The advice in this article is fairly solid and has been said and done quite a lot. Like many general-business advice articles posted here, it does seem to lack substance or really any actionable advice, so here is some based on my own experience:
A medium to very large company will spend $0.95 to save $1.00. Because of tax incentives and business performance metrics, any opportunity to grow for the future is usually capitalized on so all you have to do is find a pain point for a company and pledge to solve it cheaper than they can, which is usually through headcount.
In fact, an easy way to find ideas (to the point where it kind of feels like a cheat code) is to see what companies in a given industry are constantly hiring for. If you can replace 10% of a job that companies pay $65,000 per year per head, you can pretty easily demand $6,500 or more. Unlike a W-2 employee, Your company does not cost your customer a full-time manager, nor does it increase administrative burden for HR, IT, or facilities, and does not incur costs such as benefits, payroll taxes, or accounting fees associated with personnel - which will undoubtedly be higher than the flat monthly or yearly line-item on the expense sheet that your business represents.
Choose an industry, pick a pain point, build the product, price it according to what it costs, and sell to them. You typically won’t find super interesting problems to solve here but it will be reliable as long as they don’t build it themselves.
"Choose an industry, pick a pain point"
This is solid advice, but for me it is very hard. I always found finding pain-points in an industry as an outsider (not working in the industry day-to-day) very hard. (Living in a relatively small and culturally isolated Eastern European country does not help either.)
By the way the only industry I know well (from the inside, as software engineer) is "big software product development". Nowadays I invest a lot in public markets, so I learned a lot about other industries from an investment perspective, but it is not enough to find pain-points.
I agree that this is the hardest part, and you’ve pointed out the reason why developer tools seem to be over represented in startups. For this reason, I mentioned to check job listings and see what responsibilities they are looking to hire someone to take on.
Just a personal thought (and please tell I’m wrong if this is not the case), I think Eastern Europe as market is ripe for good tech innovation. To my knowledge, it’s not “behind” but products and services seem to reach there after being recycled from Western and Central European companies, with translations into local languages being spotty at best and nonexistent at worst. Someone who lives in a culturally-isolated place might have the upper hand at solving specific problems and being a native speaker of the local language would you give you the upper hand and no competition should you elect to write software to help that doesn’t exist where you are. This could be especially true if you can find software that they wish they could use but is not translated into an language that makes it useful for them.
I've lived in Serbia, Croatia, and Hungary... The key is to go to networking events. (Or co-working spaces, or just show up at their company and say you're interested in working there as an engineer and ask if you could get a quick tour)
If networking events don't happen in your country, then become the organizer. You'll instantly be seen as a leader and attendees will eventually want to talk with you. When you organize regularly, they'll start talking about you. Then you're "in".
If you don't live in the capital city, then it's worth the time & money to travel 1x a month or every 2 weeks. Ask attendees if anyone has a spare couch for you to stay on.
Themes for events you can use the major happenings like AI. Or 'duplicate' Meetup events in other cities.
Post flyers near companies doors, make event on FB & Meet-up, find developers on LinkedIn, there are so many options to get the word out. Split Test and discover which one is most effective (ask attendees where they heard about it)
My network creepingly broke away over the past three years and I didn't bother to re-build it. Your post reminds me of the great discussions I've had at networking events. Time to start that again!
> I always found finding pain-points in an industry as an outsider (not working in the industry day-to-day) very hard.
This is a good place to lean on your network of friends that don't work in the same industry as you.
And if you don't have those kinds of friends... it would be good to work on getting them. It's important for many many reasons to have a diverse social network.
This is good advise. A lot of devs, or techies in general, often live in a bubble,so end up thinking that if their standard dev shop has all the integrations, automations,and whatnot,so it should be the same everywhere else too. It blows my mind when see businesses operate in a way as it was 1900. I still remember how I told a business owner with 50 people or so how they could use shared mailbox in the operations, so it's easier to pickup the inbound emails as multiple people work on it.. It was as I just showed the path to enlightenment. However, it's difficult to see these problems when you are an outsider,so my advice is to go out and speak with many people who work in different sectors and face very different problems than an average HN reader.
In my experience running your own business is all about relationships. The fact is someone with capital to spend can deploy it to anyone, so why should they deploy it to you? Are you their cousin? Did you go to the same school? Met at a mixer? Before there is even a discussion about what you know and what you can do, or what your product is there is the question of who you are.
I have been doing some Data Science consulting on the side and last year we did some analytics work for a government lottery and that contract came to us because one of my partner's girlfriend had a relationship with the team who needed the work done. Otherwise you would never hear about any of this stuff that is constantly flying around in the airwaves.
The problem with this advice is that it's not any advice. Saying business is about nepotism is unattractive and doesn't really help you, other then to say, either you are social and good at forming relationships or find a partner that is. And moreover, you can't sell this advice in a coaching class.
If you aren't a social butterfly the only way is to build those relationships over a long period of time and create trust.
I think people jump into "nepotism" too quickly and usually I find people who jump to that - to be not to be really negative but still - <losers>.
Building and keeping relationship *is work* even with your wife or kids it is not given. Building and keeping business relationship is even more work when you have to convince someone you don't know that you are worth something.
I call out nepotism only if you can clearly see someone is hired and does nothing or has no experience or skills for what they were hired for.
I got my friends/people I know hired to the company I work for, it was not walk in the park, I had to convince my friends that company is good place to work as they were highly skilled, which took me months ... guess what ... I had to spend also quite some time convincing managers that guy I propose will fit and then they still had to go through interviews and probation period.
From the outside or other employees perspective it might have looked like "X got Y into the company because they know each other and X is on good terms with management", they did not see how much work it was to "get good terms with management", they did not see how much legwork and checking up on my friends if they are available took.
