A failed startup is nothing to be embarrassed about, most of us don't have the guts to try it!
You shouldn't expect much interest in the code, the value of a company's code without the business and people is quite negative when there isn't some technical secret sauce. Even if there was some technical wizardry people would just care about understanding how that one part worked and probably not use any of the code itself.
Konfig founder here, 100% agree. I wouldn't recommend anybody to actually try to decipher/deploy Konfig for their own use. I will say that one of our customers was able to deploy our docs platform for themselves while they find a way to deal with the blowout of Konfig shutting down.
>I wouldn't recommend anybody to actually try to decipher/deploy Konfig for their own use.
This is interesting. I used to work for a mortgage start-up years ago. They built several products for banks and home builders, such as a mortgage vault and tools for signing mortgage documents online.
One condition I still remember was that bank customers required us to put our code in escrow, held by lawyers, in case the company went under. I always wondered if customers could rebuild the code, allocate more resources to develop and maintain it, or simply look for an alternative solution.
they came to us for our solution. I assumed they either couldn’t build it themselves or didn’t want to invest in a custom solution.
i have been involved in quite a few code escrow agreements but none that were actually used. i'd be curious to hear any stories about cases where that did happen.
in my experience it has just been a way to help business decision makers credibly claim they are managing risk when buying from a startup
I imagine that it is for either insurance or regulatory reasons. Someone upstream is nervous about the bank relying on a startup for its core infrastructure, and is only placated by knowing that the code is in escrow. They're not themselves programmers and don't know how useless the code would be without the institutional knowledge of the startup.
True, having had a few increasingly less unsuccessful startups, a thing I learned the hard way is that:
1) You should not build a tech startup unless you have either a business plan for getting revenue quickly or shit ton of investment. And you won't typically get investment unless you have at least some notion of where the business is going to be. I've made this mistake. Techies mostly don't understand the business side well enough for this to work.
2) Most companies aren't startups. They are just companies. With revenue. That pay the bills. A startup is a company without revenue that is living on borrowed time and money. Especially if that's your own money, you need a plan for this.
3) VC funded companies mostly fail. A VC's business is to ensure that those companies that are going to fail, fail quickly. They fund their VC business with the handful of companies that don't fail and succeed spectacularly. So, getting "accelerated" or "funded" doesn't mean that you are on a path to success. It actually means you are on the spot to beat the odds and that you don't have a lot of time left. Chances are that you will fail quickly.
4) If you are a successful company with revenue, you don't need VCs. So you should question why you are talking to them at all? Are you struggling to make revenue? A VC won't fix that.
5) A lot of VCs are lazy and don't get interested until you are already successful. There is a weird dynamic here where companies get funded early and then fail. Or don't get funded and then succeed.
My current company is four years into being completely bootstrapped. As in we struggle with revenue and we put in our time when able. I mostly live off consultancy that I do on the side. The company just had its third most successful year in a row and is getting close to where I should be able to retire as a consultant soonish and focus on the business instead. But it's been a long journey.
As for open source. I open source anything that is not business specific or part of our core IP. One good reason for this is that I hate rebuilding the same crap when I start my next company. I've been through this and that kind of stuff just slows you down. People obsess about intellectual property in startups. The reality is that most software is not that valuable. But you still need to spend time, money, and energy building it.
So, I contribute a lot of tools, frameworks and what not of which I am the main user. Just so I can continue to use that stuff on the next project.
This is not the first story I've heard of a product that isn't quite right, but when deciding where to pivot, fell into AI as the answer and then failed. I've said it before, but it bears repeating - when we figure out what AI is good at and what it is not, we will start treating it as a tool instead of a goal, and our product ideation will stabilize.
My opinion: In software, the best use of AI is to create a do-what-I-mean UI. That is so-called AI (more to the point, use of LLMs and vision, speech, and audio processing) can allow new modes of interface that help a user operate the computer and achieve something that was nearly impossible with the user at the raw controls.
This will not produce superior work to someone who knows what they're doing at the controls. A competent programmer doesn't need this. An excellent touch typist doesn't need this. But let's say someone who has a vague idea of what outcome they want, but an incomplete understanding of the mechanisms to get there, can get further with a do-what-I-mean UI.
Agreed. It moves the interaction to something like you'd have with contractors or service staff. Request, receive, review, accept or send for revision.
One of the keys there will be providing a way to nail down the parts that are correct, hold them constant somehow, and "in-paint" the bits that are wrong. For images, we have this figured out, but for larger works, we'll have to think through the equivalents.
The problem is, people do want the product that the author was originally selling. A high quality SDK from OpenAPI spec is specifically a product that well funded YC startup I used to work for paid for. So I would contest the characterization that it was a bad idea.
What we don’t understand yet is what that means. We have never had such a thing before and it’s not clear what the patterns are that will make the best use of its known attributes with the least exposure to downsides — whether those be related to the tools, the end users, or the business stakeholders, or any other parties. Volumes more nuance to understand, and we’re just getting started.
The product itself is fine. I was part of a startup that was happy to pay for said thing and got a lot of value from it (sdk from OpenAPI spec). So I don’t think product market fit was the problem here.
> “Our main product was an SDK Generator that could take any OpenAPI specification and generate high-quality client libraries in multiple programming languages.”
This is something I could really use! Is there a product that does this and doesn’t cost an arm and a leg?
That's the official tool and has support for a lot of languages(probably the most). Granted last time I checked the generated python code wasn't great. Can't speak for other languages
Now if you want multi language generation and especially high quality you may have to spend a lot of time evaluating different choices. I decided that the official java client didn't generate very nice python code and went with https://github.com/openapi-generators/openapi-python-client even though it's a small personal project with a primary developer+random contributions from users. It just seemed nicer to use for python. Finding which generator to use especially for JavaScript seems difficult
> Looking back to March 2022 when I left my job to pursue this startup full-time, I have absolutely no regrets. I knew the risks—that failure was a very real possibility—but I also knew I had to take this chance. Today, even as we close this chapter, I'm grateful for the failure because it has taught me more than success ever could.
>"We then decided to pivot into a vertical B2B SaaS AI product because we felt we could use the breakthroughs in Gen AI to solve previously unsolvable problems, but after going through user interviews and the sales cycle for many different ideas, we haven't been able to find enough traction to make us believe that we were on the right track to build a huge business."
I think we are unfortunately going to see this outcome appear a lot in the near future as the AI bubble pops
Am I the only one who would respect the effort more if it had instead been written like so?
>We then decided to try using generative AI in a vertical B2B SaaS product, believing we could solve previously unsolved problems this way. We came up with and pitched multiple ideas, but user feedback was never positive enough to give us confidence that we were on the right track to build a huge business.
As is, my first impression is something like: "Jeez, whoever wrote this is firmly embedded in a niche fly-by-night culture that instinctively turns me off, and now can't psychologically shake free even immediately after crashing and burning".
> While we gained some traction with some startups, we ultimately weren't able to build a hyper-growth business.
>"We then decided to pivot into a vertical B2B SaaS AI product because we felt we could use the breakthroughs in Gen AI to solve previously unsolvable problems, but after going through user interviews and the sales cycle for many different ideas, we haven't been able to find enough traction to make us believe that we were on the right track to build a huge business."
