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WEB/DIGITAL A billion-dollar opportunity: Shopify for SaaS

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jakobgreenfeld

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I recently wondered: Shopify does all the heavy lifting and lets me open an e-commerce store in minutes. Gumroad does the same for digital products. What's the equivalent for SaaS products?

To me that seems like an incredible opportunity.

After I tweeted the question, Twitter did its magic and Travis Fischer replied: "Happy to chat about my experience building Saasify (Shopify for SaaS)".

Saasify never really took off, but this isn't necessarily bad news. It just means that the opportunity is still up for grabs and Travis is happy to share everything he learned along the way.

Here is what I learned from our conversation.

Shopify for SaaS​

When you want to sell a digital product, say, an ebook, you can focus solely on the product and marketing since platforms like Gumroad handle all the rest. You don't have to worry about payments infrastructure, taxes, or how you can reach your customers if you want to send them updates. It all works right out of the box and takes less than 5 minutes to set up.

The same is true for physical products. Of course you have to find a way to source the products and market them, but Shopify handles everything else.

But when you're trying to sell a SaaS product, the situation is still very different. You can't just focus on the functionality and marketing. Nope. You have to go through the painful process of setting up a payments and authentication infrastructure, find a way to handle taxes properly and to connect with some email service so that you can send your customers messages.

There are of course great services that deal with individual components. Stripe, Quaderno, Paddle, Auth0, Magic Links, Mailgun, Firebase. But everyone still spends a lot of time duct-taping them together and in a sense reinventing the wheel. All of this is a complete distraction from your unique value proposition. At an early stage, you should be focused one-hundred percent on your unique value proposition, your core features and your customers. Everything else is a distraction

Another popular solution are boilerplates like Bullettrain, Jumpstart for Rails, and Laravel Spark. While these certainly help, they still require manual work to set up and maintain. Another downside is that they usually require a hefty upfront investment. As a result, they're not viable for people just starting out (who coincidentally would need it the most) and anyone running lots of small experiments.

Given that Shopify is a billion-dollar company and software is eating the world, a service like Shopify for SaaS seems like a billion-dollar opportunity. At the same time, it also would do a lot of good. Productivity from indie developers would skyrocket and it would become much easier for open source creators to finally capture some of the value they create.

Just as Shopify is arming the e-commerce rebels, a similar service for SaaS would be a weapon for software developers against increasingly monopolistic structures.

Now what are the lessons Travis learned by building Saasify?

Lessons from building Saasify​


  • People get very confused if you try to mix SaaS and open source projects (even if the model makes perfect sense). In people's mind, these two terms live at the opposite ends of the software spectrum. So Travis pivoted early away from his initial focus on helping open source creators monetize their projects.
  • Developers want flexibility. Travis' first idea was a service that would turn any NPM module or encapsulated piece of functionality into a SaaS business. Turns out that this approach wasn't particularly attractive to most developers. Travis' idea that they could just use serverless functions for everything was too restrictive. If developers have to rewrite their whole project to make it work with Saasify it probably would be easier to just figure out all the infrastructure stuff yourself. So the next pivot was from serverless functions to "we help you monetize your API".
I want to pause here for a second because to me this sounds like the perfect way to think about the problem. The core functionality of almost any SaaS product can be wrapped in an API. (Here's an excellent primer on the API-first ecosystem. Also, there are of course SaaS products where a lot of the unique value actually comes from the UX, e.g. Superhuman.)

There is already RapidAPI (which recently raised $60M) - a marketplace that makes it easy to monetize an API. However, you can only sell direct access to your API endpoints. Since only developers know how to use APIs, this is the only customer group you can reach on RapidAPI. So a service that makes it easy to sell your API to regular users would be a huge upgrade.

So why then didn't Saasify become this platform?

  • Firstly, Saasify is still around. It's still running, there are happy customers.
  • But a key problem Travis encountered is that most customers were indie hackers, open-source developers, folks who are really good at creating that unique value, but who are not well-suited for marketing and growth and sales and support. These are all things you need to build a successful SaaS business.

    Most developers just wanted to say, here's my unique functionality, I want to press a button and I want to make money. That's not how SaaS works.

    This is especially problematic since Saasify didn't charge a flat fee, only a 20% revenue cut. So unless a project made money, Saasify didn't earn a cent.

    And once a project really starts to take off, they'll leave the platform to save the 20% cut. This is the exact problem that currently, for example, Substack is encountering.
I'm seeing two solutions to this problem. You could charge a flat fee like Shopify does. Their entry plan starts at $29/month, so they make money regardless of the store's revenue.

Alternatively, you can choose a marketplace model like RapidAPI which helps SaaS products get discovered by customers. There are many APIs that earn good money just from the customers RapidAPI sends their way.