You’re trying not to be negative but they’re losers? If you’re going to start a comment like that everything better be bang on. Unfortunately, you seem to be saying that nepotism is wrong..unless you do it then it’s somehow fine because you’re “special”.
What a low quality comment made even worse by the insult in the beginning.
He has a point. People that are always calling out nepotism, or good looks, etc... typically also have an axe to grind and have some festering sour grapes.
The situation outlined is true. It can take time to convince outsiders (friends), and time to convince insiders (the company, manager) that X and Y are a good fit.
I don't want to start a flamewar with this controversial hot-button topic, but imo it is kind of similar to the whole incel culture. The kind of takes where they believe that women aren't interested in them because they are 5'9 or because of them not having a square jawline or because of some perceived "chad" gatekeeping them, and totally not because of their own attitudes and behaviors.
This is just missing forest for the trees. I am not saying that looks don't matter at all. But the sad part is that the heavy majority of those people look totally fine, and it is just their hyperfocus on their perceived deficiencies (and associated behaviors) that drives people away.
Same here. No one denies that nepotism exists. But 9 times out of 10 when I hear someone complaining about it, it boils down to "how dare they hire someone that they had any prior personal experience with and who they know for a fact is a great specialist due to the shared track record".
People get upset because companies boast about being a meritocracy and then take the (pragmatic?) road of hiring people they already know, and promoting those people they enjoy hanging out with.
The game being somewhat rigged would be a lot easier to accept if you haven’t been told all your life that if you work hard and be a good person everything will automatically fall into place.
The logic of being upset that somebody who got worse grades in school now has a better career and how unfair that feels is the same logic as being mad that somebody with a criminal record who has no house or car can get dates easily but the “nice boy who played by the rules” cannot.
Exactly.
There are 'kind' and 'un-kind' readings of this situation.
For many years I swallowed the story that companies are a 'meritocracy', and got very upset when they were not (nepotism, hiring people that under-perform).
But then realized, maybe sometimes it is 'pragmatic'. It is more like 'moneyball', they are not hiring the 'best', but maybe they are hiring the 'known quantity'.
Sure, there is some cases where you can be mad at nepotism. But I tend to think people are generally good and trying to do the right thing. Sometimes the story goes "I don't know much about programming, but I'm going to hire my nephew because he seems smart", is innocent.
This comment reads like a classic "X-ism doesn't exist because Y people have it hard too!"
No one is saying that Y does not have it hard. The claim about X-ism is that people with X never even had the chance that Y did. In your case, sure, someone worked hard to convince their boss to hire their friend, but the people who don't have those connection (i.e. because they are from marginalized backgrounds/different country) just don't have a single chance of being hired, regardless of how qualified they are.
> In your case, sure, someone worked hard to convince their boss to hire their friend, but the people who don't have those connection (i.e. because they are from marginalized backgrounds/different country) just don't have a single chance of being hired, regardless of how qualified they are.
This requires that every hire the boss ever made was based on an employee recommendation. That seems unlikely.
> This comment reads like a classic "X-ism doesn't exist because Y people have it hard too!"
The claim was not "nepotism doesn't exist". The claim was that "It isn't nepotism if the person hired through personal connections can actually do the job".
Yes, people without personal connections have it harder, but the mere inequality exists does not mean the situation is unjust.
It’s really all opinion. I would say the system here is unjust. (Life’s not fair.)I wouldn’t say that the relationship-hires are morally wrong (if the person hired is qualified).
Tech is culturally obsessed with those Moneyball edge cases where the metrics totally contradict intuition, where someone is objectively brilliant but overlooked. And with their complements, incompetent but charismatic frauds. Those cases are certainly interesting, but I think it kind of elides the much more boring reality: relationships and reputations are earned, the most common way to be respected is to actually be good, and the vouching of other professionals who’ve seen your competence and character in a variety of situations over time is a much stronger signal than a few hours of systematized interviewing or testing.
It’s still an unjust system, and it’s worthwhile to aspire to a system that is truly fair.
Technological advancement is ultimately the only way to achieve a fair system where “systematized interview or testing” works as well as a relationship.
I think it’s interesting you emphasized “losers”, and even chose that word at all.
What motivates you to disparage an entire group of people, because they (correctly, as you admit) point out that success doesn’t depend on the relevant talent but on socializing?
I point out that success requires talent - I don't know how you read that differently.
Most of the time losers claim that "if they would know the right people..." or point "he/she got a job only because they knew someone", well NO because knowing right people is only part of the work, one still needs to deliver and still needs to have relevant skills/talents.
Knowing the wrong people doesn’t make you a loser. You should rethink your wording or qualify loser with “losing the chance to get hired at a certain place”.
Not knowing ozim and not getting hired at their company doesn’t make you a loser.
i dont think this person is stating that knowing the wrong people makes you a loser. it's that complaining about others getting jobs or opportunities centered around "they only got that because they knew someone" is generally a sentiment shared by losers. its a strong take, and i don't know if i agree/disagree, but there does seem to be a general trend of people who are always complaining about external forces are the ones that don't tend to ever gain any success or move up.
> there does seem to be a general trend of people who are always complaining about external forces are the ones that don't tend to ever gain any success or move up
This is true but on the flip side it also seems that some people who end up in privileged positions attribute 100% of success to themselves, and 0% to circumstances and external factors, which is just as bad
take this with a grain of salt, but i've listened to a lot of the "how i've built this" podcasts and i think 99% of the founders all believe that their success came with some level of luck. but then again, maybe thats just selection bias and the types that think they're god's gift to earth wouldnt be on the podcast to begin with
Yes - exactly that is what I mean in my way of thinking.
It is not about people who didn't get specific job but it is about people complaining. "Normal people" even if they don't get some job are not complaining like that.
Knowing the "wrong people" (or not knowing the "right people") doesn't make one a loser. But discounting other people's skills just because they associated with the "right people" (in addition to having the skills) does.