How many wonderful niche products would be around if their owners had tried for a small business instead of a 'huge business' with 'hyper growth'?
> Nothing wrong with setting out to build a Google
Sure there is. The probability of success is as good as zero. In all seriousness, a better business model is buying $1000 a month in lottery tickets. You have the same chance of success, you can do it on the side while working your job, and if you do hit the jackpot you don't have to do any additional work. This particular business has no path to being a Google but it might have a shot at being a Basecamp.
All of these have 10 different paths (in reality), any of which if you take the wrong one could end up in some kind of expensive dead end or spectacular failure.
You are zooming out, and when you look at an abstraction from a distance it's easy to miss the details and just boil it down to probablities.
The reality is that you measure and get information on all of these things to determine more accurately what odds you have. The act of measurement changes the probabilities, because if you do it right you will know more than you did before.
And sometimes you start in a place (or take directions into a place) which put you at such a disadvantage with competitors that you can’t ‘win’. It’s rare you can know that while it’s happening though.
In theory all these things are controllable and no problem is unsolvable. Sometimes it’s even true (post-facto however, more often than not). That view is often the best for succeeding (or more precisely, NOT having that view often puts one at a disadvantage when it comes to succeeding).
But the probabilities are often the more accurate model. That is often the best model for deciding if you want to take a bet, or for comforting yourself later if it doesn’t actually work out perfectly. It really doesn’t help though (most of the time) with actually doing successfully.
If you need funding to cover your monthly nut, you need a plausible path to hyper-growth; the portfolio math doesn't work for investors otherwise. If you set out to build a small-scale sustainable business, and you succeed, you can avoid funding. But if you're pivoting to something entirely new mid-to-late-ways through your company, you've probably burned down most of your reserves.
Yes. Most of what early vc practically pays for is salaries (and a lot of that is really just a passthrough to landlords because California is an incompetent state run by incompetent people.)
"An individual's fixed monthly expenses, such as rent, utilities, cell phone, Internet access, car payments, car insurance, etc. These are the bills you have to pay regardless of what you do in a particular month. Can also be used more generally to describe one's monthly expenses, regardless of whether they are fixed or variable."
Urban Dictionary is know for shoehorning any word(s) no matter which into a sexual innuendo, but this the most voted definition, by far. Seems like ejaculation is not such a widespread meaning.
People say that but as someone trying to actually do that, it is freaking hard to commit to 3-5 years of virtually no salary to maybe get to the same outcome you would have had with a funded business.
You need to sell a lot of 10$/month licenses for it to even viable to a 2-3 people startup in a developed country. There is also the cost of opportunity to consider in that.
I don't understand why people even think about selling $10/mo licenses.
Just go sell $2-4k/mo SaaS to a medium sized traditional industry that has ancient, crummy software with a target customer employee size of 50 - 1,000 people.
Customer problem discovery is easier, you get reputation network effects within the vertical, you gain trust because you learn the industry lingo, you can actually solve peoples' problems because you're not balancing needs against unrelated industries, they're willing to pay, and once you get 20 customers you're doing pretty OK.
The one point where gp is wrong is you really can't sell $4k things; $10k min and $25k is better. eg a good to great salesperson closes 25% of deals, so you have the cost of 4 mqls per one close, and then the salesperson gets 20%ish of the deal.
Yes. But it's not for everyone, especially not for a lot of engineers.
Many of these buyers feel more comfortable meeting you in-person, so going to trade shows, writing articles for niche trade publications, and sometimes doing site visits are all very helpful. So is cold calling.
Sales cycles are often slow. You have to get used to customers taking months to decide, having lots of meetings with different stakeholders, and to get good at telling the difference between those who need a lot of meetings but will likely close versus those who will never do anything. It's a very different game than selling subs online, which I know little about.
The product does need to be decent but I disagree with others that it has to be amazing. Most enterprise software is horrible. They will be delighted if you actually solve their problems (rather than the problems horizontally-oriented software vendors want their customers to have), even if it has some rough edges, as long as you're very customer-focused, responsive, and available.
But it also tends to be durable revenue, because you get tightly integrated into their operations if you do it right.
> Just go sell $2-4k/mo SaaS to a medium sized traditional industry that has ancient, crummy software with a target customer employee size of 50 - 1,000 people.
I’ve successfully done exactly this.
Except in order to get there, we had to spend 3-4 years selling cheap $29/mo self-serve plans at volume to iron out all of the kinks in the product and UX. Only after that were we able to go upmarket selling $40-90k/yr contracts.
It all boils down to the fact that customers paying $20k/yr or more have extremely high expectations across the board. It’s extremely difficult to just pop into a completely new market with a brand new product untested by anyone, and expect large companies to trust and buy from you.
Yeah exactly. You can't just roll out of bed one morning and grustle out a stable enterprise application. Also:
> customers paying $20k/yr or more have extremely high expectations across the board.
They definitely do, in certain ways. But also a lot of the software companies use sucks shit. But this part of the other comment cracked me up.
> a medium sized traditional industry that has ancient, crummy software
This is actually how to do it but the thing they're leaving out is that you have to already have knowledge of the specific industry and its players, their niches, and the software they use within them. You have to know where standards are high, and where the current options are bad, and how to market that improvement to the companies that are juuuust flexible enough to switch to your product while being conservative enough not to dump you if exactly one VP leaves.
Once you have all that in place, sure, you can "just" sell your software to them lol.
>This is actually how to do it but the thing they're leaving out is that you have to already have knowledge of the specific industry and its players, their niches, and the software they use within them.
In most cases, this requires at least one former employee who used the crummy software. Most likely this person would be the one to identify the problem and propose an alternative solution.
Information like this is extremely valuable. It forms the core of the biz opportunity. Casual comments often overlook this.
Builders doing their own thing may not overlap with employees using office horror software 9-5.
Boiled down into 1 sentence: Create a company that solves a problem you’ve personally experienced.
(If you feel like you haven’t experienced any problems worth creating a company to fix, consider putting yourself in situations where you’ll be exposed to different/new problem sets)
Yes, get industry experience! You have to be pretty special to be just a software developer with no domain knowledge who can somehow make something more valuable than the bazillion other just-a-software-developers out there. I sell fairly high priced software to companies and I'm doing fine. Though I'm kind of lucky in how I got into it and by now most of my domain knowledge has come from my previous customers asking for things.
True and what I find funny is that the same companies are often willing to pay a lot of money to consultants that will deliver a shitty streamlit POC. Like they will literally pay consultants the equivalent of 4 years of new SaaS cost to get a POC instead of using a product with rough edges and grow with it. Expectations can be really dumb and confusing.
I'd pay to buy a bad house and then spend money to improve it, rather than paying a full rent for the same bad house and hoping that the landlord uses that money to improve it.
I don't get the comparison. are you comparing a SaaS that is doing 70% of the job and a shitty streamlit POC that no more than 3 people can use in parallel ??
They’re saying that they would rather pay a consultant because they would have control over fixing things that don’t work the way they want. Compared to the alternative of buying a SaaS product that is “rough around the edges” where you’re not able to directly control whether and how the product is improved over time.
To be clear: It usually makes no sense to develop an internal solution when there is an estabilished offering on the market. If there isn't, embracing an rough and incomplete Saas solution from a startup may work, but:
- You have no control on how the solution will evolve
- You don't own the solution (an internal solution can became a product on itself)
- You don't have any competitive advange (the money you pay are used to develop a product that benefit your competitors as well as you).
