examples Oh, there's a there's a ton of them.

It's a huge market.

There's like Just in the text base alone.

You've got like boot camps everywhere.

You've got There's a bunch of word WordPress word for me a few years ago Yeah, what's the one based in Portland, not egg egg?

Egghead, I'm Joel Hooks.

That's it.

I literally just emailed him this morning.

I'm going to be interviewing him on the Open Threads podcast next week.

Okay, cool.

I can't wait to learn from him.

That's what I remember from Joel.

I go to a lunch in Portland with the microcon crew.

One of the first lunches of after moving there, we're sitting down, we're hanging out having like, I mean, our normal lunch spot.

So I think I'm feeling myself at this point because Cardoaksat like 50 came off.

Okay.

Joe comes, sits down, tatted up, loose, happy, no ego, no, not just this casual dude, sits down, starts talking to his numbers and I'm like, oh, okay.

That's a better business.

So he's been doing great for a long time.

And they just put out amazing quality, amazing quality.

I can't wait to meet him.

I'm going to talk to him next week, and really pick his brain on air on the Open Threads podcast.

So that should be pretty cool.

I'm talking to a few other course, I'm also talking to Chris Oliver from GoRails.

He's built an incredible business over there.

And so what I'm interested in, like I said, short term, I'm probably going to be selling like templates and components and UI stuff because that's like a buy I already have that it's like a byproduct of the work that I've been doing but I see that pairing with like training on how that stuff is built longer term in like sort of like the sort of like the mission if you will then I'm start and I don't have like the exact elevator pitch for this yet but what I'm getting kind of excited about I sort of see a wave coming and non-developers trying to become developers in a way yes it's AI driven okay there's we're already in like an AI wave right now in terms of like tooling with AI right like you're building an AI tool like there's that wave exists and it's real right I think like that were also on the cusp of a people wave of, look, people like me and you and most of the people listening to this podcast, we know how to leverage AI to build software solutions in businesses, right?

And AI makes it incredibly easy to build software solutions.

So that that viral tweet of an eight-year-old building a software thing with cursor this week that was incredible, right?

But the rest of the world is not there yet Mm-hmm, yeah, big gap huge huge gap and they might see that this stuff is possible But you don't know how to you can't use AI to build a software solution if you don't know the right questions to In the prompts and the and how and how software gets architected and and what's actually possible and how the big pieces fit together people like me, I can direct an AI or I can build myself to put it all to put the pieces together, right?

I think that there's already a ton of training out there for like developers, teaching fellow developers how to build this or that stack, but I think that there's a larger wave of, because businesses This is everywhere are going to be hiring builders at a much, much higher rate in the coming years.

I really believe this.

I think that like small businesses everywhere, like businesses who wouldn't normally hire developers, they're going to, like hiring a developer is going to become the norm for like every business, like every single business to just solve their, their streamline your business with technology and AI.

Yeah, I'm seeing a lot of agencies that are starting to specialize in that and they're coming stuff They're they're almost kind of non-technical themselves They're just selling to people who are completely not technical and they're like I will improve your business Yeah, basically don't worry how there's a lot of opportunity I think the past couple of decades it's it's been like most businesses don't even really know like what's possible with Technology and so they they just stick with their spreadsheets and their paper and their and they're you know a person-of-person interactions.

But now we're in a time where businesses are becoming a lot more savvy about what's actually possible.

You're literally seeing it with your customers on Rosie.

Like small businesses are starting to get technology.

And they need to, yes, they need, they're going to be hiring tools for that.

They're going to be hiring consultants for that.

They're going to be hiring employees for that.

The founders themselves are becoming more technology, you know, technological.

So I think that there's a workforce wave that's coming where people need to be skilled up in order to be hired to be the builders in these companies.

They need to be skilled up to offer their consulting services to companies and they, and maybe they're running a business themselves and they want to skill up to streamline something in their own business, you know.

I like that identifying that.

To me what stands out is the potential to either improve your high-ribility or build a business around these skills that make learning it very, very valuable.

Beyond just like, hey, I want to accomplish a task, so I want to learn how.

Yeah.

I think that like, that's why the training space, especially in tech, has already blown up for the past 10 years.

Like, there's a massive industry of these tech boot camp, like course educational companies.

You're motivated.

You can get yourself into a six-figure salary.

It doesn't matter where you were born.

Exactly.

What are those instances?

And those have done really well on what they're selling is like, hey, you're in some other industry and you want to bring it into the tech industry.

Right.

I would take higher ability.

And that's just to get a tech job.

And I think that's going to continue to play.

But it's going to get multiplied now with AI because like every single business is gonna have a wave of demand for more of these builders.

It's not just like get hired at a tech company.

It's gonna be like get hired at like literally any business because they're all hiring technical builders.

You know?

Very interesting.

I saw something, I mean, that's just like my hunch but like that's sort of what I'm seeing.

Like even like in some of the clients that I'm working with on the MVP service, right?

Like I'm finding like people are in these like regular non tech industries.

and they are technical, like small business owners are using zappiers and no codes and to wire up chat GPT to streamline things in their own little small business.

Yeah, you know, and like, that's like, wait, normies are starting to do that kind of thing, like that's a little lagging indicator for like, there's a wave here, like you are, you know.

I like that, I don't know exactly where it leads, I don't know.

It doesn't really you don't need to know where it leads right now.

Yeah, you're kind of heading that direction.

I saw something the other day that stuck with me where This video is showing How to sell websites with AI and what he was doing was Take a website your prospects website Put into these tools.

Yeah, take all the data to have it build a beautiful modern website with all the existing data.

You have done no work and it has cost you nothing.

And then imagine approaching a business with, I rebuilt your website, do you wanna buy it?

And imagine competing with someone who said, let's have a conversation, I'll give you a quote, then maybe I'll start working on your website.

So even that's just a little unfair thing to take advantage of that if you know how to do it, you're at it advantage.

100% like a lot of that stuff is like if you start to think about it like now in the age of AI All all that all that kind of stuff like I my whole early part of my career was selling people on redesigning their websites, right?

and like That stuff is going away like what like yes, there are there's always gonna be consultants who can help with that But I think that we're just a few years away from like like mainstream, small businesses being able to do that themselves.

Like, you know, like we're really entering a phase now where everything is going to become so much faster and easier, and maybe the whatever, like the older business owners are not going to be able to, you know, tool it up themselves, but they're going to be hiring younger folks to get into their businesses and get set up.

Yeah, that's fun.

All right, well, I like this detour that we took.

I'm going to jump off to my mastermind.

There you go.

I got those on Friday now.

There you go.

We're going to keep working our way down the funnel.

We're going to go celebrate Michigan not losing their opener to Fresno State.

All right.

And, uh, it's a great Labor Day.

All right, later, folks.

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