Opinions Needed: Can a SaaS startup survive without Investment?

[GrayCode]

Currently in the process of building a SaaS Program, built on iOS software.

My question is: Do you think the business can be grown organically without investment.

This is the route i prefer. I prefer to not take outside money if possible..

Do you think it is doable? My plan was get a deal, Invest it back, Get another deal, invest it back... so on and so forth to build organically

What do you all think?

 

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[Yoda]

What do you all think?

Fear is the path to the dark side.

 

[GuestUser450]

building a SaaS Program, built on iOS software

Confused by your wording. Do you mean a SaaS business with an iOS app front-end?

 

[GrayCode]

Confused by your wording. Do you mean a SaaS business with an iOS app front-end?

Yes, sorry. iOS app is the front end, Parse is back end.

 

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[GuestUser450]

Yes, sorry. iOS app is the front end, Parse is back end.

SaaS can absolutely survive and thrive without venture capital. It does however, usually require a large investment in time and patience. SaaS is notoriously slow in ramping up.

For a good intro into single-founder SaaS, check out the Microconf talks on vimeo and some of their presentation summaries here. It's all self-funded, single-founder software startups. Every talk is pretty interesting, but Jason Cohen, Patrick McKenzie and Amy Hoy are must see. Then check out the Business of Software series.

 

[GrayCode]

SaaS can absolutely survive and thrive without venture capital. It does however, usually require a large investment in time and patience. SaaS is notoriously slow in ramping up.

For a good intro into single-founder SaaS, check out the Microconf talks on vimeo and some of their presentation summaries here. It's all self-funded, single-founder software startups. Every talk is pretty interesting, but Jason Cohen, Patrick McKenzie and Amy Hoy are must see. Then check out the Business of Software series.

Awesome Thank you very much.

I have bookmarked your links and i will check them out in spare time.

I am coding the software myself from scratch. while self teaching to code in swift. Great experience so far.

Do you think a SaaS company can run on a iOS app front end?

 

[GuestUser450]

Do you think a SaaS company can run on a iOS app front end?

Well, there's what's possible, what's probable, and what's probably not a good idea.

I mean, yes you can, but Apple doesn't make their process easy or easy to understand. They've been changing guidelines since '11 and I think it's a 70/30 split for subscription revenue now. Make no mistake, if you're making money from the app, Apple will get their cut. There's also things like how people pay and in what way. As far as I know you're not allowed to link to an external payment process("Tap here to Subscribe") you can only state that the app requires a paid subscription outside of the app.

(If you're thinking about a creating a free app to be the at the top of your funnel to market, deliver content, generate leads, that's completely different.)

The app store is a large, viable market and there are few fastlaners (@regoapps) who've done very well. But it can violate the commandments of Need, Entry and Control. Your success in the app store depends on Apple's interpretation of your app. SaaS monetizes very well. iOS is much more difficult.

The questions are, What are you gaining from using iOS as a front end? Is the probable upside of leveraging the ecosystem worth handing over control? Is it better for you or your customer? Will they care either way? Will they spend more? Will they cost less to acquire?

Sorry for being all over the place, just trying to tackle the question from enough sides.

 

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[GrayCode]

Well, there's what's possible, what's probable, and what's probably not a good idea.

I mean, yes you can, but Apple doesn't make their process easy or easy to understand. They've been changing guidelines since '11 and I think it's a 70/30 split for subscription revenue now. Make no mistake, if you're making money from the app, Apple will get their cut. There's also things like how people pay and in what way. As far as I know you're not allowed to link to an external payment process("Tap here to Subscribe") you can only state that the app requires a paid subscription outside of the app.

(If you're thinking about a creating a free app to be the at the top of your funnel to market, deliver content, generate leads, that's completely different.)

The app store is a large, viable market and there are few fastlaners (@regoapps) who've done very well. But it can violate the commandments of Need, Entry and Control. Your success in the app store depends on Apple's interpretation of your app. SaaS monetizes very well. iOS is much more difficult.