We experienced something similar - we were able to wrangle a $30k/year contract as one of our first contracts, but the expectations around the software were and continue to be incredibly high - we sort of wish he had had a few $100/mo customers first to iron out the UX, and just learn more about how to work with a midmarket/enterprise buyer.
Anyway we survived but we understand why companies move upmarket over time now haha.
Hell, I went straight for 20k/mo (average) with my SaaS.
The key is providing a good value proposition. My software would save my customers more than they would spend on it yearly, while outsourcing $50-300k/year in salary worth of work that previously had to be done in internally (usually incorrectly).
You always need to solve an actual business problem that people are willing to pay to fix.
Would you be willing to share insights and help with mentoring in private. I'm going this path (building SaaS) and would appreciate someone with experience to share to discuss topic.
Just gotta find that price point within discretionary spending where a manager can OK the cost without having to get a VP to sign off on it. It's definitely way higher than $10/mo.
There's gotta be a name for this fallacy. "This enterprise software sucks and is extremely expensive, so we will build something that is actually good and become billionaires!"
This is the graveyard of engineer driven startups in the enterprise space, who make the mistake of thinking that software quality matters. The fact is it is not a top priority, if it is even a priority at all.
In the enterprise space, if you're not a Fortune 500 company, all that matters is 'relationships', by which I mean sleazy sales processes (or actual nepotistic friends-and-family relationships).
Joel Spolsky wrote a great essay once about why there is no software priced between $1000 and $100,000. Because above $1000 you need a sales team that takes purchasing managers to strip clubs and play golf with CEOs, and that shit adds up. On the plus side, your software can be dogshit, like the stuff you work with every day.
The world has changed. Today you can sell software for $5000 or $10000 without any sales process. Not always of course, you have to find the right niche.
There is a whole non-corporate world of SMBs that employ 30 or 100 people total. Those businesses have no VPs or corporate cards, but they still have problems and are willing to pay good money for solutions. Family businesses in any industry, law offices, marketing agencies, boutique hedge funds/pe, etc.
Corporate approval for a 10k purchase doesn't need to be complicated either. As a software vendor it helps to have a web page/email with all the relevant info intended to be forwarded to accounts payable.
Only engineer and product oriented types think that quality has any actual value. Unfortunately it does not, even less so if your only USP is "quality". If your products only differentiator is that it's technically better than the competitor it really needs to be 100x better in order to sway anyone's interest.
If your maximum work/effort you can put into any project is 100% which you have to allocate into fragments, the product person will put 80% into product development and 20% to marketing but a sales person will put 80% into marketing and 20% into development and unfortunately the latter will product much better results. All it needs to be is "good enough" but reaching to your target market with the right product really is the key.
The unfortunate side effect is that quality is best achieved by having the PR team write it out and put it into a snappy slogan on your product website. Done. Quality achieved.
Edit: And the above applies to your typical non-safety critical Saas, Enterprise, B2B, B2C software. And thinking back to for example the Boeing crashes it likely also applies to the the "safety critical" software/systems as well...
You can get very far with just sales and marketing, but if the quality isn't there, reputationally, that's going to catch up with you over time, same if you have dodgy business practices (i.e.: predatory pricing practices for existing customers, impossible cancellations etc.).
>Just go sell $2-4k/mo SaaS to a medium sized traditional industry that has ancient, crummy software with a target customer employee size of 50 - 1,000 people.
The guy is so out of touch it's like a cartoon. Like, right, why did they think of that?! Just create something that's worth several thousands a month instead of a small value product!!! And get all the big companies who can actually afford that kind of thing to buy your product!!! How hard can that be?
The only times I've seen anything remotely like that work, it's a situation like this: Two engineers work together at company A, become friends and gain experience in the domain. Both move on, progress in their careers and work other companies in the same domain. They meet for coffee and person 1 says: "hey remember that problem we had at A? I see it again at B", person 2: "me too and I've been working on a side project to fix it, you should totally buy the solution from me". And voilà. Could a kid right out of school build the same thing? Sure. Would it have ever succeeded? No. They lack the domain experience and the social connections to do it.
I didn't say it's easy, and it's probably not the right fit for you. But it's at least a plan with a good end-game, which a lot of $10/mo online only business models simply cannot turn into something viable.
50-1,000 person companies aren't actually that big. You can get to know the decision makers and it's not like navigating 20,000 person corporate mazes (also possible if you have the stomach for it).
It does seriously benefit from industry knowledge though. The reason so many people think it's a ridiculous pipedream is because they have no industry experience outside of tech, and that's a big problem -- a solvable one, but most people will never do what it takes to solve it and instead say that it's not possible.
It takes a lot of willingness to do non-tech things though. You can't just set up an online marketing funnel and watch the cash come in. It's relationship driven. The advantage of going after a vertical is that the relationships start feeding each other -- you get social proof within the niche industry. And you don't compete with VC-backed software companies as much because they much prefer horizontal solutions (which can get bigger and achieve bigger exits) versus vertical solutions.
Pricing really is key here. $10/month is very hard for most businesses. Depending on your situation, you need to find the "sweet spot" that matches your markets budget, while also making the math work in terms of your revenue needs.
For example, you could try to find 100 customers paying you $500 per month, and do OK with a small team. The alternative, of $10 a month, means you would need 5,000 customers, which could be impossible, depending on the circumstances.
Small businesses focused on bootstrapping should also be aiming for revenue within months, and not 3-5 years. But that's another topic entirely
> it is freaking hard to commit to 3-5 years of virtually no salary to maybe get to the same outcome you would have had with a funded business.
I agree and I disagree.
It is hard to bootstrap a product. It's even harder to bootstrap a product that folks want to buy. It's even harder to do that when the prevailing wisdom on this (and other tech sites) is to go the VC-funded route.
The VC funded route -- for the vast, vast, vast majority of software businesses ends up being the exact same as the bootstrapped route -- except that you lose one avenue when you find out your business isn't "hyper-growth" or isn't going to be a huge as you claimed in your pitchdeck to the VCs. You lose the ability to pare back and to be what is described as a "lifestyle business". On failure, the business gets sold or stripped for parts, unless the founder can somehow get the VCs to agree to let them 'buy it back' or write-off their investment and give it back.
Bootstrapping means taking that risk on yourself; but it also means control over your options, and that is one fundamental strength to bootstrapping you don't get with VC funded startups.
Absolutely, it's no salary or the aptly named ramen profitability for a long time if your marketing is not aligned with the folks that will buy your software, or if your software really is just selling a solution to a problem no one actually cares about.
The 'hard part' isn't the engineering. It isn't the technology. The hard part is the marketing -- the connecting the hopefully expensive problem you solve to the right folks who want to buy that solution.
To your second part, I wholly agree that selling $10/month licenses is not a viable way forward if you want to be anything more than a solopreneuer.
But to do that, you need to hone your positioning so that you get in front of the folks with money who need to solve the problem your solution solves.
In your case, it looks like you run a web-auditing tool (according to your bio) called caido.io; and it looks like you're targetting basically everyone who needs to audit a website.
In the thought that "there are more fish in the ocean so why not fish there", that is a seemingly sound idea.