> Knowing the wrong people doesn’t make you a loser. You should rethink your wording or qualify loser with “losing the chance to get hired at a certain place”.
You are misreading ozim.
The claim is not that people without connections are losers. The claim is that people who often make the accusation of nepotism generally are losers.
In other words, untalented people will make the accusation of nepotism as ego defense to avoid confronting their own lack of skill.
its funny how mostly true this is if you take the converse. i have very rarely seen smart/successful people complain about others. they focus on themselves
You’re calling people with the right skills/talent “losers” because they’re frustrated serendipity wasnt in their favor and they don’t also know the “right” people.
The people you’re disparaging know that skills/talent are also part of the work, but they’ve done that part — the part under their control. They’re commenting on the part of it which isn’t… and as far as I can tell, you’re disparaging them because you’re lucky and they aren’t.
It's also interesting that you separated 'relevant talent' from 'socializing', as if socializing is ever not relevant. People do have to at least know about you, and that indeed is a skill on its own.
> I got my friends/people I know hired to the company I work for, it was not walk in the park, I had to convince my friends that company is good place to work as they were highly skilled, which took me months ... guess what ... I had to spend also quite some time convincing managers that guy I propose will fit and then they still had to go through interviews and probation period.
That sounds very far away from nepotism. Nepotism is giving relatives or friends the job without any qualifications and/or treating them different.
That is why I replied to parent poster. He wrote like it would be that getting business from someone you know is already sign of nepotism but there is more to it.
I can understand why both your friends and the company struggled to respect your choices and required so much more legwork than normal, because man oh man you are quite bad with words!
When I left, my network was very narrow (industry focused).
I did a hard reset and ended up first working at a YC company and then another SV VC backed startup.
When this second startup pivoted they asked if I wanted to stay on or accelerate my vesting. I left because there was something else I wanted to build.
But now being connected to this network, the founders of the company I left opened up 8-10 VC calls.
Nothing changed about me, my capabilities, my skills, my knowledge. But being plugged in to this network definitely has benefits.
The bias is obvious in the tech industry. Lots of companies get funded that aren't true VC scale businesses. I spoke with another YC founder that ended up folding his startup doing an open source product. I asked about his pitch to YC and how he framed his business model and he said he basically didn't have one.
As much as we think tech is a meritocracy, there's a lot of bias, nepotism, and favoritism.
A lot of this ultimately comes down to trust. Unless they want to do a lot more due diligence (FTX anyone?), trust is the shortcut. Trust in institutions (Stanford, MIT, Harvard, ex-FAANG, ex-McKinsey, etc), trust in people (connections), trust in the individual (serial/repeat).
This. I was one of the founders in a software development co-op and the unfortunate truth was that almost all of our work came from connections one of us previously had. The good news is that if you do good work, and we did, that web of connections grows exponentially. But yeah, it's hard to tell somebody just getting into it that it's all who you know, but it's true.
I think what ozim is trying to get across and I agree with, is that "it's who you know" does not imply that its just a good ol boys network for it's own sake. Working with people you know and trust is normal. There is no way you can suss out in an interview loop or a client meeting what you can from a recommendation from someone who has with direct knowledge through experience with that business partner or employee. Managing relationships is part of the job and part of career building. For the career part, I have found that just being competent and nice goes a long way, without having to do aggressive networking.
> The problem with this advice is that it's not any advice
It sounds like very good advice, or rather, information. If I believe this, a few decisions I might make are: (1) spend more time networking, and following up with people I've met, whether at conferences or local events, even if they are outside (2) recognize I have a handicap if I am not a social butterfly and think about ways to counteract it (or realize this as another factor working against me and decide not to start a business)
I don't think you need to be a social butterfly to have a large network. I think you just have to show up to a lot of things. Which might feel like wasted time if you don't frame it this way.
> ... Met at a mixer? ... Saying business is about nepotism is unattractive and doesn't really help you
I think it's unhelpful to consider this level of socialization "nepotism". A word often associated with a rich parent giving their child with no experience a directorship at a big company. Not only is the energy different, but it misleads people into believing business could be anything but social.
Business deals largely run on trust that the other party will do what they say, and hopefully do it in good faith (many people believe this isn't so because of the legal contracts we sign, in fact the need to use a contract in court is a failure of a business relationship). The only way you can build that trust is by entering someone's network of trust - you can do that through word of mouth or by talking to them, but you have to do one of them.
A 30 minute chat at a mixer is great way to give signal that you're at least not obviously a fraud and perhaps worth talking to.
That sounds like a narrow idea of what kind of businesses a person can start. If you target the general public with your offers, there is no nepotism or relationships involved. That's the beauty of an open society.
All businesses started as small businesses, we tend to forget that.
I think the better version of these ideas is in Jason Cohen's classic "Designing the Ideal Bootstrapped Business" talk.[0, 1]
The difference is that Jason Cohen's advice is based on personal experience growing four businesses to over $1M/yr in revenue. I'm not seeing what qualifies this author to give such broad, sweeping advice about bootstrapping.
My side gigs almost always involve a little physical labor. Everyone writes code, but how many people do small-scale manufacturing of wood products?
Its hard to compete with bigger shops, but selling on platforms like Etsy (so long as you are willing to bet on yourself) can be semi-lucrative.
Running the numbers this morning since a friend asked, in the past 117 since I started my latest side-hustle selling wooden things, I've done 245 orders, selling 251 items for a total gross revenue of $5,612.19. It isn't retire to a private island money, but it covers the costs it is supposed to (mortgage & utilities). I usually let these hustles go a year before deciding to give up or invest more time and energy.
A modest home, in a LCOL area, purchased in the 90s or early 2000s, could have an annual mortgage in this range. Post 2020 may be higher (on the same mortgage) with insurance rate increases.
