
What I’ve learned in 5 years of running a SaaS - rahulroy
http://mir.aculo.us/2013/11/27/5-things-ive-learned-in-5-years-of-running-a-saas/
======
WA
I absolutely agree on every item. Notes:

2.: Couldn't agree more. I tried it a few times, could never make it, because
something came up. So I don't tell release dates. I hardly tell about new
features. Nobody cares. Perfect.

5.: My PHP application without any fancy technology makes me close to 100K
euro in revenue per year. It delivers, it keeps delivering, there are no
problems.

I want to add one more thing:

6\. You hear critics' voices the loudest, if you don't do anything against it.
I changed pricing once and about 50 people complained. I tried to justify
myself (won't do this again) and the 50 people became a mob with the
respective mentality. No chance to say anything. I might have lost another 50
users because of the discussion. In my mind, I completely forgot about the
other few thousand people who did not complain.

Happy people hardly contact you, only the critics and haters. Don't let it
sink in too deeply. Or use an easy mitigation strategy: If people reach a
certain goal, ask them for feedback by writing a personal sounding email (that
you send automatically, for sure). You'll get mostly positive feedback. This
is important from a psychological point of view: You see that people are happy
with your product and you can handle the critics in a better way.

Most emails I get are like:"There's nothing to improve, thank you so much for
this product". Nice :)

~~~
HyprMusic
Out of interest, what is your SaaS?

~~~
WA
Sorry, won't tell. I decided to keep a low profile on HN :)

It's consumer-oriented, it costs 2 euro a month, it has several thousand
users.

~~~
applecore
You should raise your prices.

Charge at least 5 euro a month, or 50 euro a year.

~~~
WA
I heard that before and my sibling-poster is correct: You have no idea what my
product is, so you can't say anything about the price. If my product were
MP3s, 5 bucks per MP3 wouldn't work.

Anyways, your point is not totally invalid. I did a mistake when I changed
from free to paid. I started with 99 Cent per month. The goal was to convert
as many users as possible. This worked well. Only about 10-20% stopped using
my service. However, it made future price increases harder.

Some people would pay more. For some people the service delivers a a lot of
value and they'd probably pay 10 bucks a month. However, there are also quite
a few people for whom 2 euro is the limit, especially since the long-term
costs would explode for them.

And I can't experiment with pricing. The niche is too small to have this go
unnoticed. I know, because I tried. Either I increase it globally for
everybody or not. To be honest, maybe I didn't find the perfect pricing point
yet, I don't know. But it's okay, because I can live quite comfortably.

~~~
PhilipA
Couldn't you make different levels of subscriptions? So find a new idea to
improve you product, and have only those with Gold membership be able to use
it. This way you don't make and enemies with the old subscription, but you can
still convert more to the more expansive price tag.

~~~
WA
I thought about that as well but I have a luxury problem:

There is not much to improve. In the space I'm operating in, the software, as
it is, can be considered more or less complete. I mean, I can always add
features, but the core mechanics, the way it works, the way it delivers value
and the value people expect from the software is more or less complete.
There's not much to add that improves the perceived value for people in such a
way that they'd be willing to pay more for it.

But the fundamental idea is right: There must be some additional thing that's
good for people, that people want. There's also related products, added
benefit, whatnot. I won't do Gold membership, but I might be able to sell
different things that complete the offering for some people.

Compare this to Microsoft Office. Word is for writing stuff. It's more or less
feature-complete. Sure, you could add some stuff, but most people are happy
with how it is in its basic edition. So Microsoft offers also Excel and
PowerPoint. They are for very similar people, they complete the offering, but
they're totally different. A "Word Gold" wouldn't make any sense.

One more thing: Whatever I add and whatever pricing change I introduce comes
at a cost. Introducing tiered-pricing (3 wiggles for 2 euros, 7 wiggles for 4
euros etc.) for example has benefits, but it also increases complexity and
decision making. I'd do this for my next project, but for the current
business, I'm also a bit stuck in the current userbase with decisions I made
in the past.

I might offer my service in English as well next year. That's going to be an
opportunity to experiment a little bit and a way to grow the business.

~~~
joelhooks
An interesting tactic that I see repeated by successful bootstrapped internet
businesses is to really dig into the pain of their current audience. You've
got this group of thousands that have proven to pay for things on the
internet. You are in a position of trust, since you provide them value
already.

What are their other pain points?

That is the question I'd be studying them to answer.

~~~
WA
Thanks for your advice. I probably didn't dig deep enough into the pain
points. But I know what you mean. I gonna try something and go from pain
points to product ideas. I mean, I talk to people and ask for feedback, but
maybe I'm asking the wrong questions.

------
sigil
Number 5, "don't believe the hype," reminds me of this interview with the
creator of Pinboard...