But you don't really want to spend your time trying to fish in the ocean if you have a barrel you could fish in and get the same result... dinner. (I did not come up with this metaphor, that was Jonathan Stark -- who writes a lot about positioning in this context).
The question you have to ask yourself is, are you positioning your product so that the CISOs or the large cyber-security firms would want to buy it? And if you did, do you think they'd trust your product at a mere $25 per month?
Anyway, the point to all this is that the problem is learning how to position the thing you build and get it in front of the right folks, and that's a marketing problem, not a technology problem, and that's something that we as engineers have ignored for far too long collectively.
I wish you the best of luck with your product -- we need more small software businesses in this world!
Depends on the problem. But I don't find a lot of companies that are all marketing and a bare cupboard of an engineering department. They exist, but they are not a universal.Also, most companies that are in this state today have shifted to it from one where product development with the engineering, was actually at least competent.
If you find marketing the hardest part, and most here probably will, you are likely an engineer foremost.
You need a good enough product, and you need it in front of the right buyers. Both aspects can be a significant obstacle to create a business.
>> How many wonderful niche products would be around if their owners had tried for a small business instead of a 'huge business' with 'hyper growth'?
> People say that but as someone trying to actually do that, it is freaking hard to commit to 3-5 years of virtually no salary to maybe get to the same outcome you would have had with a funded business.
Isn't that a better outcome than putting in exactly the same effort but winding up with a totally failed business (i.e. nothing).
Maybe my understanding of "big company" salaries are skewed but I imagine there's a profitable middle ground between big company salary and hypergrowth? As long as one isn't taking VC money at least
On the flip side, I can't say I'm super sure what "hypergrowth" means, it's a rate of growth but I guess what really Matters is some expected valuation/market cap kinda thing
Isn't 500k+ TC on the upper upper end of the salary distribution though? Vs equity in a rapid growth 20% CAGR or somethin? Or hypergrowth that caps out around 2M ARR?
I guess I'm just trying to gain some career perspective on this heavily bootstrapped startup I'm at thats targeting the alt-thread-mentioned "medium sized traditional industry that has ancient, crummy software with a target customer employee size of 50 - 1,000 people." and whether it's really worth it for me
I wonder how the probability of securing such a job - with huge layoffs lately and increased competition - compares to the probability of business success. There's unemployed engineers grinding at system design and algorithms 10 hours a day for at least half a year to get an interview. If I'm going to spend hundreds of person hours on something, I think I'd rather start a company to be honest. Additionally, internationally those levels of pay are incredibly rare.
I suspect the majority of entrepreneurs aren't doing it for the money, they are doing it because they don't fit the traditional corporate mould. The people the media loves to focus on are the outliers.
Also, for some of us, building your own company is much less risky than working for a company.
No matter how comfortable or secure you feel in your job, sudden layoffs can and do happen. Also, what if you develop an illness that makes you unable to work?
Having your company means you can make money while you sleep, you answer to the market (which on average is somewhat "rational") rather than to a (possibly capricious) boss, you get to grapple with a wide range of interesting challenges that take you out of your comfort zone and lead to personal growth, and so on.
As long as you are able to build a company that provides income at least comparable to what you would make at a job, I think the benefits are numerous. It is not for everyone though.
Yeah I have been wondering this myself as well. I'm one of 3 co-founders in a bootstrapped company doing consultancy for a few years in a LCOL area. We have been paying founders 50k/year salaries for the life of the company. We haven't been especially lucky and we haven't been super brilliant in our business decisions. Yet we are doing fairly well.
This year we made 400k revenue, 150k profit and 40% growth. Our sales prospect are a lot better than at the start of the year. So I'm expecting to have another strong year of growth next year. Also we are nowhere near saturating the market and can have strong growth for many years to come.
Salary + 1/3 of profits is equal to 100k for this year. 40% growth doubles the company every 2 years, If everything goes well just salary + profits will grow very nicely. Then on top of this come the exit opportunities where founders will make millions.
Product and service businesses are very very very different things. Service you get immediate cashflow but the thing doesn't scale past the humans. Software scales infinitely in theory, but it takes a lot of time to build before you even get 1$ out of it.
I've know quite a few businesses that started with services then transitioned into product. Once you have enough domain knowledge it is the obvious next step.
You can hire people into consultancy business and grow it like any other business. Sure it won't become the next magnificent seven, but you can grow it enough that you can make a lot of money.
For example, there exist plenty of consultancy companies that have 10million revenue. That would be 20x growth for us. In practice that would mean 500k - 1m yearly income for founders in our case. On top of that the company probably could be sold for 30m - 100m.
With typical vc dilution founders need to grow a very successful product company to earn similar amounts of money. There are plenty of examples of unicorn exits where the founder team has made less.
'Just' making money is not very hard in IT. We have been for decades and it's only growing; we do emergency software fixes which means we can ask whatever. We do not, we have a high hourly rate but it is usually clear what it will cost. We don't grow because I do not want a big company and good people are almost impossible to find, but there are way too many projects as, and I know HN doesn't believe this in a survivor bias kind of way, software is getting worse very fast (thanks node and python; and we used to laugh at php; that's more or less a joy these days) so our regular clients are calling more often year after year and new clients come in at a rate I don't care for. But the dream still is products, not consulting; I sold my first product company 25 years ago; I shouldn't have. Nice money but I want it back; consulting is nice and we make a lot for the past 25 years, but making products is nicer so we are now doing 50/50 products vs consulting and hoping it will work. We don't have to work for decades already but why not if it's fun?
Has there ever been a scenario where someone gave up on a startup, dumped the code, then someone picked it up and turned it into a successful business?
This isn't exactly what you mentioned, but Josh Pigford gave up on his startup Maybe, shut down the company and open sourced it. It got incredibly popular on Github, so he started it up again. (https://maybefinance.com/)
A bigger example might be Mozilla. It was a closed-source browser (Netscape Navigator), and when it was dumped, some employees petitioned to open source it. And that's how we got Firefox.
Close but not quite (and keeping some parts intentionally vague):
There was a data startup ran for ~3y until the 10 person team imploded in a tough market. Everyone left or was laid off, the office was closed, operations ceded etc. The website and some collection were still left running in zombie mode.
A couple of years later, the non-technical founder and CEO (who at this point had bought everyone else out) saw demand and PMF emerging. Mostly through serendipity, I was one of 3 people brought in to "see what we can do with it", originally intended as a 3 month project. We came in with zero context and jumped right in to figuring out the ship we were now sailing. I was able to have one or two of conversation with the previous CTO but that was about it in terms of overlap.
Things progressed and within a few months we found ourselves as co-founders of "Company v2.0". My partner took over as CEO.
I left after 2y around our series A when we were 20~30 employees and arguably a leader in our market segment. At that point there were significant and crucial parts of the stack and codebase inherited (and evolved obv) from the original efforts by the previous team. The company is now an established brand, have offices in several countries and had a successful series B last year.
Oh, it looks like we were competitors! I'm the founder of ReadMe.com, and we do API docs (as well as SDKs and more).
I don't really know why, specifically, we ended up being successful. I know I also had a lot of false starts – slightly iterating on the core idea until I hit something people were visibly excited about. I also knew it was a hard market, so I put a lot of my time and effort into non-engineering things. Hacker News was always good to us, especially as I was more vulnerable.
