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Post-mortem of a Dead-on-Arrival SaaS Product (petekeen.net)
141 points by zrail 646 days ago | 84 comments



This was the biggest take-away from this article, one I've learned after wasting much time building my own SaaS "products". Launching without an audience means nobody shows up. It's a very true statement. One of my favorite sayings now, from Jason Cohen, is to get 30 people to fully commit to pay for your product before you even start coding it.

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Just this weekend, I started coding up a tiny "saas product" that I thought about last week. Nobody knows about it, and that certainly has no launch page or audience. I got most of it done over the weekend, and really enjoyed putting it together in my favorite stack (sinatra, roots, marionette) and doing some design work, which I don't often get a chance to do.

I'll probably launch it late this week or next week. I have no audience, and don't expect massive profits either. I made it mostly because I want it. Since I plan on using it extensively, I honestly don't care if I have huge profits or a gigantic audience. I spent $5 on the domain name, am hosting it along with 10 other sites on a $5/month digital ocean box. I put in some great work this weekend, and am now going to end up with something that will fit nicely into my workflow.

It will ship with a decent free plan, and a $5/month pro plan with some expanded capabilities. If one person signs up for the pro plan, that covers the cost of hosting for this site and 9 other sites (bonus!) If 2 people sign up for the pro plan, it's profitable. If zero people sign up, I paid a very small cost for something that's going to be really useful to me.

Sometimes I wonder why so many developers gravitate towards huge ideas that they think other people might want rather than starting small, with things that you want. With this little thing I'm making, there's no risk. I've already won.

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What you've made is just a hobby then, not a business. (Not that there's anything wrong with programming being a hobby - it's more about managing expectations)

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I’m not sure - I’ve coded several "micro-businesses". They make small amounts of money, and cost small amounts of money to run, and take almost no time.

One for example makes about $500 revenue with $200 expenses and 2 hours a year. It’s profitable, I’m not doing it because I like spending time on it - or I’d spend more time on it.

These aren’t traditional businesses, but they sure aren’t hobbies. They are services I think need to exist, and that I can create, without "wasting my time".

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I think the distinction Bluedevil is trying to make is you're going into this SaaS app with no intention of it being hugely profitable or successful. You're scratching an itch and if other people decide to pay you to help scratch their itch as well, then that's just a sweet bonus.

In contrast, a business would be going in with the intention of the service/app being successful (profitable or popular). Maybe hobby isn't the best way to describe it, but I agree your way of looking at things is closer to a hobby then a business.

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In my book If you don't enjoy doing it not a hobby. If you care about ROI, and profit it is a business.

For me weather something is a business or a hobby has more to do with outlook than anything else. A few lucky people have insanely profitable, and scalable hobbies with 1000s of employees, and plenty of kids are struggling to keep their lawn mowing biz afloat so they can afford a new video game.

Over the years I've been told that company I founded 8 years ago, and has been my and several other peoples's day job ever since, is a hobby for many reasons, including not enough W2 employees, revenue and so on. Which, even though these things were said to prop up the speakers egos, made me think on the topic - and this is what I've come up with.

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edit: totally rewritten

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I have very similar experience creating a few microwebsites making $200-300 a month with no intervention what gives extreme ROI (2-3 days of initial work). These are mainly spin-offs - projects we have coded in spare time - from our Ruby on Rails and Java software house http://codedose.com

<shameless plug> If you want to build your MVP or extend your existing development team with reliable programmers thinking about scalable design, SEO and A/B testing from the very beginning we are the guys the call. </shameless plug>

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Don't be so dismissive. This could very easily transition into a business.

The only real difference is that the author won't feel too much pain if it doesn't make a lot of money.

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Agreed. The custom domain makes it pretty trivial to do initial scaling. This leaves only marketing as the big hurdle to go from small scale to something larger.

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Yes, only marketing.

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Not sure - if it's a hobby, then it's a hobby with fair potential to become a passive income or a lifestyle business (or more).

Just because the parent has reduced the risk of setting up a business doesn't mean he isn't setting up a business. There's no compelling reason to believe that the parent commenter has any smaller chance of success than any other business - but he surely has a smaller chance of making a significant loss.

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There's no compelling reason to believe that the parent commenter has any smaller chance of success than any other business

Really? He stated in his comments that he doesn't plan to do anything for this site. No marketing, no publicity, nothing. His goal is to not lose money. Not to make money, just simply to not lose any. Do you think that has the same chance as success as someone who's only goal is to make money?

It goes back to my original comment on his post - if your #1 goal isn't making money, then you should consider it a hobby. That's not a bad thing at all, again, it's to keep things realistic with yourself.