> _The Pinboard about page says: "There is absolutely nothing interesting
> about the Pinboard architecture or implementation; I consider that a
> feature!"_

> _Can you explain why you think that 's a feature?_

> I believe that relying on very basic and well-understood technologies at the
> architectural level forces you to save all your cleverness and new ideas for
> the actual app, where it can make a difference to users.

> I think many developers (myself included) are easily seduced by new
> technology and are willing to burn a lot of time rigging it together just
> for the joy of tinkering. So nowadays we see a lot of fairly uninteresting
> web apps with very technically sweet implementations. In designing Pinboard,
> I tried to steer clear of this temptation by picking very familiar, vanilla
> tools wherever possible so I would have no excuse for architectural wank.

[http://readwrite.com/2011/02/10/pinboard-creator-maciej-
cegl...](http://readwrite.com/2011/02/10/pinboard-creator-maciej-ceglow)

------
bsaul
I just upgraded my laptop from a 4 years old mbp to a brand new one, got a 27"
second screen display, and i can tell you my productivity has been
skyrocketing. Performance gains are obvious, but the psychological aspect is
also a factor. After working for a year on the same project, new hardware can
bring some new joy, and a new boost to your project.

~~~
stinos
4 years is reasonable. But the OP just says 'upgrade often' which might mean
anything and as such reminds me too much of iDiots [1], which is imo not what
your upgrade strategy should be like (i.e. upgrading for the sake of
upgrading).

Over the years I tried different upgrade schemes, and it seems 2 or 3 years
works best for us. Over the course of that timespan there is an overall
performance gain large enough to notice and worth money. If you go with less,
say 1 year, the gain is much smaller, and you essentially pay for something
that's the same but just looks newer. Also depending on the country you live
in, there's a certain amount of time you can use hardware as an actual cost on
your tax form. As such keeping it much longer than that time means loss,
keeping it much shorter as well.

The psychological aspect (which we all know since childhood already and
basically is set in our genese: new = interesting) does do something, of
course, but has in my experience no long-term effect whatsoever apart from it
costing money. Especially with short upgrade cycles the 'wow, new' effect gets
less and the money effect more.

[1] [http://vimeo.com/79695097](http://vimeo.com/79695097)

~~~
aestra
Adding extra ram or a second monitor would be upgrading, you don't need to
replace every component.

~~~
stinos
This is true - must admit I didn't consider it/forgot it as I'm not a big fan
of saving on these from the start: when we buy new workstations, we
immediately get them with plenty of ram (which is rather cheap anyway) and
screenspace (which is productivity-wise way more important for me than raw
computing power)

------
measure2xcut1x
My homegrown saas application grosses ~$225k USD per year and growing. I
started it in 2003 with $0 capital. I don't currently advertise, new business
comes from seo and referrals. I am the sole developer/designer. (I use those
titles loosely.)

What I have learned:

\- Try to think about/plan for ten years out \- Make your application
easy/pleasant/fun to use for you _and_ your customers \- Limit third party
dependencies at all junctures \- Log everything, it makes support and
monitoring easy and fast \- Customers don't care what language/platform/db you
use \- Have a support ticket system \- Have a coding convention/style and
stick to it \- Life work balance is important, take vacations \- Run lots of
backups \- Keep it simple and thank yourself later!

Of course YMMV. Hope that's helpful to someone starting out.

~~~
colanderman
moneyrich4, who is hellbanned, has a good question for you:

 _i have a question for you. i have a software product, and its so informative
it would almost assist someone who copies it. any advice on planning 10 years
out for a software product with this problem? planning x years out is not my
strong suit.

i've thought a bit about removing stuff that would help competitors but that
would hurt my customers. i will probably do this though anyway._

------
bowlofpetunias
> software that allows you to concentrate on developing your application’s
> features rather than configuring servers

If you are running a SaaS, how is system administration less important than
coding?

Now if the author had written "software that allows you to be more productive
on both fronts", fine. But the notion that operations is somehow less
important than development is exactly what fucks up so many SaaS companies in
the long run.

Your users want your service to be 24/7 available and responsive. That's not a
static goal (unless you fail to gain traction), and an essential and highly
integrated part of what you deliver.

Maybe the author is lucky that his particular SaaS is easy to deploy and
scale, but dismissing system administration as a distraction that can be
solved with software is not universally applicably advice.

~~~
mrgoldenbrown
The context of the snippet you quoted is "Spend money on tools that make you
more productive." In other words, don't skimp on a tool or service that can
simplify an operations task, if the result is that you can focus more time on
features. I don't see the implication that operations is unimportant.

Having a laptop/PC that you can develop on is important to developing a
product, but no one would suggest that the author design one from scratch.
Everyone (excepting perhaps Richard Stallman) would say it's better to just
outsource that task to Apple or Lenovo.

------
patrickwilson
I especially agree with item #2. I have been involved with several web based
projects that have "failed" only because someone loosely associated with the
project put a release date and the dev team made the mistake of agreeing (it
seemed like a sure thing at the time). However, this deadline took its toll on
the team's moral. As it became more and more evident that we would not meet
the deadline we became more and more grumpy with each other and started
shooting down great product ideas because the couldn't be done NOW. It
resulted in lots of bad blood and several resignations.

That being said - I do think there are certain situations where release dates
will exist in a SaaS product. For instance, if you market tends to start and
stop activities on a set calendar (ie: school year) or if there are a handful
of trade shows that are critical to demonstrate new features at. I think it is
about being insanely pessimistic about how much you can actually achieve.
Figure out the minimum you need to demo at a date and work on that first, but
never commit to a set of UI diagrams with features that are not insanely
flashy for a demo.

my $0.02