I'd love to hear more! I'm going to reach out privately :)
Overall, though, congrats on all the work you put in. It's incredibly hard to start a company and believe in yourself, and you should be proud!
You might have been successful, compared to konfig, because it looks like you had an 8-year headstart. It could be that konfig was a fine idea and well executed, just not at the right time.
Maybe, but there’s a number of companies in the SDK space that popped up the past 3 years and are seemingly successful. And there were a number of companies back when we started that are no longer around.
Since you're here, I wanted to say that the css transition on readme's login has stuck with me as the strongest branding element I can recall. Kudos to whomever came up with that because it is just excellent
As a customer of Konfig, I am super bummed about this. I think we may even have been their first customer (referenced in the init commit). Dylan and Anh-Tuan solved a number of real problems for us, and they did it spectacularly. They essentially provided a one-stop-shop for generated SDKs and beautiful hosted docs/tutorials that would call our API and immediately allow users to start playing with real data. Prior to Konfig, we were hand-writing a hodgepodge of SDKs to wrap our API and using ReadMe to host the docs (which never quite worked interactively with our API due to request signing that we require on our API).
Tons of respect for these guys and I wish they'd found a way to make it work.
Also, for anyone finding themselves in a similar situation as Konfig (a product that (some? most? all?) customers love, but revenue not scaling as needed), please consider charging more. We probably would have paid 2-3x what Konfig was charging us and more as we grow, but they never asked and never built in any usage-based cost scaling (like $X/month/SDK, $Y/month/demo, etc).
I got to know about konfig from your product itself. The docs were(maybe still are?) so good that I had to check what was behind it. It really is better than swagger/redoc.
There are multiple open-source tools backed by large companies to do this. I use one of them for my sdks. So I can really understand how they could struggle to sell it, it's a hard sale to sell someone a commercial product that does pretty much the same as free open-source projects. I was tempted to check it out but as bad as it sounds even with it being open source and free I couldn't find a reason to spend the time over just using what I have now.
The product in TFA is a wrapper around the tool I linked, plus some stuff for docs and so on.
Wrapping free software is mainly viable towards enterprise customers, where the thing you're actually selling is SLA and a certain level of insurance and sexiness on middle manager CV:s and so on.
Good on you for open sourcing the code. Its destiny may yet be as a hidden gem that makes some peoples' lives better. In which case, not what I'd call a failure.
from the bottom of my heart thank you @dylanhuang . Releasing it without modification gives us rare opportunity to inspect the codebase of actual startup that had paid customers. Its more valuable than polished/redacted versions.
Not every little idea, as useful as it might be, needs to turn into a hyper-growth business. Just make it an open source project on the side. If it gets popular then you get famous and hopefully some big company finds it so useful that they hire you and let you work on it full time. Konfig seems like a perfect example for this.
Remarkable show of persistence. Honestly, I really like that the Repo is as-is. Congratulations on the journey, hope you learnt a ton. PS - you built some of your static content on Docusaurus, a Meta open source project. They're hiring like crazy. Maybe you get to work on that one.
That said most developers don’t have any awareness of problems outside of those they experience… which tend to be developer tooling issues. So you get a ton of companies building dev tools startups despite an incredible amount of need elsewhere.
I feel like a lot of value could be unlocked if there were some way besides random chance and networking for skilled developers looking to start something to discover people with problems, domain expertise and entrepreneurial ambition.
> if there were some way besides random chance and networking for skilled developers looking to start something to discover people
The main problem here is that non-programmers are often so entrenched in their workflow(s) that they fail to see what can be automated and wind up proposing nice-to-haves instead of tasks critical to their mission.
Moreover, they're more likely to dismiss 80% solutions because the introduction of new unknowns/things-to-check adds enough uncertainty to make them uncomfortable. "The new thing always puts things here instead of there and it doesn't handle these cases. I miss the way we used to do things."
Not really true, but dealing with 50x 10 USD invoices is not something I want to waste time on.
Is there a business that can bundle different services with just one invoice? Or do I still have to use AWS, Azure, GCloud?
Selling tools to developers is just hard. You are competing with a lot of OSS tools that are constantly adapting and changing. Any good ideas quickly get picked up and replicated. So, most commercial tools have a limited shelf life in terms of utility. Which makes them mostly just nice to haves.
There's a secondary problem here that many developers are employed and don't typically have a personal tools budget. This narrows the market effectively to developers that are free lancing or the bosses of developers that are employees.
The team managers will scrutinize a lot of spending on this front and typically not have. a lot of budget for this. And there is no such thing as a personal tools budget for developers in most companies.
Freelancers mostly just use the same tools as the companies that pay them. Which is mostly free tools. Non free tools actually complicate getting freelancers because now you need to worry about getting licenses for your contractors as well. So, there's a bias towards keeping things simple here and just avoiding such tools.
What's more, developer tools are misleadingly difficult. Put simply, it's easy to think that creating developer tools is going to be a winning formula for a company/startup. After all, you're probably a developer, and you've probably identified a problem you personally had in the past.
And you know where developers hang out and what kinds of things do well there. So everything's good, right?
But as you said, many of them don't want to pay for things, and many will find open source solutions that'll do the job needed instead, even if it's a tad less convenient than your potential solution might be. Plus, you're literally selling people whose job/life involves creating software, so their answer could just as easily be "build something myself to do this" instead.
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[ 4.2 ms ] story [ 288 ms ] threadYou shouldn't expect much interest in the code, the value of a company's code without the business and people is quite negative when there isn't some technical secret sauce. Even if there was some technical wizardry people would just care about understanding how that one part worked and probably not use any of the code itself.
This is interesting. I used to work for a mortgage start-up years ago. They built several products for banks and home builders, such as a mortgage vault and tools for signing mortgage documents online.
One condition I still remember was that bank customers required us to put our code in escrow, held by lawyers, in case the company went under. I always wondered if customers could rebuild the code, allocate more resources to develop and maintain it, or simply look for an alternative solution.
they came to us for our solution. I assumed they either couldn’t build it themselves or didn’t want to invest in a custom solution.
in my experience it has just been a way to help business decision makers credibly claim they are managing risk when buying from a startup
1) You should not build a tech startup unless you have either a business plan for getting revenue quickly or shit ton of investment. And you won't typically get investment unless you have at least some notion of where the business is going to be. I've made this mistake. Techies mostly don't understand the business side well enough for this to work.
2) Most companies aren't startups. They are just companies. With revenue. That pay the bills. A startup is a company without revenue that is living on borrowed time and money. Especially if that's your own money, you need a plan for this.
3) VC funded companies mostly fail. A VC's business is to ensure that those companies that are going to fail, fail quickly. They fund their VC business with the handful of companies that don't fail and succeed spectacularly. So, getting "accelerated" or "funded" doesn't mean that you are on a path to success. It actually means you are on the spot to beat the odds and that you don't have a lot of time left. Chances are that you will fail quickly.
4) If you are a successful company with revenue, you don't need VCs. So you should question why you are talking to them at all? Are you struggling to make revenue? A VC won't fix that.
5) A lot of VCs are lazy and don't get interested until you are already successful. There is a weird dynamic here where companies get funded early and then fail. Or don't get funded and then succeed.