The questions are, What are you gaining from using iOS as a front end? Is the probable upside of leveraging the ecosystem worth handing over control? Is it better for you or your customer? Will they care either way? Will they spend more? Will they cost less to acquire?

Sorry for being all over the place, just trying to tackle the question from enough sides.

No worries, Ty for responding.

Let me be more clear: Yes, i would have a website which would be sort of the backbone of everything. The place where businesses go to request demo, see cost, see video on product etc.. However i was thinking. Once the business decides to sign up, they can do that over the website.

Then for the actual software part, They can download our app, which will require log-in credentials which will not be user generated. (people cannot download the app and just sign-up) . We will generate username and passwords on our parse back-end for the business to use to log-in to the app.

Essentially: The website is the backbone, the app is the tool which the businesses use. Is this not what most businesses do already?

As far as businesses that do not have an iOS connected device to use the SaaS product, we were going to offer IPads to them for use.

The market is niche, Gyms and fitness studios of any kind(yoga, crossfit, pilates, etc..) so, it is not like i am starting a zenDesk or salesforce where every business would use it, which would drive my costs way up while scaling and giving out ipads for use.

However i've done my research and the Gym/fitness studio market in the U.S alone is Huge, not talking international. So there is definitely space to go FastLane.

What do you think?

 

[tafy]

Yes you can go it alone without investment but it might be easier and faster to raise some money to hire a few key staff at the start than doing everything yourself.

 

[GrayCode]

Yes you can go it alone without investment but it might be easier and faster to raise some money to hire a few key staff at the start than doing everything yourself.

I understand, but really the product should be built first in my opinion which is why i am learning to code it.

If i were to go to an "Investor" with a good idea, and need his money.
if i didn't build the product, Which means i've invested no time except to "Think about" the idea.
Why would said investor give me any money, ideas are a dime a dozen.

He would be giving me his money, so i can hire someone. when he can just do that himself. If that makes sense

 

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[Tiago]

The thing about SaaS is, it takes time. You have to be prepared both mentally and financially to give it 24-36 months before it gets any meaningful traction. Are you ready to do that?

 

[GuestUser450]

What do you think?

Ah, got it. Because it's so high touch and niche, seeking investment might not be a bad idea. Otherwise you'd have to fund it completely on the side as it could take 1-2+ years to support itself. Pros and cons to both.

 

[GrayCode]

The thing about SaaS is, it takes time. You have to be prepared both mentally and financially to give it 24-36 months before it gets any meaningful traction. Are you ready to do that?

Yes.

I am learning swift programming from scratch. started 3 months ago. in that time i have a good understanding of how it works and i already have the 1st 2 screens of the SaaS functional.

 

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[GrayCode]

Ah, got it. Because it's so high touch and niche, seeking investment might not be a bad idea. Otherwise you'd have to fund it completely on the side as it could take 1-2+ years to support itself. Pros and cons to both.

1 - 2 years to support itself is fine with me, I am already broke and only doing personal training on the side for money now as a salary while i build it. so if i get it to a point where i can draw even a 25k salary thats a step up.

I am building it not only because i see a need in the marketplace for the product because i work in that field. I already don't have a extravagant lifestyle and i am only 24, so if i have to build and slowly grow for 3 years thats fine with me. The goal here is to build something meaningful enough to the marketplace.

Putting in the time now, so hopefully by 30, i can remove myself from the Time is Money equation and make my wealth independent of my time.

 

[GuestUser450]

The goal here is to build something meaningful enough to the marketplace.

You're off to a great start being here. The next step is starting a progress thread...

 

[GrayCode]

You're off to a great start being here. The next step is starting a progress thread...

I was thinking about it, Maybe i should. Once i get some downtime later today i just might.

 

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[Christiano]

As someone who has solicited investment funds before, it's not a question of if it's possible, but whether the acceleration of time is worth the cost of equity. This leads to questions of: what is the value of time accelerated (how much time, reduced risk of speed to market) versus cost of equity (how much equity, impact on company decision making process). Lastly there is capacity to consider from an infrastructure standpoint. What data, servers, processing power is required to manage x users bringing in y revenue per user with z amount of data points tied to the unique identifier for each profile?