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> Do you think that has the same chance as success as someone who's only goal is to make money?

Yes, or at least maybe. The viability of businesses is extremely low in almost all circumstances. Doing something creative and putting it out there with a will to get some income from it perhaps has no lower chance than a more aggressive business strategy.

By reducing the cost of running the business to near-zero, you extend your runway to near-infinite. I'd say it's as good a bet as a VC-funded startup which needs regular cash injections to survive infancy.

> if your #1 goal isn't making money

I understand why you are saying that, and given the state of the world, you may well be correct in your belief.

However, I find it an extreme and quite a negative view.

As a consumer, I (with my limited economic power) would rather support people and small businesses with a #1 goal of improving the world in at least a small way - perhaps those which you would probably call hobbies - rather than support things that have a primary or exclusive goal of making money.

I believe that having money as a primary focus will, slowly but surely, damage your business branding over time.

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The only tech business I can think of that meets your description is Pinboard - how do you assess the apps/sites/businesses against your criteria?

Thinking about it some more, most things I "fund" are a bit like this:

* Mailpile

* HabitRPG

* Ubuntu Phone (RIP)

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Pinboard is a nice example, I have an account there.

Ethical criteria are not high on my list, but I try to apply them to the best of my knowledge when two competing services both meet my needs. E.g. LibreOffice vs Microsoft Office, and Starbucks vs local coffee house (if you count that as tech related), I tend to have an ethical preference for small and/or local businesses: I think it benefits me to support diversity and the local community.

Some nice tech companies that I'm aware of:

* Hog Bay Software

* 7 Generation Games

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I don't agree with that either. It starts as a hobby, sure. But if it's doing well, I could definitely keep working and expanding it out. Start small and ship fast.

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It's a business in a similar vein to someone selling things at a local craft fair. What would have to change about his idea for you to consider it a business?

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One of the reasons i taught myself to program years ago, was because i wanted the power to make my life easy for myself. I am currently building a semantic supply chain for my ideas, i have being using a few notetaking apps but they do not satisfy my needs because they lack in their ability for me to query, visualize and interlink my ideas.

So i was reading a paper on supply chain management and thought maybe i can implement this process for taking my ideas from inception to prototype. This is not a startup and i will use the cheapest hosting i can find, but i am thinking of allowing people to use it in the web and app form. If it gets traction, i will adjust app accordingy, if not i have a cool process to get my ideas out and visualize their process.

The bottom line is: "Don't build technology unless you feel the pain of not having it." http://nathanmarz.com/blog/suffering-oriented-programming.ht...

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Because so many developers want to build a business. You've aimed your sights at making $5/month.

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You can move your sights after they are aimed. Let's start at $5/month then see how it goes : )

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Because we don't want to be stuck in a cubicle until we're 70 years old. That's why.

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So..... what did you make?

(The fact that you didn't say shows that you REALLY aren't concerned about marketing! But I'm still curious.)

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haha fair question. I'll post in on HN as soon as it's done (maybe it will make it to the front page, who knows!), and I'll reply to this comment and let you know - promise : )

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get 30 people to fully commit to pay for your product before you even start coding it.

I can't think of any valuable product that was created this way.

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That's quite the sweeping dismissal of Kickstarter.

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The level of work to do a successful Kickstarter is way in excess of "before you even start coding it." I can't imagine anyone who could do a successful kickstarter on a project that hasn't even begun (not even a line of code).

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...I'd like to see this mysterious Kickstarter page that has had basically no work done in advance.

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You should probably revise that to 'successful Kickstarter page'. I've seen plenty of doomed Kickstarters that clearly had very little to no work done ahead of time. Which kind of shows the previous point.

If you want to see lots of doomed Kickstarter campaigns, look at the local listings for your town. I live in San Diego and even for a big city there are tons of campaigns that maybe earn 1% of their goal and look thrown together with little planning.

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Well Jason Cohen wasn't talking in the abstract, he's talked about how he got checks up front before starting WP-Engine.

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Obviously it depends on your exit strategy. Do you want to (a) get a loss making but huge user base or (b) bootstrap a business that has cashflows from day 1?

Sounds like that advice applies more to the latter route than the former.

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Note the careful wording: "before you even start coding it". Coding is a time-consuming thing, very fragile (if you get it wrong, you may almost need to start over again) and brittle (making changes is, connectedly, hard). Very significant validation can be done without ever writing code. (That's a lesson that I've been learning this year, as one who delights greatly in coding.)