That's just part of being a 1-man show and not something you can really avoid. If you hurt your hands you can't write code either so it doesn't save you.
I think it's more subtle than that. If you're in a service industry, and you can't serve, your cash flow stops. But if you're selling a product, then the product can keep generating income as long as it's valuable.
Obviously, you can think of yourself as being in the service of building a product, but that doesn't nullify the distinction. In fact, it can strengthen it: devote your initial efforts to building the sellable part of the product, so that you can actually sell it as soon as possible.
(This is the "capital" part of capitalism. Use labor to build capital, then profit off the capital.)
I'd even abstract it to "don't start something that ties your income to hours worked". If you're working alone, you will need time off, and no one can cover for you. It's easier to take time off if your project can survive a few weeks with minimal work. If something comes up in your personal life, you can set the business aside and sort it out.
I learned my lesson early on. I was making websites for small businesses in college. If a client's site had issues, I could not tell them "sorry, I'm preparing for a very important exam". I had to drop everything and fix that right now.
This is exactly the kind of submission that I tend to be more interested in the comments than TFA. Or that I'd submit myself evem having not liked it so that I could (hopefully) get to read the comments.
That is, people (like you - thanks!) are going to offer their own suggestions, and it's going to be more varied, more interesting, quite likely some bigger names or monetarily success stories, etc.
Since you’re interested in more opinions I’ll toss mine in as someone full time focused on building a one person software business.
First, I think entrepreneurship is a bit like music genres. There’s a lot of different styles. If you’re trying to start a pop punk band, the guy in the successful jazz quartet probably has a lot of good advice , but also a lot of advice that’s less relevant to your goals. It’s good if you can filter between the two.
I hang out in dvassalos discord which is filled with people trying to do 1 person business, about half SWEs and half creators / influencers. The creators seem to be crushing the SWEs. It’s just way easier to build an info product people will pay for than an app people will pay for. The info products also have the advantage that , content creation is both the product and the marketing work. But in pure SaaS, product development and marketing are completely different.
I’m working on a few different “bets” but the project I’m most optimistic about making money is www.livepokertheory.com . I still want to do SaaS since I’m a SWE at heart and think there’s more long term upside. But this project is a hybrid info product/ SaaS since I’m creating content on how to understand game theory solvers and creating a SaaS to make it easier to study and retain the content.
Poker is a niche I enjoy plus it’s quasi-b2b since there’s an ROI on the content.
If you’re looking for credibility I have very little as I’ve only made a bit. I had an iOS app that made a little more but it was too controversial (very unfairly so, but it was too much controversy to build a business around, it’s in my post history here).
But I’ve made a little plus I’m making money myself with my own content.
I’ve been a little MIA on my blog and twitter but hoping to build in public a bit more once I get ducks in a row.
Anyway, I think there are certain formulas and playbooks that get trotted out because they often work well. But they don’t guarantee success nor do alternative playbooks guarantee failure. I think what’s more important is to look at high level strategic reasons why certain playbooks exist and let the high level strategy guide you rather then rigid adherence to specific tactics (which, incidentally, is also good advice for understanding the articles on my poker blog).
> anything that makes me feel like I wasn't tricked into hearing about what's promoted at the end of the page
That's why I read the comments here on HN first and decide whether to spend time reading TFA later. Chances are anything of substantial relevance will be directly quoted here. The discussion will probably be more interesting anyway.
There are things that mostly just work (e.g. static content), and then there are things that require constant attention (infra, PaaS, tech heavy APIs).
And my advice to developers who are considering joining a small business or consulting firm:
- Don’t work for someone who has one customer that dominates their revenue.
That company will always control the requirements, even if those requirements make the application a chore to get working for other customers. Also if there is ever a problem with how that customer is treating you personally, the company always always has to preserve the revenue from that customer. They will throw you under the bus.
I did two contracting gigs in a row that were unpleasant. The first told me a pack of lies about advanced project management and architecture being their focus. The work was identical to any contract I’ve ever done, but the feeling of betrayal soured the entire experience. If they did anything to advocate for their employees, I didn’t see it. The consequence of that is that it knocked my confidence, and I took an FTE position which was definitely “settling” and I’ve stayed at that position for far too long (though COVID played a role, I can’t fully blame COVID).
It’s probably better if you work someplace that gets less than 30% of its revenue from any one customer, but 75% from its top 4. There are diminishing returns being pulled in many directions at once, yes, but there are serious dangers of being railroaded by an offer you can’t refuse.
I think OP’s point here is that you, in general, have more flexibility as a free agent. The trade-off is that the nature of your work changes to include lead gen and salesmanship to initially get those jobs, and active relationship management, billing systems, and consistent output to maintain the jobs. It’s a hustle you must partake in and not everyone is game for that.
I guess it would be better to say you can flex your annual hours and pay by adjusting your contract load. A family member has lived this way for 30 years, and has pretty great flexibility on the scale of a month, but not necessarily day to day.
I suppose that’s one of the advantages of being an intermittent contractor. The customer doesn’t know why you’re unavailable next Monday and Tuesday. It could be another customer, or it could be a trip to Yosemite.
I have done this as well and completely disagree with the advice. The key to success as an entrepreneur is to build a product that can be endlessly replicated without too much extra cost. If you have a large company paying you a large amount of money, they expect that your product is built for them and not everyone else. So your job ends up being that of an employee or at best an external consultant. Which may still be valid, sure, but your business is never going to scale in the way you’d like.
The last B2B I did we built a product for a couple of “whales” and then struggled making money off of the long tail. They had such peculiar business rules we had to thread a needle to get our top three working. We had one team pull a RedHat on us, essentially forking the code to make big changes for other customers, and didn’t tell us about it. When we started refactoring and rearchitecting to fix some of our biggest problems, we broke all of their stuff. Way to communicate guys.