One of the biggest challenges for any SaaS provider has to do with engagement - getting people to go from trying the tool to incorporating the habit into their culture, processes and way of doing things. Often in organizations, that engagement can be driven with a mandate, but facilitating buy-in from the employees helps close the deal.

SaaS takes time because while people think their tool is so easy anybody can use it, often it's not. Effective UI that results in 90%+ self-serve out of the gate remains virtually unheard of. Bridging that gap effectively either with a temporary or permanent on-boarding team has been one of the most effective solutions.

Hope this helps.

 

[GrayCode]

As someone who has solicited investment funds before, it's not a question of if it's possible, but whether the acceleration of time is worth the cost of equity. This leads to questions of: what is the value of time accelerated (how much time, reduced risk of speed to market) versus cost of equity (how much equity, impact on company decision making process). Lastly there is capacity to consider from an infrastructure standpoint. What data, servers, processing power is required to manage x users bringing in y revenue per user with z amount of data points tied to the unique identifier for each profile?

One of the biggest challenges for any SaaS provider has to do with engagement - getting people to go from trying the tool to incorporating the habit into their culture, processes and way of doing things. Often in organizations, that engagement can be driven with a mandate, but facilitating buy-in from the employees helps close the deal.

SaaS takes time because while people think their tool is so easy anybody can use it, often it's not. Effective UI that results in 90%+ self-serve out of the gate remains virtually unheard of. Bridging that gap effectively either with a temporary or permanent on-boarding team has been one of the most effective solutions.

Hope this helps.

Your response was very insightful and it is something i will give thought to going forward.

As for Effective UI, i am making that a key focus.

 

[100k]

Here some saas posts for ya to read at your convenience:

http://www.matthewbarby.com/saas-startup-growth-hacking

http://www.techrepublic.com/article/how-to-measure-success-as-a-saas-startup-5-metrics

http://productpeople.tv/2014/06/19/ep56-sean/

http://productpeople.tv/2014/07/03/ep58-garrett-dimon/

You can start a (saas) business without venture capitol ... one way is by pre-selling the product/idea to your customers and validating the concept at the same time. I recommend you read Dane Maxwell's blog and listen to the podcasts created by "product people" if you want to go that route.

http://productpeople.tv

http://lmgtfy.com/?q=site:thefoundation.com/blog

mixergy.com/listen-to-dane-maxwell-call-a-prospect-and-hear-how-he-extracts-a-profitable-business-idea/

 

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[GrayCode]

Here some saas posts for ya to read at your convenience:

http://www.matthewbarby.com/saas-startup-growth-hacking

http://www.techrepublic.com/article/how-to-measure-success-as-a-saas-startup-5-metrics

http://productpeople.tv/2014/06/19/ep56-sean/

http://productpeople.tv/2014/07/03/ep58-garrett-dimon/

You can start a (saas) business without venture capitol ... one way is by pre-selling the product/idea to your customers and validating the concept at the same time. I recommend you read Dane Maxwell's blog and listen to the podcasts created by "product people" if you want to go that route.

http://productpeople.tv

http://lmgtfy.com/?q=site:thefoundation.com/blog

mixergy.com/listen-to-dane-maxwell-call-a-prospect-and-hear-how-he-extracts-a-profitable-business-idea/

i will check these all out in spare time. Thank you for your post.

 

[johnp]

Here's some different advice.

Stop what you are doing right now.

Don't write one more line of code in Swift. Get out from behind the computer and start selling your idea.

Don't fall into the trap of thinking that you need to have something built before people will buy it, because you don't. I'm speaking from experience here.

Here are some reasons why you should start selling now.

1. A native app might not be the best approach. If you're doing an SaaS then it might end up making more sense to do a hybrid app...maybe something like Ionic + Cordova. A hybrid app might lower you dev costs and get you to market faster. Swift is amazing, but it might not be practical for a SaaS. This is something that is better to find out early, before you code. Also Parse is great, especially in terms of dev speed, but there are some scalability issues. So keep that in mind.