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Cohen's advice is good for two reasons:

1) Obviously you see if there's any demand for your product but perhaps more importantly ...

2) It forces developers to put on their salesperson hat. Lots of us developers just like building products and just willfully ignore the other part - selling the darn things!

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get 30 people to fully commit to pay for your product before you even start coding it.

This seems like sound advice, but I'd like to hear more on the execution of it. Do you actually get these people to sign contracts, or is it more of getting people to say "yeah, I'll pay you for that"? Do you let them know you haven't written any code, or just say it's "in development"? Etc., etc.

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I wrote a post about how we got 8 commitments to pay before writing my current SaaS app. It has made well over 6 figures and counting:

http://blog.reemer.com/how-to-get-paying-customers-before-yo...

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Brennan Dunn and Nathan Barry have both appeared on HN a number of times, and their approaches to selling eBooks and SAASes have included the option to pre-order the book/prep-pay for the SAAS subscription at a discount.

Something like this works great when you have an audience and/or have some decent previews to show. (btw, my takeaway here is not 'this only works for internet-famous people,' but rather, 'it's a great idea to build an audience for your idea and show them previews to keep the leads hot')

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I likewise performed a detailed dissection of my previous failed website on my blog - very therapeutic. It still has one fairly regular user (me!) so I keep it going but I launched in much the same way: built it silently then managed to get about 10k+ visitors through HN. Only a few hundred gave it a go initially and within a fortnight or so, no tangible traffic at all.

Great learning experience though, and this post is a reminder to me to make sure I don't repeat the same mistake.

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I disagree with this statement on the basis that this assumes all products are made with monetary profit in mind. I'm working on a product right now that is for myself and my spouse to solve a money management issue we have, it is something I will use even if nobody else does.

I will be adding the ability to purchase it as a subscription so that if others want to use the product they can too, but ultimately I'm building something I want to use.

Jason Cohen's statement is based on the idea that all software is written with profit in mind, and there are a good number of years in Open Source that prove that to not be true.

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I think all SaaS products (which this article is about) have monetary profit in mind.

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> Jason Cohen's statement is based on the idea that all software is written with profit in mind, and there are a good number of years in Open Source that prove that to not be true.

Usually in most cases the code is not the direct source of income for the developers.

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I have a question about the lesson here "don't write code without having committed customers first." Does this apply to a startup that is not a SaaS product? I am working on an app that has the chicken/egg problem where it can't make money straight away, it needs a strong user base to be effective.

I have been working on this app for the past year it seems like, with development really amping up in the last 6 months. We just brought on another developer to help us finish up and get it out the door. I submitted my market information and business proposal to a university marketing research class, and they gathered data from a 50 person survey for us, which validated our ideas & assumptions. When we do launch it will be a quiet soft launch with friends & family trying it out first. Then we will tweak it with their feedback before we really try to make it public and do serious marketing efforts.

All of that said, our monetization strategy won't be implemented until post-launch once we have this feedback from actual users and a good amount of them sticking around. The whole thing is bootstrapped and we haven't spent anything, aside from the weekend development hours. Does this seem like the right approach for launching our product?

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It sounds like you have some validation, which is a huge step in the right direction, but more is always better. One reason is that, if you ask someone if they would like to use/have product XYZ, you will get very different answers and feedback than if you ask, "Would you like to pay $NNN for Product XYZ right now?"

Depending on your product, I might recommend starting to build an audience of people interested in your product. Try to interact with them as soon as possible. Get them interested. Then when you launch, you have a stable of warm leads, champing at the bit to go.

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get 30 people to fully commit to pay for your product before you even start coding it.

While I don't know about 30, we use some apps in house that clients began to use for their business. We're now looking at building those apps for ourselves and our clients are on board. We'll be saving the expenses, and have some folks on board before day one. Cool.

Along the road we have had the clients ask us if we can extend the app for certain use cases they have. Since we built their web-presence and integrated those with other tools.. Lets just say things are developing.

So maybe look to your existing clients (you know, the work you do during the tim you wish you were building your app). They are a great source for us, so far...

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I would rephrase as N customers, where N is enough to earn some significant percentage of your costs. For many kinds of businesses N might be only a handful, it completely depends on your market. For others 30 is nowhere near enough I'd imagine.

Of course, determining significance is left as an exercise for the reader.

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I think the right pricing model for this one is freemium. People start using it, get addicted, then you charge them for extra storage once they go over a limit, like Dropbox and Workflowy.

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Agree!

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Thanks for posting the "behind the scenes" story.

You say you built a landing page with mailchimp signups for your new product. Did you get many signups? And I suppose these were just signups, no money involved, right? Did a good chunck turn into paying customers?