My current company is four years into being completely bootstrapped. As in we struggle with revenue and we put in our time when able. I mostly live off consultancy that I do on the side. The company just had its third most successful year in a row and is getting close to where I should be able to retire as a consultant soonish and focus on the business instead. But it's been a long journey.
As for open source. I open source anything that is not business specific or part of our core IP. One good reason for this is that I hate rebuilding the same crap when I start my next company. I've been through this and that kind of stuff just slows you down. People obsess about intellectual property in startups. The reality is that most software is not that valuable. But you still need to spend time, money, and energy building it.
So, I contribute a lot of tools, frameworks and what not of which I am the main user. Just so I can continue to use that stuff on the next project.
This will not produce superior work to someone who knows what they're doing at the controls. A competent programmer doesn't need this. An excellent touch typist doesn't need this. But let's say someone who has a vague idea of what outcome they want, but an incomplete understanding of the mechanisms to get there, can get further with a do-what-I-mean UI.
One of the keys there will be providing a way to nail down the parts that are correct, hold them constant somehow, and "in-paint" the bits that are wrong. For images, we have this figured out, but for larger works, we'll have to think through the equivalents.
Using AI to automate things to rescue a failing product idea is kind of treating AI as a tool. But AI won't fix a bad product idea.
We know. It's good at making stuff up. It's bad at facts or for generating things that withstand scrutiny.
This is something I could really use! Is there a product that does this and doesn’t cost an arm and a leg?
All others are too expensive at ~250$/language/month (still less expensive than human developer).
- Speakeasy
- Fern
- Stainless
First SDK with Speakeasy is free and we also have discounts for companies who are just starting out.
Feel free to shoot me an email if we can be useful: nolan@spakeasy.com :)
Including the semi official tools https://github.com/OpenAPITools/openapi-generator
Now if you want multi language generation and especially high quality you may have to spend a lot of time evaluating different choices. I decided that the official java client didn't generate very nice python code and went with https://github.com/openapi-generators/openapi-python-client even though it's a small personal project with a primary developer+random contributions from users. It just seemed nicer to use for python. Finding which generator to use especially for JavaScript seems difficult
About the code - would you be willing to add an MIT License? I don't see the code being used without a permissive license.
https://github.com/konfig-dev/konfig/blob/main/LICENSE
> Looking back to March 2022 when I left my job to pursue this startup full-time, I have absolutely no regrets. I knew the risks—that failure was a very real possibility—but I also knew I had to take this chance. Today, even as we close this chapter, I'm grateful for the failure because it has taught me more than success ever could.
>"We then decided to pivot into a vertical B2B SaaS AI product because we felt we could use the breakthroughs in Gen AI to solve previously unsolvable problems, but after going through user interviews and the sales cycle for many different ideas, we haven't been able to find enough traction to make us believe that we were on the right track to build a huge business."
I think we are unfortunately going to see this outcome appear a lot in the near future as the AI bubble pops
>We then decided to try using generative AI in a vertical B2B SaaS product, believing we could solve previously unsolved problems this way. We came up with and pitched multiple ideas, but user feedback was never positive enough to give us confidence that we were on the right track to build a huge business.
As is, my first impression is something like: "Jeez, whoever wrote this is firmly embedded in a niche fly-by-night culture that instinctively turns me off, and now can't psychologically shake free even immediately after crashing and burning".
>"We then decided to pivot into a vertical B2B SaaS AI product because we felt we could use the breakthroughs in Gen AI to solve previously unsolvable problems, but after going through user interviews and the sales cycle for many different ideas, we haven't been able to find enough traction to make us believe that we were on the right track to build a huge business."
How many wonderful niche products would be around if their owners had tried for a small business instead of a 'huge business' with 'hyper growth'?
Nothing wrong with setting out to build a Google instead of a Basecamp. They’re different kinds of company.
If anything it’s easy to underestimate the risk of building a low-risk business. They’re all hard.
Kudos to Konfig!
Sure there is. The probability of success is as good as zero. In all seriousness, a better business model is buying $1000 a month in lottery tickets. You have the same chance of success, you can do it on the side while working your job, and if you do hit the jackpot you don't have to do any additional work. This particular business has no path to being a Google but it might have a shot at being a Basecamp.
Even the Marxist analysis would say it’s about privilege, access, and exploitation. Not “probability”.
Considering well connected people with startup know-how and experience in the Bay Area, I would say they do pretty well with serious startup projects.
- right product?
- right market segment?
- right marketing?
- right execution?
- right scalability post basic execution?
- right sales approach?
- right post sales approach?
All of these have 10 different paths (in reality), any of which if you take the wrong one could end up in some kind of expensive dead end or spectacular failure.
The reality is that you measure and get information on all of these things to determine more accurately what odds you have. The act of measurement changes the probabilities, because if you do it right you will know more than you did before.
In theory all these things are controllable and no problem is unsolvable. Sometimes it’s even true (post-facto however, more often than not). That view is often the best for succeeding (or more precisely, NOT having that view often puts one at a disadvantage when it comes to succeeding).
But the probabilities are often the more accurate model. That is often the best model for deciding if you want to take a bet, or for comforting yourself later if it doesn’t actually work out perfectly. It really doesn’t help though (most of the time) with actually doing successfully.
No, but that's how anyone should think about startups that are "Google or nothing". Not even Google started that way.
You can get funding for that?!
private tax (rent for soil bound property is nothing but a private tax) is the best thing since aristocracy and tithing.
That means... something different where I come from.
Are you using it to mean "monthly fixed costs"? I haven't come across that meaning before.
I hear it some from business or sales types in the US most often.
Strongly recommend checking urban dictionary before using that in Australia :D or you'll get some amused comments
Urban Dictionary is know for shoehorning any word(s) no matter which into a sexual innuendo, but this the most voted definition, by far. Seems like ejaculation is not such a widespread meaning.
https://www.urbandictionary.com/define.php?term=monthly%20nu...
If you only look towards people like Peter Thiel, sure. But the people that cleaned up his mess with SVB aren't so insane.
You need to sell a lot of 10$/month licenses for it to even viable to a 2-3 people startup in a developed country. There is also the cost of opportunity to consider in that.
Just go sell $2-4k/mo SaaS to a medium sized traditional industry that has ancient, crummy software with a target customer employee size of 50 - 1,000 people.
Customer problem discovery is easier, you get reputation network effects within the vertical, you gain trust because you learn the industry lingo, you can actually solve peoples' problems because you're not balancing needs against unrelated industries, they're willing to pay, and once you get 20 customers you're doing pretty OK.
The one point where gp is wrong is you really can't sell $4k things; $10k min and $25k is better. eg a good to great salesperson closes 25% of deals, so you have the cost of 4 mqls per one close, and then the salesperson gets 20%ish of the deal.
Many of these buyers feel more comfortable meeting you in-person, so going to trade shows, writing articles for niche trade publications, and sometimes doing site visits are all very helpful. So is cold calling.
Sales cycles are often slow. You have to get used to customers taking months to decide, having lots of meetings with different stakeholders, and to get good at telling the difference between those who need a lot of meetings but will likely close versus those who will never do anything. It's a very different game than selling subs online, which I know little about.