2. The heartbeat of every business is sales. You can write all of the great code that you want. But it 99% of the time it won't sell itself, unless you have something like Uber. But even Uber took some good salesmanship. MagicCab came before Uber and they clearly sucked at sales. So that just proves my point, most products today are not really amazing enough to sell themselves.

Start selling early to see if you should even continue. If you find out that you can't sell it then you will learn two things. 1) Either the idea sucks and there is no need or 2) You need a sales person.

3. Great programmers are everywhere, especially for iOS & Hybrid apps. Why spend your time programming when you can get someone else to do it?

4. See if you can presell 10 people to pay 6-12 months in advance. If you can do this then you will have money to pay a developer, investors will take you more serious, and you will be more confident in your idea.

how do you do this?
1) Write up a 5 step cold email sequence
2) Setup a landing page (don't send traffic to landing page from cold email though)
3) Join Stripe.com, get an SSL for your landing page, integrate strip
4) Accept payments right there

Or don't do any of that and just have people write a check or send you the money through Paypal. It's really that simple.

5. You're going to learn that people have different opinions about how the product should work. It's better to figure out the right way to build it before you actually build it.

6. If you're worried about pre-selling a product that doesn't exist then put some time into making quality mockup designs. I did that and pre-sold someone on a 4k/year subscription because it looked so real.

Next,

It's going to take about 6-12 months to get sales going strong with an SaaS. And that depends on your prospecting and lead generation skills. If you don't know anything about sales then add another 6 months to 36 months since you can't afford to pay someone to do sales for you yet. So you really really need to start learning sales. I would start with this book:

Predictable Revenue by Aaron Ross..he covers cold calling 2.0, which is really interesting.

Then consume as much content as you can by Grant Cardone.

That will help.

The upside to an SaaS is the you can really go super MVP with it in a lot of cases. Ask yourself what is really the most MVP version of the product that you can get out into the market. Then go from there.

Also about the investor thing:
I have been down this road before. Right now you have $0 in presales, 0 pre-users, and a couple of iOS screens. Unless you have something that is truly amazing then you're probably going to get an investor who won't bring any value to the table. Maybe the gambler type of investor who is just going to get on your nerves 2 years down the road. Don't get into bed with the wrong people this early in the game. This idea might not even work for you. But if you stick with it then something will..maybe... So again, I really think that you need to take a step back and consider how you are approaching things

 

[GrayCode]

Here's some different advice.

Stop what you are doing right now.

Don't write one more line of code in Swift. Get out from behind the computer and start selling your idea.

Don't fall into the trap of thinking that you need to have something built before people will buy it, because you don't. I'm speaking from experience here.

Here are some reasons why you should start selling now.

1. A native app might not be the best approach. If you're doing an SaaS then it might end up making more sense to do a hybrid app...maybe something like Ionic + Cordova. A hybrid app might lower you dev costs and get you to market faster. Swift is amazing, but it might not be practical for a SaaS. This is something that is better to find out early, before you code. Also Parse is great, especially in terms of dev speed, but there are some scalability issues. So keep that in mind.

2. The heartbeat of every business is sales. You can write all of the great code that you want. But it 99% of the time it won't sell itself, unless you have something like Uber. But even Uber took some good salesmanship. MagicCab came before Uber and they clearly sucked at sales. So that just proves my point, most products today are not really amazing enough to sell themselves.

Start selling early to see if you should even continue. If you find out that you can't sell it then you will learn two things. 1) Either the idea sucks and there is no need or 2) You need a sales person.

3. Great programmers are everywhere, especially for iOS & Hybrid apps. Why spend your time programming when you can get someone else to do it?

4. See if you can presell 10 people to pay 6-12 months in advance. If you can do this then you will have money to pay a developer, investors will take you more serious, and you will be more confident in your idea.

how do you do this?
1) Write up a 5 step cold email sequence
2) Setup a landing page (don't send traffic to landing page from cold email though)
3) Join Stripe.com, get an SSL for your landing page, integrate strip
4) Accept payments right there

Or don't do any of that and just have people write a check or send you the money through Paypal. It's really that simple.