I would love to know more.

Thank You!

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I had a list of about 300 people when I launched preorders and about 30% of them converted to paying customers. I was sending out weekly updates with progress toward preorders, and then after preorders started I sent out weekly updates with download links for people who paid and "buy now for X% off, won't last long" messages for people who hadn't.

The whole story is here: https://www.petekeen.net/adventures-in-self-publishing

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Wow! Nice conversion rate! Good job on not making the same mistake again!! And Good luck!

I'm reading the "Adventures" post as we speak.

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Interesting. I've been throwing around the idea of roughly the same thing for myself. I was keeping a TiddlyWiki, but that's stopped working. Developer solution ... write my own!

In general, developers are a terrible market because they think they can do whatever you did better / cheaper / faster, and they won't shut up about it.

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I would say that developer tools are a terrible market for that reason. Information products (screencasts, books, etc) can be extremely successful in the same market. Examples abound, including patio11's marketing training[1], egghead.io[2] for AngularJS training, Peepcode[3], Railscasts[4], and various other ebooks [5][6][7].

Most developers that I know have two common traits that make info products an easier sell. First, they're innately curious about their field. Second, they have access to a company credit card that will happily pay for training materials.

[1]: https://training.kalzumeus.com

[2]: http://egghead.io

[3]: https://peepcode.com

[4]: http://railscasts.com/pro

[5]: http://www.nathanbarry.com/authority

[6]: https://www.petekeen.net/mastering-modern-payments

[7]: http://www.jstorimer.com/products/working-with-ruby-threads

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Reasons why I would not pay for this (I'm a developer):

- I already keep notes in markdown using nValt. It's fast. And it's free.

- I sync these notes, which are just .markdown files in a directory on my machine, with Dropbox. Now I can edit these notes on my iDevices.

- Your service costs me money to do what I do for free.

- If I need more bells and whistles, I use Evernote. Evernote is also free for me.

- Emailing myself notes with tags in the subject in is also free.

Why should I spent $5/mo to use a digital journaling service, and then more time to make this service work with the rest of my workflow, when I already have things in place that take care of my note taking problem?

I would need a great incentive to switch how I take notes. I'm thinking a bunch of other developers thought the same thing.

Finally, at least you shipped something. Nice retrospective. Keep at it.

Edit: It's interesting seeing this post and "Ask HN: How do you store and organize your startup ideas?"[1] on the front page at the same time :)

[1] https://news.ycombinator.com/item?id=6585375

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> I would need a great incentive to switch how I take notes. I'm thinking a bunch of other developers thought the same thing.

Just like the OP, you've generalized your personal experience to other developers. It is an easy trap to fall into. I agree with the takeaway called out in another comment: validate the idea as objectively as possible and as early as possible.

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Yes you're right. It's the only data point I have, so it's what I went with :)

What you're echoing is also correct.

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It's funny but your list of reasons are kinda stuff learned in business school. Switching costs, substitute products, etc are common to all businesses in my opinion and a little bit of analysis might have helped the OP to identify his niche. However, that said, the experiences learned from failing will have a huge impact in the OP's success in the future.

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One more reason for me not to switch:

- why in hell would I want to use a browser-based solution for something a free, native, off-line program is much better?

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You put it on HN and when it didn't move you gave up? What else did you try?

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I tried content marketing microsites, google ads, reddit ads, talking about it a lot, etc. Nothing really stuck, and then life got in the way and I lost interest.

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I think you did a really great job in completing the project and launching. Disclaimer: I'm an MBA student so take my thoughts with a grain of salt :) I thought that your marketing was spot on in terms of trying to generate something but I'm just wondering if you tried targeting other types of customers or even zoning in on very specific types of programmers ( beginner level, expert level, etc)?

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He says later in the article he tried paid advertising, but it never led to sale.

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Writing a Post Mortem to try to resurrect it from the dead. And submitting it again to HN, hoping that second life would be better.

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Ha! No, no interest in resurrecting it at all, I just wanted to share what I learned.

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By reading my comment again, it may appear a bit bitter, which was not my intention. I just wanted to point out that I hoped that you didn't give up and that post mortem was just a new marketing ploy to resurrect it.

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Well he put the source on Github and it's very interesting to see how some projects come together.

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Just as an aside, if you have a project that you're not sure is going to take off, there is no reason to shell out $29/month for it. Shared hosting will do the job for $5 - $10 a month. No its not super reliable, but if you have no users, who cares? And if you do get popular, my experience has been that they can handle bursts of traffic surprisingly well, until you can move to proper hosting.

