Zero to Sold
Rating: 9/10Author: Arvid Kahl Read The Original
Filled with great advice and wisdom for all bootstrappers and indie hackers who are either starting or already running a software business. There is little fluff in this book, which I liked. Arvid who has successfully seen all the ups and downs of being a bootstrapped founder shares his experiences and failures so you don't make the same mistakes. This is a no brainer read for solo founders and will save you thousands of dollars of mistakes and hours of stress and headaches. He goes into great detail on all topics including marketing, sales, product development, customer service and even the sale of your Saas.
Zero to Sold Summary
The Book in 3 Sentences:
- Build your bootstrapped Saas around a critical problem that intersect something mandatory and something wasteful.
- Build your business like your going to sell it from day one, this includes documenting everything from code to sales.
- You're never finished building your product, so optimize your workload for safe, early, and consistent releases using technologies that you are comfortable with.
My Outlined Highlights
"We documented our internal processes so we could easily outsource or take over each other's activities. We built the business as if we were to eventually sell it."
A bootstrapped business is always self-funded, but not every self-funded business is bootstrapped.
They will also be hard to retain, as they are capable of changing vendors quickly in such a crowded field.
Knowing if you need to focus more on sales or on marketing is very important. Some markets require you to reach out to buyers individually. For others, a good and well-targeted marketing strategy could mean you will never have to talk to a single customer.
The hosts of podcasts in B2BC industries are very good targets for your research, too.
STEP TWO: THEIR PROBLEM
- I believe that many bootstrapped businesses only do half the work. They solve a problem, but they don’t address the most critical problem. If you want to build a profitable business, you have to solve the most important problem your customer is facing, the one that, when solved, will change their life. (Location 685)
- You want to build a “need-to-have” instead of a “nice-to-have.” You want to develop a painkiller instead of a vitamin. You want to be their aspirin.
- Find the critical problem at the intersection of something mandatory and something wasteful.
- Find the critical problem where people would love to opt out, but can’t.
- Find the critical problem where solving a problem takes a long time every time the problem occurs.
- solution-aware and have already created their own simple systems to solve the problem.
- They’ll be willing to pay: if the solution saves them time if the solution saves them money if the solution makes them money If it does all three at the same time, it will be a guaranteed hit.
- You want your service to be the last subscription that gets canceled when budgets are shrinking.
STEP THREE: YOUR SOLUTION
- "At what stage of your workflow will you be using this solution?"
- "Could this solution cause friction in unexpected areas?"
- It turns out that a majority of your customers have an Excel plugin to deal with their fleet management and driver tracking. If your solution does not take into account this integration, it will add more friction to their process instead of removing it.
STEP FOUR: YOUR PRODUCT
- Your product will never be finished—treat it as an ongoing concern at all times. Allow for quick and safe releases, release early, and release often. The less exciting your tech choices, the better. The fewer things you have to build yourself, the better.
- Your product can never be finished because it's embedded in a world of changing technologies.
- release often, release early, and release safely.
- bundle them up into one big release every few months, your validation data will lose a lot of accuracy and granularity.
- Many client-side error-monitoring tools can assign a suspect release to every new error, making an educated guess as to which deployment may be responsible for a newly encountered error.
- Not focusing on one feature for too long prevents going down endless rabbit holes,
- Never release something you can't roll back.
- Three main things are important to create a system capable of automated rollbacks: artifacts, versioning, and bidirectional migrations.
- Having migration logic in place that can go both ways makes it possible to release database-related changes very safely.
- Continuous Integration, the concept of automating build and tests, makes releasing extremely easy and manageable.
- If you run a web-based SaaS without any extra fluff, you will likely be able to set up a simple release pipeline and be okay with it for a long time.
- I would still build the Docker images locally on my development machine, and upload them to a container registry.
- Very quickly, I automated away the build step into a cloud build service, which made it both faster and less dependent on me being connected to a high-bandwidth line to deploy.
- Do this with hot paths all over your business: tedious manual processes, resource-intense tasks, and software components. If you optimize the hot paths often enough, you'll end up with a very streamlined business.
- For your own development comfort, modularize your software. This will make it easy to add new components later in the lifetime of the product. Modular software has a high separation of concerns, explicit dependencies, and well-defined interfaces. Every function is neatly wrapped in a package or a module that can be tested and maintained independently. This may not be important when you start, but it will become essential when you start building a team of developers later.
FROM PRODUCT TO BUSINESS
- BUSINESS A WELL-OILED MACHINE A PRODUCT IS NOT A BUSINESS—JUST yet.
- Negative churn happens when the customers who stay with your business spend more time on upgrades than you lose from customers canceling.
- the Entrepreneurial Operating System (EOS) has been used successfully in many bootstrapped companies. It aligns and strengthens the six key components of any business:
- Empowering people is at the core of entrepreneurship.
- Most people don’t even start.
PRODUCT EVOLUTION: CONTROLLED GROWTH AND SAYING NO
- Hot Path -> Is there anything you can speed up significantly that would impact the day-to-day activities?
- You can accomplish this on the user-experience level by using tools like Hotjar and CrazyEgg, which are called behavior analytics tools, and are mostly recording your users' sessions.
- let's say you are integrating MailChimp into your backend server. Instead of using the MailChimp URLs directly in your code, build a class or module responsible for interacting with email list services that handle all the specific calls internally.
- Once you can reliably test that the internal logic of your abstraction works, you can extend your automated checks to integration tests as well, by mocking the external services or using them directly.
- There are whole libraries and packages that can do this kind of testing for you, so plug them into your deployment pipeline as soon as you can.