In the end it turned out the goal of the company was to sell it to deep pockets. Having prestigious customers is how you do that. But the employees including some of the salespeople thought we were trying to serve an entire global industry. If that had been the case we should have started with customers about 1 std below median size, and built momentum toward landing large customers.
Because what happened is that we had contracts with the big companies we couldn’t net a profit off of, and they liked to keep paying what they were already paying. If we were solid with mid sized customers first, we could have asked for more from the biggest ones because we were selling a mature product. Instead they bought a fixer upper and wanted to pay the same as we fixed issue and added tons of functionality.
The article does not say you should have one customer. It says you should choose a niche, target businesses, and aim for big dollars/small customer base rather than small dollars/big customer base.
That is client management issue in my eyes. I prefer working with individuals. I find business often make political and erratic group decisions. This makes client management almost impossible. Any client large or small that understands what they are asking is a good client. I personally find dealing with individuals or coherent groups is the sweet spot.
I'm also more or less done working specifically for others and I'm now pursuing a market that is measured in the 1s or maybe 10s if it's a real success.
If you are bootstrapping a profitable product with mass appeal and get any sort of success your product will be replicated with VC funding and you will be outspent.
The article is right. Small startups that are bootstrapping succeed via relationships, not scalability. The exception would be if you build a niche product that you can manage and scale yourself better than a well funded team could. That’s rare.
A better approach is to have a solid base of profitable business clients, customize for them, and then unify the use cases & customization later on a single platform, and go big from there once you are on solid footing.
The purpose of being an entrepreneur is creating a profit generating asset.
How efficiently that profit is created is up to the individual entrepreneurs.
With 10x multiples being paid for startups like this, it couldn’t be further from being an employee. Those who are not profitable are more in a position of owning a job they can’t quit because they’re so invested in it they can’t breathe or grow because the financial equation wasn’t a high enough priority.
I can totally relate to these tips. I used to do in-home computer service and I advertised on self made signs all around the city. Got a lot of calls but not a lot of conversions. The minute I put "Business Computer Service" on the signs, I got the same amount of calls and nearly every call was converted into an appointment. And now that they had a reliable computer person, they continued to call. I was able to raise my prices by 40%, hire a few employees, get some funding and eventually sell the business. I'll never forget how adding that one word was liked a magic trick.
3) Selling to businesses can be tough because you can't automate all tasks. For a one-person business, the key is to automate as much as possible.
4) Small businesses shouldn't worry about competition. In fact, big markets are great for small businesses because they offer a vast range of customer needs. Not everyone wants the same set of features in a product. So, you can create a version of an existing product, but with fewer features. You can even advertise it as being simpler. Alternatively, you could tailor your product to suit specific uses better.
I’m not sure about 1) - scaling is easy for certain type of apps and services. It really depends.
The examples of niche businesses at the end remind of a another niche example from Tim Ferriss's 4 Hour Work Week (paraphrased):
> A man created a low-budget how-to DVD for less than $200 and sold it to owners of storage facilities who wanted to install security systems. It’s hard to get more niche than that. In 2001 selling DVDs that cost $2.10 to duplicate for $95 a piece through trade magazines, he made several hundred thousand dollars with no employees.
Tim Ferriss is very good at downplaying the effort and costs that go into businesses. Good for inspiring people to try, bad for actually being transparent.
In this example, the (claimed) $200 production cost and $2.10 DVD cost are probably nothing relative to this large marketing cost:
> piece through trade magazines
The marketing costs and effort are conveniently omitted.
The info is generally available. It is just old school and somewhat of a lost art.
There’s lists of publications by trade. You could buy ad space on multiple publications or individually. The model was $n per square inch of space.
The trick was finding the lists. General business magazines used to have advertisements for companies that ran/owned the lists. So it was somewhat accessible to the general public.
Cost was similar to how ad words are calculated. So the more niche you’d go the better chance you had of manageable costs (unless your niche was super expensive for some reason).
Effort is relative. Once you knew how the marketing channels worked everything else was fairly straightforward. The ads that worked were just left on autopilot. There weren’t redesigns or none of the shit that’s done today. Ads were left alone. Tracking was even rather simple. You’d have a special code, phone number, or mailbox that tied the ad to the order. Simple stuff.
You can replicate all of these today and still make a tidy sum. But you won’t do it behind a computer. Gotta go out into the wild and talk with people about all kinds.
> The marketing costs and effort are conveniently omitted.
I agree with you, but also somewhat disagree on the overall takeaway. Yes, of course you have to put more effort into it than just spending $200 NRE and $2.10 unit cost. The quiet part that really needs to be said out loud (way more than marketing costs and effort) is: find a niche with really great unit economics. When you've got a product with 10% margin, you have to manage all of those marketing costs very very carefully. When you've got a product with a raw 5000% margin, it matters way way less whether your CAC is even triple the raw manufacturing cost of the product.
Back then marketing was easier - just throw something up on eBay. But there are some 'hidden' costs not discussed.
I have a friend who did something similar back around the same time frame and he did pretty well. His niche was doing video tutorials on how to use new camera equipment. He needed to buy/own camera and video equipment. Luckily he already had it from is other endeavor as a photographer. He needed to have the skillset to the make and edit the video. Again, he had that from being a photographer. He ended up selling quite a lot of DVDs.
So the moral is to find a niche that leverages a lot of what you already have/know.
Yeah, I feel like these are the key examples missing from the post. It's clear when you read that story that they're onto something, and it requires a niche and a little gusto.
I think most of this advise is very arbitrary. There are a million ways to make money. Choosing a small market vs. large market is not inherently better, targeting businesses is not inherently easier, and finding one customer who pays 10k€ is not necessarily easier than finding a 1000 customers who pay 10€. It's just different.
There are one person companies that are successful with either choices, and the decision which opportunities to pursue should depend on your talents, your personality, your experience.