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What was the initial reactions of people when they tried your product? Did they say they loved it and would want to use it everyday?

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its sort of silly, but one thing in the post that stood out for me was the $29/month for SSL and database.

It was a significant amount of money for this dev - but it could have been done even cheaper with the aws free tier and getting an ssl cert from somewhere like positivessl / commodo.

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It's actually $9/month for Heroku Basic DB plan and $20/month for SSL endpoint not cert (you can use your own domain and SSL cert). You can always piggyback on yourapp.herokuapp.com for free SSL cert.

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This is probably my background in sysops talking, but $29 a month for an nginx frontend, rails daemon and PostgreSQL instance sounds like highway robbery...

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Seriously? $29 doesn't register as real money to me. Especially from a business perspective.

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certainly - I think I paid 3 bucks for my cert for a year and amazon doesn't charge me anything extra for turning on SSL with my node code. I use a micro instance ..with swap ;)

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"The next big thing will start out looking like a toy" -- Chris Dixon

http://cdixon.org/2010/01/03/the-next-big-thing-will-start-o...

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Great post for you because the honest introspection will lead you to more success.

Great post for us because even though these lessons have been written about before, it seems to take lots of repetition for them to sink in all the way.

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Rightly said, SaaS easy to build hard to sell. Products hard to build are easy to sell, as it has value and willing high value customers. But in all, a product or business without a clear customers acquisition strategy is a miracle.

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The Idea is nice but I wouldn't pay for it mainly because of the reasons stated by Pete Keen and another reason: When I have free tools to be doing the exact same things, why would I want to pay? If I had to launch a SaaS product, I would definitely create a buzz about it amongst my peers and give free subscription for a limited period enough to get the user used to the new idea.

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I apologize in advance if I sound snarky, but I (and I suspect many others here) hadn't heard of Marginalia until today. How much did you spend on ads and where did you advertise?

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Don't be silly. When he said he spend a lot on advertising he didn't mean that put up a superbowl ad. He probably spend it on Google Adwords for people who where searching for related terms.

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"people who where searching for related terms"

I think that would be a strange thing to search for, and I'm not sure it would be a profitable demographic.

Sometimes the problem is not just "do people search for something" but who are those people doing those searches?

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Being on this page was his best advertising--ironic?

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Great post Pete, I'm really enjoying your Stripe + Rails book. Keep it up!

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Thanks!

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Are you still going to use your product after the SaaS version is shut down?

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No, I switched to greener pastures[1] a long time ago.

[1]: https://www.petekeen.net/git-backed-personal-markdown-wiki

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Any service that is dependent on network effects needs a plan to cultivate activity before it launches. It's crucial to offer engagement to the Real People that are early adopters on your product, and the reality is that if you go hands-off and attempt to wait for the audience to self-materialize, you'll get a lot of people who drop by, make one post, and check for interaction a couple of times, and then never come back. It's a bad deal for everyone.

Get together a group of people -- pay them if you have to -- who are committed to using your product before you do a real public launch, and then new users will immediately be engaged and it will grow from there. Launching without this spells disaster.

If you are launching SaaS that doesn't depend on other parties' involvement, you should still gauge interest, but it's OK to start small.

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I looked at the original announcement and looked specifically at the technical details list. If I didn't have the stuff on the tech details list available, and had to accomplish roughly the same non-technical task, there are a lot of ways to take notes more or less for free. I can't operate without gmail and I guess google drive so I need not worry about an app built on them.

Dropbox is not a negation of my argument, in that they handle the annoyance of keeping a storage service up.

In my cartoon mind if gmail is down, then storing notes in gmail doesn't work, but the bigger headache is gmail is down not that I can't access some minor notes. So just use gmail for free. Or github. Or a browser extension to "save email to dropbox or google drive"

The other problem is you have a very narrow window of opportunity for a programmers note taker because of habits. The concept of writing README and TODO files and inserting source comments or placeholders, perhaps with tags to search for and ASCII art for markup, has been a part of programming education and tradition for a long time. Could you sell a note taker app to noobs who don't already have a github / text editor habit? Well, maybe, but it'll be harder.

So in my cartoon mind I have an idea it gets entered into TODO or perhaps as a TODO flagged comment in the appropriate spot and its done. You need a wedge to fit your process into it. Like if PUSHes to github regularly failed or github filtered out source code comments to "save disk space" or something. But if it works great, something new is going to be a hard sell.

Now if you did something unusual once you got the data that might sell. Here's a nice web front end that uses GIT and/or github and/or dropbox and/or google drive and/or gmail as a backend.

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