~~~
joelhooks
There is a distinct difference between internal milestones/targets and
publicly announcing "feature X will be ready by xx/xx/xxxx!"

------
jwr
As someone who runs a SaaS company, I agree with everything in this article.
The importance of point #1 cannot be overstated!

------
rodolphoarruda
"2\. Never promise dates for a feature launch"

Reminded me of a sponsor who once offered me a bonus if I could put together a
schedule with delivery dates for each and every product feature.

"Hmm, no thanks. I prefer to leave it (the bonus) for when we go to market."

~~~
ams6110
All the side projects I've ever done have had hard deadlines. E.g. systems
that had to be ready for a campaign the client was already committed to.

But for something that's entirely your own, yeah creating artificial deadlines
doesn't make a lot of sense.

------
drderidder
5\. Don't Believe the Hype - really good points there, too. "Use technology
that's proven (to you)."

I agree but also don't ignore newer technologies just for the sake of
familiarity. Especially if it has an active, supportive community.

------
tixocloud
Really agree with #3 with regards to software. I've been focused on getting a
VPS and the flexibility but it's lead me to not focus on my
application/service. The configuration and maintenance of the VPS is chewing
up my time, time that I could have spent working on validtaing my idea. Maybe
I'm just not focused enough but I'll try to get something going on Heroku so
my application/service gets the attention it needs. Any thoughts?

------
jusben1369
"It’s your job to make your customer more awesome. Every decision you make for
your product and business should revolve around that."

Unless of course your customer requires knowing a date that a certain feature
needs to be in place by. In which case, point them to Number 2. Which really
means Number 2 should be Number 1 because Number 2 negates Number 1 if the two
come in conflict.

------
ibsathish
"Never promise dates for a feature launch" \- Gem of a point.

~~~
cygwin98
In a dull corporate environment, the equivalent is "No ETA yet".

------
mathattack
I like that there is a perspective of time. A six month sprint would not care
so much about working hours, ignoring hype, and investing in productivity
tools.

------
frozenport
Post would benifit from examples or stories. Also genuinely curious how author
can stay afloat in the rough and tumble world of note taking SaaS.

~~~
bdunn
You mean of time tracking?

I know Thomas and Amy well, and trust me when I say they're doing quite well
with Freckle. And there are much, much bigger fish in the pond. The great
thing about building business tools is that the markets they typically serve
are SO BIG that you only need a few hundred / thousand accounts to have a
healthy and profitable company.

------
mwcampbell
> software that allows you to concentrate on developing your application’s
> features rather than configuring servers

I wonder if Amy and Thomas would use a PaaS like Heroku if they were doing a
new product. Or would that be considered too expensive?

~~~
ma2rten
I can't answer for Amy and Thomas, but I guess the answer would be it depends
on the project. If you are building a freeminum project with lots of
pageviews, you'd have to watch server costs more than a SaaS with only paying
customers. Just do a quick estimation and you will get an idea how much it
will cost you.

------
niyazpk
[3] ... software that allows you to concentrate on developing your
application’s features rather than configuring servers.

Can somebody please explain what he means by this using some examples? Thanks!

~~~
wikwocket
Here are some examples, some based on personal experience.

\- You could set up and configure an email server to send email to your users,
or just use a service with an API like Mailgun or Mailchimp.

\- You could write your own Wordpress theme and plugins from scratch, or just
pay $10 for a slick theme and $50 for a few plugins that meet all your needs.

\- You could spend time each week backing up your system with a set of
external drives, or just pay a monthly fee to Crashplan or Dropbox.

\- You could buy a discount VPS account and spend all your time keeping it
patched and running, or just pay for a fully managed server until you outgrow
it.

In each case, the former solution is "free," but may require you to spend tons
of time getting it working and putting out fires. Often it's better to pay a
little money to just remove the problem from your critical path. The reason
for this is that you only have a finite amount of time and mental energy each
day. Try to use them on the things that matter.

------
NameNickHN
Of course a SaaS is a "make customers awesome" company but you'll need use
technology to make it awesome. Sure, clients don't care about the technology
but that is not the same as "You’re not a tech company".

------
z3bra
Did you learn something about privacy of users?