- If you need to migrate your database to another provider at any point, recompiling your code because you can't dynamically change the connection strings is a hassle.
- Having your systems in immutable containers will force them to be mostly stateless, which allows you to save your data in a single source of truth, likely a database or in-memory storage system.
- ONCE YOU HAVE PAYING CUSTOMERS, you will notice one thing: it’s easier to keep a customer than it is to find a new one.
- At FeedbackPanda, we used Intercom for our customer service. They allow for all three primary modes of customer service: synchronous, asynchronous, and self-help.
- We also used Intercom for our marketing and onboarding emails. Doing this plays well with having all our customers on their platform already. The onboarding campaign, in particular, can be used to measure conversion rates and engagement profiles. For newsletters and product announcements, the email system will allow your customers to respond immediately, and it will show up as a customer service conversation, with all your added customer data present to help them out.
- On average, a 5% increase in customer retention leads to a 25%–95% increase in profits.
- Offering a “pause and pick up where you left off” solution was a clear path for us, and something similar could work if your business is in a similar niche with expectable temporary periods of non-use.
- The book Farm, Don’t Hunt by Guy Nirpaz describes the concept of value nurturing in great detail. If you want to work on showing your customers how much value you provide, it will give you many great insights and actionable ideas.
- It’s also a highly psychological issue: annual plans are usually discounted and therefore non-refundable.
- Using a tool like Canny.io allows your customers to suggest features and vote for the ones they find most relevant.
- I attribute this behavior to the fact that we named the more affordable plan "Basic" and the more expensive one "Professional." Our customers were teachers who took great pride in being experts in their field.
- Keep your eyes on the Customer Acquisition Cost and the Lifetime Value of your users and how those metrics change when you implement these kinds of accounts. Once those metrics show a tendency toward negative revenue, be prepared to phase out those offers.
- It worked like this: for every three customers you referred, you would get a free month of the service. It would be automatically credited to your account the moment the third referred customer purchased a subscription. All referred customers would get a 50% lifetime discount on their subscription.
- The math is simple, too: if the discounted advocate revenue plus the discounted revenue from the referred customers is higher than the non-discounted revenue for a user that doesn’t participate in the referral system, your system works.
- With unique referral codes, we could track where our new customers were most receptive to marketing, and who among our customers would most actively share their link in which social networks. That made the previously opaque word-of-mouth marketing much more measurable.
- Roadmaps without dates: I personally really like these, and it’s best if they come in the form of a Gantt chart.
- When you write an SOP, put yourself into the shoes of someone else doing the job.
- Allow for CSV data export. Your customers may not need it all the time, but this data format is surprisingly relevant for retention.
- Think about how you can enable other businesses to integrate with your product as well. How would offering a programmatic interface enable other services to provide additional benefits to their customers?
- To make your product easier to integrate with other programs, provide a machine-accessible interface such as a REST API or any other way to automatically ingest data, using a commonly used and trusted authentication method. This also allows you to monetize your product at scale: by offering pricing based on API usage, you can create new subscription tiers that are much more interesting to your more technical users.
- Integrations are supposed to amplify the usefulness of your product, not bury a time-bomb beneath the foundations of your business.
- How to Find Your Perfect Hire There are two places that I recommend checking out before you head over to the regular job portals and recruiting agencies: expert communities and within your customer base.
- April Dunford has an exceptional approach that will help you align how you position your product with what your customers can understand. Find the competitive alternatives first, then highlight the unique features you have that they don't. Show how those features produce value for your customers in fields that they care about, then contextualize it within the market segment.
- I recommend listening to Andy Raskin’s talk about storytelling.
Selling Your Business
- Create a separate Google account for your business and use that to log into the services you use for your company via OAuth2, or use your business email and a strong password. Keep all of the login details in a separate 1Password vault, and keep only logins and secure notes related to your business in there. That way, when you hand over your business, all you need to do is to invite your acquirer into that vault, and all relevant credentials will be available to them immediately.
- In its most basic form, it's a spreadsheet outlining your expenses and revenue history, month over month. Some P&L sheets are highly detailed, down to describing each individual expense, while others group expenses into broader categories.
- For the internal metrics of your business, I recommend using tools like ProfitWell or Baremetrics. Those business analytics services hook into your payment processor and use your subscription data to extract trends, key numbers, and aggregate numbers.
- Where analysis tools look into your past, forecasting tools look into your future. A tool like Summit will hook into your payment processor's data as well, and then give you projections and forecasts into the future of your business.
- When it comes to legal tripwires, make sure you have your software licenses under control. Use tools that extract all the licenses used in your codebase, and turn this into a living document. When you use software that has no license attached, you may need to replace or modify it to comply with legal requirements.
- Usually, at the first sign of legal trouble that was not mentioned immediately by the seller, a buyer will retreat from the acquisition. Be honest, forthcoming, and clear about the realistic consequences of those legal issues.
- Don't share secrets. Never let your buyer access the account details of your customers without anonymizing them. Imagine what could happen if a competitor, disguised as a potential acquirer, gets their hands on your customer data. Don't make this possible.
- The moment you are ready to sign a Letter of Intent, you should definitely involve a lawyer.
- Good actors will have a track record of successfully buying businesses. Bad actors will not.
- TinySeed is an accelerator for early-stage SaaS founders, helping with a cash injection and mentorship while focusing on a bootstrapping approach at the same time.
- Similarly, some VCs such as Indie.vc wants to support founders on their journey beyond initial profitability similarly.
- They take an initial percentage of ownership, which can be redeemed through a portion of the monthly revenue. Should you want to raise further money, the ownership will be converted into traditional equity.