The product does need to be decent but I disagree with others that it has to be amazing. Most enterprise software is horrible. They will be delighted if you actually solve their problems (rather than the problems horizontally-oriented software vendors want their customers to have), even if it has some rough edges, as long as you're very customer-focused, responsive, and available.
But it also tends to be durable revenue, because you get tightly integrated into their operations if you do it right.
I’ve successfully done exactly this.
Except in order to get there, we had to spend 3-4 years selling cheap $29/mo self-serve plans at volume to iron out all of the kinks in the product and UX. Only after that were we able to go upmarket selling $40-90k/yr contracts.
It all boils down to the fact that customers paying $20k/yr or more have extremely high expectations across the board. It’s extremely difficult to just pop into a completely new market with a brand new product untested by anyone, and expect large companies to trust and buy from you.
> customers paying $20k/yr or more have extremely high expectations across the board.
They definitely do, in certain ways. But also a lot of the software companies use sucks shit. But this part of the other comment cracked me up.
> a medium sized traditional industry that has ancient, crummy software
This is actually how to do it but the thing they're leaving out is that you have to already have knowledge of the specific industry and its players, their niches, and the software they use within them. You have to know where standards are high, and where the current options are bad, and how to market that improvement to the companies that are juuuust flexible enough to switch to your product while being conservative enough not to dump you if exactly one VP leaves.
Once you have all that in place, sure, you can "just" sell your software to them lol.
In most cases, this requires at least one former employee who used the crummy software. Most likely this person would be the one to identify the problem and propose an alternative solution.
Information like this is extremely valuable. It forms the core of the biz opportunity. Casual comments often overlook this.
Builders doing their own thing may not overlap with employees using office horror software 9-5.
(If you feel like you haven’t experienced any problems worth creating a company to fix, consider putting yourself in situations where you’ll be exposed to different/new problem sets)
To be clear: It usually makes no sense to develop an internal solution when there is an estabilished offering on the market. If there isn't, embracing an rough and incomplete Saas solution from a startup may work, but:
- You have no control on how the solution will evolve
- You don't own the solution (an internal solution can became a product on itself)
- You don't have any competitive advange (the money you pay are used to develop a product that benefit your competitors as well as you).
Anyway we survived but we understand why companies move upmarket over time now haha.
The key is providing a good value proposition. My software would save my customers more than they would spend on it yearly, while outsourcing $50-300k/year in salary worth of work that previously had to be done in internally (usually incorrectly).
You always need to solve an actual business problem that people are willing to pay to fix.
This is the graveyard of engineer driven startups in the enterprise space, who make the mistake of thinking that software quality matters. The fact is it is not a top priority, if it is even a priority at all.
In the enterprise space, if you're not a Fortune 500 company, all that matters is 'relationships', by which I mean sleazy sales processes (or actual nepotistic friends-and-family relationships).
Joel Spolsky wrote a great essay once about why there is no software priced between $1000 and $100,000. Because above $1000 you need a sales team that takes purchasing managers to strip clubs and play golf with CEOs, and that shit adds up. On the plus side, your software can be dogshit, like the stuff you work with every day.
What do most managers have access to on their corp card in terms of spend limits, without needing to get VP/finance approval for their purchase?
In my mind, I had the limit as $500/month (potentially from some old readings on the subject).
Corporate approval for a 10k purchase doesn't need to be complicated either. As a software vendor it helps to have a web page/email with all the relevant info intended to be forwarded to accounts payable.
Only engineer and product oriented types think that quality has any actual value. Unfortunately it does not, even less so if your only USP is "quality". If your products only differentiator is that it's technically better than the competitor it really needs to be 100x better in order to sway anyone's interest.
If your maximum work/effort you can put into any project is 100% which you have to allocate into fragments, the product person will put 80% into product development and 20% to marketing but a sales person will put 80% into marketing and 20% into development and unfortunately the latter will product much better results. All it needs to be is "good enough" but reaching to your target market with the right product really is the key.
The unfortunate side effect is that quality is best achieved by having the PR team write it out and put it into a snappy slogan on your product website. Done. Quality achieved.
Edit: And the above applies to your typical non-safety critical Saas, Enterprise, B2B, B2C software. And thinking back to for example the Boeing crashes it likely also applies to the the "safety critical" software/systems as well...
You can get very far with just sales and marketing, but if the quality isn't there, reputationally, that's going to catch up with you over time, same if you have dodgy business practices (i.e.: predatory pricing practices for existing customers, impossible cancellations etc.).
Nitpick, but this is the price range for most professional film restoration software.
The target is often small restoration houses with workstations at 10 or so seats.
As if that is easy.
50-1,000 person companies aren't actually that big. You can get to know the decision makers and it's not like navigating 20,000 person corporate mazes (also possible if you have the stomach for it).
It does seriously benefit from industry knowledge though. The reason so many people think it's a ridiculous pipedream is because they have no industry experience outside of tech, and that's a big problem -- a solvable one, but most people will never do what it takes to solve it and instead say that it's not possible.
It takes a lot of willingness to do non-tech things though. You can't just set up an online marketing funnel and watch the cash come in. It's relationship driven. The advantage of going after a vertical is that the relationships start feeding each other -- you get social proof within the niche industry. And you don't compete with VC-backed software companies as much because they much prefer horizontal solutions (which can get bigger and achieve bigger exits) versus vertical solutions.
For example, you could try to find 100 customers paying you $500 per month, and do OK with a small team. The alternative, of $10 a month, means you would need 5,000 customers, which could be impossible, depending on the circumstances.
Small businesses focused on bootstrapping should also be aiming for revenue within months, and not 3-5 years. But that's another topic entirely
I agree and I disagree.
It is hard to bootstrap a product. It's even harder to bootstrap a product that folks want to buy. It's even harder to do that when the prevailing wisdom on this (and other tech sites) is to go the VC-funded route.
The VC funded route -- for the vast, vast, vast majority of software businesses ends up being the exact same as the bootstrapped route -- except that you lose one avenue when you find out your business isn't "hyper-growth" or isn't going to be a huge as you claimed in your pitchdeck to the VCs. You lose the ability to pare back and to be what is described as a "lifestyle business". On failure, the business gets sold or stripped for parts, unless the founder can somehow get the VCs to agree to let them 'buy it back' or write-off their investment and give it back.
Bootstrapping means taking that risk on yourself; but it also means control over your options, and that is one fundamental strength to bootstrapping you don't get with VC funded startups.
Absolutely, it's no salary or the aptly named ramen profitability for a long time if your marketing is not aligned with the folks that will buy your software, or if your software really is just selling a solution to a problem no one actually cares about.
The 'hard part' isn't the engineering. It isn't the technology. The hard part is the marketing -- the connecting the hopefully expensive problem you solve to the right folks who want to buy that solution.
To your second part, I wholly agree that selling $10/month licenses is not a viable way forward if you want to be anything more than a solopreneuer.
But to do that, you need to hone your positioning so that you get in front of the folks with money who need to solve the problem your solution solves.
In your case, it looks like you run a web-auditing tool (according to your bio) called caido.io; and it looks like you're targetting basically everyone who needs to audit a website.
In the thought that "there are more fish in the ocean so why not fish there", that is a seemingly sound idea.
But you don't really want to spend your time trying to fish in the ocean if you have a barrel you could fish in and get the same result... dinner. (I did not come up with this metaphor, that was Jonathan Stark -- who writes a lot about positioning in this context).