For example, I personally find it much easier to sell a cheap app to lots of people. I suck at selling big contracts to businesses. I only once managed to close a five figure contract, and that was a consulting job where I was basically an employee.
But I'm not saying everyone should do the same. Figure out what you are good at, and do that.
"If you were a goldfish, would you rather live in an ocean, or a garden pond? Probably the pond."
When Goldfish are in larger bodies of water, they actually grow much faster and larger.
I'm might replace "Don’t choose a large market" with "Start with a targeted niche, but one that is able to expand to a related larger market later over time".
I feel like there's also a case where the opposite is true, e.g. that there's already proof that businesses are willing to pay for solutions in the space. As long as you have a differentiating factor to the big players (ideally via something they couldn't easily shift to), my knee jerk reaction is that it's still not a bad call to launch in the space.
I focus on very small markets with specific needs not met by industry norms.
The problem I see today is that the big box stores are replacing what had previously been regional retail buyers.
The homogenization of big box board rooms needs vs. Regional cultural needs has narrowed the manufacturing focus to the average.
My theory is that just in time manufacturing will move to the "garage stage". The retail price of American high end refrigerators and stoves may not reflect the cost of materials and quality of thought that went into the object.
My plan is to develop a platform of appliances that is more efficient than existing offerings but available in specific sizes. Think of it like ordering custom furniture. The result could be a refrigerator that fits the space exactly using the finish materials of choice.
I have spent too many decades thinking about this but I have finally have my small run manufacturing facility (FabLab) set-up. I think it will be another 2 years before I get a product out the door.
This is an epicenter of the thinking. I personally think they are overcomplicating some aspects. I'm sure at a school of higher learning it needs all times of overthinking.
Let's say I buy a condo with one of your made-to-fit appliances. Will you be available to refinishing it?
Also, I'd love to hear more about your fabrication and design pipeline. This kind of work sounds utterly dreamy to me. I used to work in hardware as a SWE and loved the mix of programming and hardware work. I've also longed to start a business, but am somewhat at a loss as to what even to do.
I haven’t worked out all the details that is why I headquartered myself in an 8 unit mixed use studio apartment. My initial plan was to work out each appliances details in batches of 10. If something were to sell out I could make more. Once I got my CNC I realized I had outgrown my barn…. found an old model school. Spent all my development money to flip the plan. I would create 7 Studio apartments to cover my expenses and act as my market testing.
Currently I’m focused on my own 7 Apartments. Every big leap in living started by adding a new service to the kitchen.
fire, running water, electricity,….
Controlling the default installation for 8 kitchens should provide with a rare design freedom.
Finally I think I will be writing manifestos on technology and design. I have set myself up to only need to produce artifacts.
view.cogs.com
I have been at it since the 90s. I have answers to your question but I dont want to get into it here.
I think both you and the author are kind of dancing around this point:
It's fine to choose a large market, as long as you niche down your specific offering with a differentiating factor specific to that niche which, in effect, shrinks your market.
A solo biz can't reasonably compete with Salesforce in the "B2B CRM" market. But a solo biz can prosper in the "B2B CRM for personal injury law offices with < 10 employees in the US", as a totally made up example.
I think he’s saying large markets can cause you to scope creep as you want to reel in more and will need scaling which is usually difficult with one person business
If you target a niche in a large market then you are targeting a small market. Create serial MVPs targeting those niches until you find product-market fit.
Any advise whether 1-person business or well funded startup needs to be taken with grain of salt and check if it is really applicable for you.
>>Target businesses. Not consumers
I was a developer with decent sense of Product Management. Hated Management and Sales related activities.
Apps in App Stores targeting consumers really worked out well for me. Having been running my business for 12 years+ profitably.
> On the flip-side, you could just have 1 single B2B client paying $10k per month for a service and make 10x the amount, with lower running costs and no churn.
Why does he assume there would be no churn? The churn would be binary and catastrophic if it happens.
Separately, I've found some businesses are hesitant to do businesses with a small/solo startup because of the risk it entails. Some of them wanted me to put our code in escrow in case something happened to me personally. Some are just hesitant to business with a smallish startup, whom they figure might not exist next year. B2C customers don't seem to care about this as much.
Generally speaking, B2B involves contracts which guarantee business for a certain period of time. Churn won't be zero, but it's not going to happen on a whim, like a B2C Netflix subscription would. You can lock in 10K/mo for 12 months and have that guaranteed income, while 1000 users at $10/mo might churn every month.
The hesitancy part you mentioned isn't really a churn thing but rather part of the sales cycle. One thing the author didn't mention is that B2B sales cycles are _really_ long. You can convert a B2C Netflix subscriber in 15 minutes, but it could take 6, 12, 18 months to convert a B2B customer into a paying contract.
Technically, the author is correct in that B2B can lead to more stable businesses and less work overall, but the lengthy sales cycle can be draining in its own way, even if the end result winds up being "better" for the solo founder. (It could be worse, too, depending on contract terms!)
In other words, I agree it was a poorly worded statement, but the author isn't totally wrong there, but they aren't totally right either. They oversimplified the advice, ignoring the complexities of B2B.
Selling to businesses can be really hard. You can get stuck with ISO standards, data and server locations and SLAs. The lead time on sales can be many months, and there's a real chance it falls through.
And on top of all that there's the strangest perception of value that can drastically change from person to person.
Companies could happily pay thousands for access to data for a single
brands segmentation, then baulk at the idea of paying $7 per user for something like Slack that gets used many times a day by many people.
and step 4, i'd do the opposite. Choose a MASSIVE market. It'll be easier to get customers.