5. You're going to learn that people have different opinions about how the product should work. It's better to figure out the right way to build it before you actually build it.

6. If you're worried about pre-selling a product that doesn't exist then put some time into making quality mockup designs. I did that and pre-sold someone on a 4k/year subscription because it looked so real.

Next,

It's going to take about 6-12 months to get sales going strong with an SaaS. And that depends on your prospecting and lead generation skills. If you don't know anything about sales then add another 6 months to 36 months since you can't afford to pay someone to do sales for you yet. So you really really need to start learning sales. I would start with this book:

Predictable Revenue by Aaron Ross..he covers cold calling 2.0, which is really interesting.

Then consume as much content as you can by Grant Cardone.

That will help.

The upside to an SaaS is the you can really go super MVP with it in a lot of cases. Ask yourself what is really the most MVP version of the product that you can get out into the market. Then go from there.

Also about the investor thing:
I have been down this road before. Right now you have $0 in presales, 0 pre-users, and a couple of iOS screens. Unless you have something that is truly amazing then you're probably going to get an investor who won't bring any value to the table. Maybe the gambler type of investor who is just going to get on your nerves 2 years down the road. Don't get into bed with the wrong people this early in the game. This idea might not even work for you. But if you stick with it then something will..maybe... So again, I really think that you need to take a step back and consider how you are approaching things

I can agree with the things you are saying. Let me explain some of my logic.

The product is for the Gym/ Fitness Studio space, i have spent the last 2 years working in this space and have heard both managers of gyms and my clients at the gym complain heavily about certain topics that can be easily fixed with a proper working SaaS.

The SaaS for gym space isn't too big, can count the companies doing it on one hand and none of them have the angle that fixes the complaints yet. I spoke with my boss and asked him for things that would make his job easier and he gave me a list. (he didnt know i was working on anything at that time)

A reason for developing on iOS is, Ipads are becoming an increasingly common theme throughout gyms everywhere. So it would be very simple to integrate the technology into them.

Also, as far as when you said i should stop writing lines on code:

I believe this would be counter-productive because i am not just learning to write code for this one potential product, i am also doing it so i can become really good with swift because at the end of the day whether this "one" product pans out or not, i will have the ability to code in swift and lets face it, apple is definitely the market leader now and will probably be for my lifetime. So i can go into other projects with a running start.

As for learning sales:

I was a sales person in a Manhattan GNC and in 8 months i was ranked #5 out of 3100 employees in NYC for sales, so i have a decent foundation but i agree with you and will definitely start reading some of the topics you posted.

Finally, i am keeping it super MVP and i believe it will be ready to hit the market in 3-4 months.

So at the end of the day, I will spend the next 3-4 months learning code, i will have an MVP ready for market, for a market i know personally could use this SaaS and at the very very least if all else fails. I will have the knowledge of swift to move on to the next thing.

However i feel very strongly about this product and i am using it as a potential acquisition play. I love the field enough to be willing to run the company for 15 years, but i know it will be different enough that it might just be worth acquiring.

Ty for your feedback, i appreciate the time and effort you put in to writing it, some excellent stuff in there.

 

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[John Robert]

I dont believe your B2B SaaS startup will survive without investment, unless you are a great/experienced salesperson, or have a cofounder who is. B2B has notoriously long sales cycles, and can be very costly to break into bigtime. My intuition says the best way to fastlane the biz would be to focus on companies that own lots of gym franchises.

 

[GrayCode]

I dont believe your B2B SaaS startup will survive without investment, unless you are a great/experienced salesperson, or have a cofounder who is. B2B has notoriously long sales cycles, and can be very costly to break into bigtime. My intuition says the best way to fastlane the biz would be to focus on companies that own lots of gym franchises.

I agree, i am going to be seeking out gym owners whom have more locations then just 1. However i will not turn down someone who only has 1 of course. There are currently 33,000+ gyms in the US, and 55,000+ fitness studios

 

[FastNAwesome]

5. You're going to learn that people have different opinions about how the product should work. It's better to figure out the right way to build it before you actually build it.