The question you have to ask yourself is, are you positioning your product so that the CISOs or the large cyber-security firms would want to buy it? And if you did, do you think they'd trust your product at a mere $25 per month?
Anyway, the point to all this is that the problem is learning how to position the thing you build and get it in front of the right folks, and that's a marketing problem, not a technology problem, and that's something that we as engineers have ignored for far too long collectively.
I wish you the best of luck with your product -- we need more small software businesses in this world!
Depends on the problem. But I don't find a lot of companies that are all marketing and a bare cupboard of an engineering department. They exist, but they are not a universal.Also, most companies that are in this state today have shifted to it from one where product development with the engineering, was actually at least competent.
If you find marketing the hardest part, and most here probably will, you are likely an engineer foremost.
You need a good enough product, and you need it in front of the right buyers. Both aspects can be a significant obstacle to create a business.
> People say that but as someone trying to actually do that, it is freaking hard to commit to 3-5 years of virtually no salary to maybe get to the same outcome you would have had with a funded business.
Isn't that a better outcome than putting in exactly the same effort but winding up with a totally failed business (i.e. nothing).
On the flip side, I can't say I'm super sure what "hypergrowth" means, it's a rate of growth but I guess what really Matters is some expected valuation/market cap kinda thing
I guess I'm just trying to gain some career perspective on this heavily bootstrapped startup I'm at thats targeting the alt-thread-mentioned "medium sized traditional industry that has ancient, crummy software with a target customer employee size of 50 - 1,000 people." and whether it's really worth it for me
I suspect the majority of entrepreneurs aren't doing it for the money, they are doing it because they don't fit the traditional corporate mould. The people the media loves to focus on are the outliers.
Schumpeter had some interesting insights on this: https://reactionwheel.net/2019/01/schumpeter-on-strategy.htm...
No matter how comfortable or secure you feel in your job, sudden layoffs can and do happen. Also, what if you develop an illness that makes you unable to work?
Having your company means you can make money while you sleep, you answer to the market (which on average is somewhat "rational") rather than to a (possibly capricious) boss, you get to grapple with a wide range of interesting challenges that take you out of your comfort zone and lead to personal growth, and so on.
As long as you are able to build a company that provides income at least comparable to what you would make at a job, I think the benefits are numerous. It is not for everyone though.
This year we made 400k revenue, 150k profit and 40% growth. Our sales prospect are a lot better than at the start of the year. So I'm expecting to have another strong year of growth next year. Also we are nowhere near saturating the market and can have strong growth for many years to come.
Salary + 1/3 of profits is equal to 100k for this year. 40% growth doubles the company every 2 years, If everything goes well just salary + profits will grow very nicely. Then on top of this come the exit opportunities where founders will make millions.
For example, there exist plenty of consultancy companies that have 10million revenue. That would be 20x growth for us. In practice that would mean 500k - 1m yearly income for founders in our case. On top of that the company probably could be sold for 30m - 100m.
With typical vc dilution founders need to grow a very successful product company to earn similar amounts of money. There are plenty of examples of unicorn exits where the founder team has made less.
A bigger example might be Mozilla. It was a closed-source browser (Netscape Navigator), and when it was dumped, some employees petitioned to open source it. And that's how we got Firefox.
There was a data startup ran for ~3y until the 10 person team imploded in a tough market. Everyone left or was laid off, the office was closed, operations ceded etc. The website and some collection were still left running in zombie mode.
A couple of years later, the non-technical founder and CEO (who at this point had bought everyone else out) saw demand and PMF emerging. Mostly through serendipity, I was one of 3 people brought in to "see what we can do with it", originally intended as a 3 month project. We came in with zero context and jumped right in to figuring out the ship we were now sailing. I was able to have one or two of conversation with the previous CTO but that was about it in terms of overlap.
Things progressed and within a few months we found ourselves as co-founders of "Company v2.0". My partner took over as CEO.
I left after 2y around our series A when we were 20~30 employees and arguably a leader in our market segment. At that point there were significant and crucial parts of the stack and codebase inherited (and evolved obv) from the original efforts by the previous team. The company is now an established brand, have offices in several countries and had a successful series B last year.
I don't really know why, specifically, we ended up being successful. I know I also had a lot of false starts – slightly iterating on the core idea until I hit something people were visibly excited about. I also knew it was a hard market, so I put a lot of my time and effort into non-engineering things. Hacker News was always good to us, especially as I was more vulnerable.
I'd love to hear more! I'm going to reach out privately :)
Overall, though, congrats on all the work you put in. It's incredibly hard to start a company and believe in yourself, and you should be proud!
We're self-hosting the docs now thanks to Konfig open-sourcing it: https://docs.snaptrade.com/
Tons of respect for these guys and I wish they'd found a way to make it work.
Also, for anyone finding themselves in a similar situation as Konfig (a product that (some? most? all?) customers love, but revenue not scaling as needed), please consider charging more. We probably would have paid 2-3x what Konfig was charging us and more as we grow, but they never asked and never built in any usage-based cost scaling (like $X/month/SDK, $Y/month/demo, etc).
Wrapping free software is mainly viable towards enterprise customers, where the thing you're actually selling is SLA and a certain level of insurance and sexiness on middle manager CV:s and so on.
YOU didn't fail. Your business failed. It's an important distinction.
You are not your business - for your mental health.
Publishing your results makes you part of history. Respect.
At that age you have plenty of time to pursue many things but you often lack the experience needed to succeed in the B2B market.
You definitely need support from someone with sufficient B2B experience, or you might have better luck focusing on something in the B2C space.
My only advice if he really wants to continue pursuing B2B is to find a partner who can sell the product. Selling is a full-time job on its own.
Nearly every architecture decision is "which open source tool can I use to solve [problem]".
No one wants to pay for anything and that's ok.
I feel like a lot of value could be unlocked if there were some way besides random chance and networking for skilled developers looking to start something to discover people with problems, domain expertise and entrepreneurial ambition.
The main problem here is that non-programmers are often so entrenched in their workflow(s) that they fail to see what can be automated and wind up proposing nice-to-haves instead of tasks critical to their mission.
Moreover, they're more likely to dismiss 80% solutions because the introduction of new unknowns/things-to-check adds enough uncertainty to make them uncomfortable. "The new thing always puts things here instead of there and it doesn't handle these cases. I miss the way we used to do things."
There's a secondary problem here that many developers are employed and don't typically have a personal tools budget. This narrows the market effectively to developers that are free lancing or the bosses of developers that are employees.
The team managers will scrutinize a lot of spending on this front and typically not have. a lot of budget for this. And there is no such thing as a personal tools budget for developers in most companies.
Freelancers mostly just use the same tools as the companies that pay them. Which is mostly free tools. Non free tools actually complicate getting freelancers because now you need to worry about getting licenses for your contractors as well. So, there's a bias towards keeping things simple here and just avoiding such tools.
And you know where developers hang out and what kinds of things do well there. So everything's good, right?
But as you said, many of them don't want to pay for things, and many will find open source solutions that'll do the job needed instead, even if it's a tad less convenient than your potential solution might be. Plus, you're literally selling people whose job/life involves creating software, so their answer could just as easily be "build something myself to do this" instead.