There are plenty of opportunities for a business that don’t require conforming to some standard. You also don’t hear about the multitude of businesses that had no problem selling to other businesses, only the times where it didn’t go as planned, i.e. who writes a blog post about a modestly successful business that does $1MM ARR with a 1-2 employee setup serving maybe 10-25 clients because they write a niche software integration that connects two different systems or some tiny internal tool that alleviates a pain point?
Per-user pricing for companies works very well if you want to sell to small companies because they only need to pay for what they use. Counterintuitively, larger enterprises would rather pay more per user if they can be guaranteed of a fixed price for a given term. It makes it easier to budget.
Conversely, when you sell B2C, the value prop can be considerably more challenging ("I can build this myself!", "This is too expensive, can you provide a discount?", etc) vs B2B where the customer will happily pull a credit card out, spend $500, and thank you for the value provided.
Your objective is not so much to write good code as finding a "sugar daddy", that is, businesses, to finance all the cool Python projects that make no money.
I find the article a bit strange. It seems to assume that an entrepreneur starts with the goal of having a 1-person business but has no other ideas whatsoever. That's not ideal.
I have a 1-person business myself, and it seems to me that it starts with an idea and/or personal skills, the two of which are inherently related. There are things that I know, and things that I'm good at. The author advises you to target businesses, not consumers, and perhaps that's good advice in the abstract, for a generic person, but for me personally it feels like bad advice. B2B is not my area, not in my past experience, not what I know. The author says "The opportunities are endless", but that's a curse as well as a blessing. How are you, as a single person, going to make an impact, distinguish yourself from other businesses? You have to rely on your personal strengths, whatever those happen to be, even if they go against the author's generic advice.
My own advice would be this: don't try to start a 1-person business unless you need to. ;-) It's extremely difficult.
I agree with everything but 3. Target business's not consumers. I find one rich person trying to solve a personal problem is much better to deal with than a business. This fits the think small better to my mind.
The only issues is the individual has to understand what they are asking for and pay their bills. If they pay their bills their understanding of what they want is less important.
Great post! Like some of the other comments none of the points were really new to me, but it's good to read them again every now and again. I think focusing on B2B is always great advice for solo hackers.
Personally I particularly struggle with charging too little. Especially early on you want to just get people use your product and it's tempting to lower prices to achieve this.
What about tackling a large-ish market but competing on price? As a small bootstrapped business, depending on the cost of the product, you just don't have too many costs.
Small companies/single founders have much smaller overhead: there's no 50 person costly dev team on your payroll. So you get to offer a subset of the main competitor's product at a much lower price and still have high margin.
It's something I've thought of: many companies I've worked for over the years bought expensive products that weren't necessarily too complicated or crucial, just did things we didn't want to do divert resources to do in-house.
Yet the costs ballooned (usually $ per/user) and we kept those subscriptions for a while up until we figured a cheaper alternative. If the costs had not increased so much there'd be nothing to move off of, we'd have been happy forking over money.
> As a small bootstrapped business, depending on the cost of the product, you just don't have too many costs.
The cost is in acquiring customers, as mentioned by the article. "Sales and marketing are both major time drains and you can't spend all your time doing them." I would say money drains too. A small business can't "make it up in volume" like a big business can.
While difficult initially, a small business doesn’t need as much volume though - you might “only” have a few customers, but that’s gonna be enough to feed you and maybe your family.
Plus, small business customers can stick around for longer, because you develop an authentic relationship with them, while delivering similar or better quality product at a fraction of the price of the big ones. I.e. you have an inherent edge, and it’s more about quality than quantity, while the bigger ones simply can’t afford that.
> Where a big company charges you 300,000K/year, I will charge you 30K and I have 10 of you, so still a win for me :-)
I think you're inventing an entirely unrealistic hypothetical scenario.
The original commenter asked, "What about tackling a large-ish market but competing on price?"
How many large-ish markets are there with $300,000K/year products, and moreover, how many $300,000K/year products can be delivered to 10 different customers for $30K each by a 1 person team? This seems completely absurd.
Every consultant and successful indie developer does this :-) And no, I’m not talking absolute numbers here. In fact, absolute numbers are sometimes even greater - I know a few prominent solopreneurs who are making millions/year while we argue whether this is possible on HN ;)
> Every consultant and successful indie developer does this :-)
I'm an indie developer.
> I know a few prominent solopreneurs who are making millions/year while we argue whether this is possible on HN ;)
That isn't the argument. It was never the argument, and nobody has disputed that. So you've clearly just misunderstood the discussion here, which may explain why you keep saying absurd things.
Before calling someone's genuine thoughts "absurd", I'd suggest exploring https://readmake.com book, which goes into much more detail on these thoughts. It was written by one such highly successful indie dev, and I think it's worth giving these ideas a shot. The author also describes many of them on his personal blog: https://levels.io/contact/
Another good resource is "It Doesn’t Have to Be Crazy at Work", where the authors describe how they've built a highly profitable bootstrapped business, and their philosophy around that, which shares many of these thoughts.
Competing on price gives you the worst type of customers. If you can deal with that then you're good. It's like some weird glitch in the human psyche - instead of appreciating that they can get their product or service for a better price, they fell like they're being cheated and will start causing problems. I have no idea why it is like this. Maybe they're pissed off for having to buy the thing and that's why they were looking for the cheapest offer to begin with?
Bigger companies might have more people on payroll, but they are also serving more customers to generate more revenue, and the individuals on that payroll can do their tasks more efficiently because they can specialize and cooperate. There might be times when a bigger company is bloated, for example shortly after a merger, or complacent, perhaps refusing to take on business below a certain volume, but in general they can easily undercut small businesses via economies of scale.
Small teams can allow you to really focus on a tiny area where larger companies just won’t bother to focus on. I think this is very sound advice from experience
I think this kind of advice is more useful when it comes from someone whose business model has nothing to do with startup lifecoaching. Otherwise it has a tendency to get a little self-serving and divorced from useful experience.