+1. A great thing about preselling is that those initial customers can provide you with very valuable feedback.

They will have suggestions, questions, requests. They will find bugs.
They can help you a lot in shaping the app that markets wants.

In my opinion, as soon as you have something that works, it's good to put it in front of some initial users and get feedback.

 

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[johnp]

The product is for the Gym/ Fitness Studio space, i have spent the last 2 years working in this space and have heard both managers of gyms and my clients at the gym complain heavily about certain topics that can be easily fixed with a proper working SaaS.

That doesn't mean that anybody will buy it. Trust me. You're much better off selling someone or something, even if that's getting them to say that they are highly interested and would pay whatever per month for it.

I have done it both ways. I'll probably never build before I sell again unless I really need to. I just don't see how it's practical anymore.

Also consider this...I could probably go get a source code that is similar to what you're trying to do. Get a dev to hack a prototype together for me in 1-2 weeks for about $500, then put the app on my iPad and start going door to door to every independent gym owner in NYC. Maybe you'll have a better product after you finish but by the time you finish I'll have pre-sold a bunch of businesses on a buggy piece of shit, then turnaround and use that money to build out a great v1 of the SaaS in probably 3-4 weeks. Who wins?

Or better yet, why not sell while you code? It sounds like you enjoy programming. So why not sell while you build? that's what the Grub hub guy did. He sold by day and built by night.

I'm just trying to say that there are other ways to go about it. What I suggested isn't pretty. It's not the typical idea of a tech company that you see in the movies or own the news. But I think it's more effective.


Either way, good luck with everything.

 

[GrayCode]

That doesn't mean that anybody will buy it. Trust me. You're much better off selling someone or something, even if that's getting them to say that they are highly interested and would pay whatever per month for it.

I have done it both ways. I'll probably never build before I sell again unless I really need to. I just don't see how it's practical anymore.

Also consider this...I could probably go get a source code that is similar to what you're trying to do. Get a dev to hack a prototype together for me in 1-2 weeks for about $500, then put the app on my iPad and start going door to door to every independent gym owner in NYC. Maybe you'll have a better product after you finish but by the time you finish I'll have pre-sold a bunch of businesses on a buggy piece of shit, then turnaround and use that money to build out a great v1 of the SaaS in probably 3-4 weeks. Who wins?

Or better yet, why not sell while you code? It sounds like you enjoy programming. So why not sell while you build? that's what the Grub hub guy did. He sold by day and built by night.

I'm just trying to say that there are other ways to go about it. What I suggested isn't pretty. It's not the typical idea of a tech company that you see in the movies or own the news. But I think it's more effective.


Either way, good luck with everything.

You are right.

I am going to sell once i have enough built for it to be used.

Some people may be different, but if i owned a business, i would not pay for something i cannot use. regardless of whether it would help me or not.

 

[Andrew Ward]

Investment isn't only about money, it is also exposure to the power and networks of successful people. If you will be 10 times richer in 3 years by seeking venture capital compared with doing it alone then do you think it will have been worthwhile?

It isn't a simple yes no, but consider your resulting wealth over time in your decision making process as a result of both options rather than flatly looking at the percentage of the your business that you will be 'sacrificing'.

Sent from my Nexus 6 using Tapatalk

 

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[Delmania]

Yes.

http://www.amazon.com/dp/0615373968/?tag=tff-amazonparser-20

http://www.softwarebyrob.com/

http://www.startupsfortherestofus.com/

 

[Delmania]

You are right.

I am going to sell once i have enough built for it to be used.

Some people may be different, but if i owned a business, i would not pay for something i cannot use. regardless of whether it would help me or not.

Do you know why I emphasized that fragment? It has the word "I" in it twice. It expresses your opinion, not that of your potential buyer's. You may not want to spend money before a product is ready, but plenty of people will. That's the whole basis of crowdfunding. Rather than spending the time to build a product, you spend as little time and energy as you can getting something that will give people your idea, and then you sell them the idea. You don't want to settle for "when it's ready", you want to settle for people handing over a credit card to you so they can be the first in line when your app launches.