
You can’t build a SaaS company in 2018 without significant funding - jcassee
https://davidmytton.blog/you-cant-build-a-saas-company-in-2018-without-significant-funding/
======
exolymph
Upvoted because it's an interesting topic, but the statement in the title is
straight-up inaccurate and reflects the author's biases regarding what meets
the criteria for "SaaS company."

In the blog post itself he wrote, "As of 2018, I believe it is now impossible
to start and scale a SaaS business without significant capital. [...]
Bootstrapping SaaS to sustainable revenues and profitability is so hard in
2018 because of the time it takes to grow organically. [...] That said, it is
still possible to gradually build up a profitable small software business in a
niche area that can grow over time."

Yeah, that last example? No reason why a niche software business wouldn't be
considered a SaaS company.

Really I'm annoyed by the phrasing / terminology here. He should have
specified that he's talking about a large SaaS company... but at that point
it's banal to say that you can't do it without raising capital.

~~~
lazarko
I am also curious to hear what is 'significant' amount? Is it something which
a couple of guys can't finance by themselves in a garage? For a month or for a
year? We've built one SaaS business without, what I would consider,
significant funding.

------
clamprecht
I started Searchify in 2012 bootstrapped (Search as a service). My goal is not
to "beat" my better-funded competitors, but to simply outlast them. So far,
one down, a few more to go.

------
adventured
"Regardless of whether you actually need all the features on offer, it comes
down to how many features a vendor has."

I have to disagree with that. Essentially all of recent economic history says
there are _at least_ three ways to compete at any given time for all services
and products: superior price, superior product, superior
marketing/sales/brand, and various combinations of those.

For my own reference, I aggressively shop on price + quality. I'll take 85%
equal product quality with a required baseline of features at a lower price
point. Generally speaking, there will never be a time that you can't compete
by lowering price, while maintaining a certain minimum ~85% good enough
quality level.

~~~
koolba
Your baseline features aren’t necessarily the same as the next customer.
That’s we’re the breadth comes into play.

~~~
adventured
The baseline features concept for a SaaS company trying to compete, is a
formula of hitting enough of the market.

Generic example: 85% quality, lower price point, baseline of features that
covers 65% of the market's needs. Each additional feature beyond a certain
core, broadly speaking, will tend to have a diminishing return in regards to
how much of the market needs/wants it.

~~~
tanilama
For customer what does 65% of features mean? You either have it or not have
it.

~~~
adventured
I didn't say 65% of features. I said that you hit 65% of the market's needs.
That is, that your features cover the required needs of 65% of all customers.

It's a mistake to build a SaaS product and try to include so many features
that you cover more than ~3/4 of all customer feature demands in the early
years. You're likely to either go broke or never finish, trying it; and if by
a small miracle you build that wildly bloated product, you'll likely be unable
to support & maintain it properly.

Generic example: the total market for a SaaS product has 30 distinct features
across 20 competing companies. 8 of those features get you to 65% of the
market's needs (few customers will need all 30, some small % will need ~15
features, the majority will need a modest base set of features, eg ~8). The
whole market does not need all 30 of those features. As a highly functional
rule, every SaaS product will have a core of minimally required features,
beyond that each feature will have a diminishing appeal versus what % of all
customers require it. You have to hit a certain threshold of minimum features
vs max customers - that formula is a bit different for each product or
service, you have to figure that out by experimenting and researching.

Do a select few things, do them well, and at a lower price. It has been a
winning formula for the last 200 years of industrial history across an
incredible variety of products & services. Or do a few things extraordinarily
well, at a higher price; that also works just the same. There are of course
exceptions to the rules, you're not going to beat Google in search with a
slightly better product most likely, or a slightly faster product (you'd
likely need a 10x product to dislodge their overpowering brand, financial
position, monopoly).

------
Bjorkbat
I had a bit of a knee jerk cringe reaction to that. I think I understand why
after thinking about it.

He’s mostly right. Mostly. Very few SaaS products are designed to be exciting
products. They solve problems, maybe even major business problems, but if
we’re being honest here they rarely make a meaningful impact in someone’s
life. You use them and move on. Most people who have to use these products are
paid to endure them until the day is over and they can go home and go back to
what they really care about.

So yeah, the company with the resources necessary to drop it’s prices and
aggressively sell something that no one really cares about will win. It’s a
race to the bottom. If that’s upsetting, too bad.

Unless...

Unless you build something that individuals, not companies, care about.

I think that’s why Slack is doing so well. Most of the add-ons for it have no
real legitimate business need. Your company doesn’t need GIPHY, or party
parrot emojis. People sure love that sort of thing though. It makes work a
little more fun. I think they’re created value in a way that is very hard for
competitors to replicate.

------
gamedna
Lets put this out there. Building any successful business is difficult. The
trick with SaaS is overcoming the inflection point where your business
transitions from bootstrapping to growing as a viable business. The
juxtaposition of supporting early adopters against growing the user-base is
always a pitfall but not impossible to overcome with a bit of patience and
planning (or luck).

------
filvdg
We are currently bootstrapping formlets.com. in a very competitive Form
building market. When you use remote talent you can bring your costs down to
compete with players with big pockets.

------
rmason
If you're building a unicorn yes you will need serious capital but otherwise
not necessarily. It is still possible in 2018 to bootstrap a SAAS startup.

------
chx
> Sales teams are expensive,

Then don't have one. Find something that people / businesses around you need,
build it, and then let others come to it too. Classic way to a slow burning
successful small business. An entire sales team? To start with? Nah.

------
technics256
This is too generic, and hard to apply to one market space or industry. Beware
of broad brushes like this.