It's a point well-taken, but I went and read this post after reading this comment, and was surprised at how inoffensive the advice was: like, a lot of this would be very high on my list of most important advice to give (rates in particular).
(Obviously we come at this from different directions!)
If you're building a SaaS, don't use a front-end framework and tools like Tailwindcss. Instead, use a full-stack framework like Django or Rails and build your UI with Bootstrap.
A lot of SaaS founders underestimate the importance of time to market. I worked on 2 projects where the founders wanted their apps built using the latest and greatest tech stack loved by silicon valley startups. Turns out, using the same tech stack as VC funded companies costs a fortune in terms of both time and money, so, you end up not shipping fast enough or not at all.
You can release a Next.js project that uses Tailwind.css really quickly though, and for free. It all depends on your skillset. It would personally take me longer to do something with Rails just because I don't know it as well.
AI is changing all this IMO... I have a 12 person team in India that is now as effective as a 24 person team in Silicon valley was. The playing field is being leveled in many ways.
To be fair, teams scale extremely poorly. I'd almost always expect a smaller team to be on par with or even outperform a larger team, even double in size.
You get both steep diminishing returns from adding more devs, you also get additional overhead from needing more management.
How did you go about getting this team in India? My experience is it is exceptionally easy to get a medicore offshore team, but a lot more difficult to find a very high quality team among all the average or poor quality ones.
I went through dozens and when I found one I could trust I treated them like kings. The reality is most people treat offshore workers like trash, so I don't blame them for screwing over non technical people who don't understand what they are doing.
The second reality is there is no such thing as mediocre anymore so long as they use AI to code. This is precisely my point, the marginal advantage of a 10x engineer and a team of 20 + to build something awesome is now cut in 1/2, soon probably 1/4.
I would love to see an example of a scaled 1-person business. The idea is super-compelling in theory, but just the thought of everything involved.
- Sales / Marketing
- Product / Technology / Engineering
- Support / Services (customization changes)
all rolled up in one just seems like an incredible thing.
I think this has to be 1-person businesses are usually service businesses - selling expertise. Would love to see real products which are live and run by 1-people businesses.
The iOS and Android app stores likely hold the most examples of high scale one person businesses. Someone already mentioned Apollo. I'd add https://overcast.fm and https://david-smith.org (maker of many apps, including the wildly successful widgetsmith). There are plenty of other really successful apps that are just one person operations.
I run a 1-person business selling a physical product, with a companion app, and a static site for sales.
It's "easy". Yes, there are some headaches, but I prefer end to end ownership. I run the entire thing, infrastructure, sales, design + engineering, manufacturing, support.
I'm in a niche, but it is doable, I guarantee you that.
Brett @ designjoy is a 1-person business doing > $1MM/year revenue. He's on twitter (@designjoy) and had a good Indiehackers interview with Courtland from a couple years back.
Start from the beginning either automating things or farming them out if they're not your core business. Even if you have the skills at something, if you're not really supposed to be doing them, farm them out.
This is why Stripe (and Braintree) is so successful, because they have automated a real pain points for many people. (For that matter, AWS, etc.) It's not that it's hard to use another provider, or that you can't get payments or billing for cheaper, but when it flows together automatically you don't need to worry about it. People who are up to their necks in business administrivia and are treading water have too many annoying responsibilities that they both don't enjoy and cannot squash. If you go down the path of needing to maintain your stuff all the time, every time those pieces do not work together perfectly is a stressful time for you, focusing on things when you should be focusing on your life or your business.
Let's say that I fell for the "Twitter hustle bros" spiel, and after a lot of trying, it eventually worked out.
It was hard AF, but eventually I managed to get a 1 person business running, one that doesn't rob me of my time and I have several flywheels in action now that generate decent income (I won't shill, you can check my profile if you're curious).
One issue with targeting a small market and trying to grow it is if your business relies on your truly innovative/unique/original idea IMMEDIATELY it will get copied either by the big guys or by other small fish who are more than willing to race you to the bottom on profits.
You must build your business on something beyond an idea.
How do you find those and market to them? I actually am trying to make a ChatGPT plugin because people wouldn't pay for the website (partly because it didn't always work great, I am narrowing the focus) and I think this will be a captive audience.
Based on this, I am thinking maybe I should change the description of the plugin (when I get it out) to something that will appeal to web design agencies rather than individuals.
Spot on great advice. The big picture is start small (niche, deep pockets) and then grow big (wide market, all price ranges). I see some comments assuming his advice is the end game for an entrepreneur, its just the start.
I will add one note: dont waste money on marketing (google/facebook/etc... ads) when you start small, if you don't have connections that can give you projects/buy your product then pair up with someone who does.
For me, the solution was simple: automate as much as possible and move most of the costs to the customer side (e.g. focus entirely on the self-hosted product instead of providing hosting myself and having to run and maintain servers for thousands of customers).
A medium to very large company will spend $0.95 to save $1.00. Because of tax incentives and business performance metrics, any opportunity to grow for the future is usually capitalized on so all you have to do is find a pain point for a company and pledge to solve it cheaper than they can, which is usually through headcount.
In fact, an easy way to find ideas (to the point where it kind of feels like a cheat code) is to see what companies in a given industry are constantly hiring for. If you can replace 10% of a job that companies pay $65,000 per year per head, you can pretty easily demand $6,500 or more. Unlike a W-2 employee, Your company does not cost your customer a full-time manager, nor does it increase administrative burden for HR, IT, or facilities, and does not incur costs such as benefits, payroll taxes, or accounting fees associated with personnel - which will undoubtedly be higher than the flat monthly or yearly line-item on the expense sheet that your business represents.
Choose an industry, pick a pain point, build the product, price it according to what it costs, and sell to them. You typically won’t find super interesting problems to solve here but it will be reliable as long as they don’t build it themselves.