However, Travis eventually ran out of steam. He had been bootstrapping the whole time and was running out of money. Also the feedback he got from VCs was not particularly encouraging.

So he took a break. After some time off, he decided that it's time to try something new. Even though Saasify didn't become what Travis imagined it to be, he's still bullish on the opportunity:

"There is an enormous opportunity to do what Shopify has done. Create a business in a box, specifically for API-based SaaS. [...] It is a huge opportunity beyond a doubt."

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Kid

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Saasify has same problem that one brilliant database has.
Its functional database with its own language.

The problem is that small users don't consume
enough to make it profitable and those who can make
it big would go for in-house solutions anyway.

They operated as PAYG but after getting invested
they raised entry prices.

Even before the raise, doing complex queries would
bring 10x to 50x more expenses than doing it with
any free database out there.


So they ended up in no mans land.
Small won't afford it.
Big won't take such a big revenue cut.


I think that they (both Saasify and this database)
should go MongoDB or Wordpress route.

Offer free full featured self-hosted version and earn via
cloud offering for bigger users.


Thanks for posting.
 

thechosen1

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This sounds like a phenomenal idea and I'm sure it can work if executed well (almost any idea can work if executed well).

I just wanted to mention that Squarespace already has a lot of the functionality to sell a digital subscription - I'm not sure if you can embed your actual Saas product into a Squarespace site, because I'm not too experienced in web development, but the functionality is either there or very close.

But even if there was already a competitor, that shouldn't stop anyone from pursuing an idea like this.
 

MachineEarning

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Good write up and critical thinking.
What's your background? Do you have the domain experience to start a company like this?
 

Hendrik5

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Jan 4, 2020
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Sadly an ecommerce store and a SaaS are totally different. It makes complete sense that Shopify is worth billions but a SaaSify failed.
 

maverick

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Shopify commoditized the ecommerce checkout process because it's effectively the same for any product. Ecommerce companies do not care about the checkout process - only that it works.

What would you commoditize for SaaS companies? Most of the things that Saasify does can be found on a typical AWS stack. The way you handle subscriptions is inherently part of the SaaS product you've already built (e.g. cost per seat, cost per transactions, cost per XYZ) so that is not very useful to 'commodotize'.
 

jakobgreenfeld

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Mar 14, 2021
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Shopify commoditized the ecommerce checkout process because it's effectively the same for any product. Ecommerce companies do not care about the checkout process - only that it works.

What would you commoditize for SaaS companies? Most of the things that Saasify does can be found on a typical AWS stack. The way you handle subscriptions is inherently part of the SaaS product you've already built (e.g. cost per seat, cost per transactions, cost per XYZ) so that is not very useful to 'commodotize'.
Why wouldn't it make sense to commoditize cost per seat, cost per transactions, cost per XYZ?

The problem with a "typical AWS stack" is that it's all duct-taped together, everyone has to figure out how to do it for themselves, and then there are still important components (payments, tax handling) missing.

Ideally, I can build my app just as I would if I would only use it myself or by wrapping it into an API. "Shopify for SaaS" would then handle everything else, except for the marketing of course, so that I can focus on my core value-add. Starting from a landing page with checkout form that handles VAT and similar taxes correctly (by acting as a merchant of record), to an UI that allows regular users to use the functionality provided by my API without needing coding skills, to an admin interface where I can manage users (issue refunds, send the messages about updates and new offers etc.).
 

maverick

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There's 2 things:

Account registration and all the fundamentals related to that has been 'solved' with back-end as a service (BaaS). If you do some research in that space you'll find that most of them have been gobbled up by AWS / Azure etc.

The fundamental value drivers differ across SaaS making it very difficult to commoditise.

The value drivers will either fall in the transactional category (e.g. price per seat) in which you can just directly integrate a payment processor (like Stripe) to handle that part of the business. Just use their API and you've solved the problem. A SaaSify type solution would not be able to do this more efficiently.

OR

The value drivers will be inherently part of the SaaS product itself. Let's take an example: BlaBlaCar (car sharing). Main value drivers here: two-sided platform so drivers registering their car on the platform AND people seeking to pay for renting a car.

How would you add value here? The functionality for registering a car will have to be built in the platform. Without it, there would be no product.

So what has Saasify shown us?
There is a pain point for small indie teams that want to hack together MVPs as quickly as they can. Any skilled indie team could just use BaaS for this - which would work out cheaper in the end as you'll undoubtedly need more functionality from AWS/Azure (e.g. DB, data storage).

I can tell you by experience that the small indie teams that find success will always transition into building the functionality themselves. Replacing the Saasify solution. It's much lower TCO.
 

Wisith

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Good write up and critical thinking.
What's your background? Do you have the domain experience to start a company like this?
I'd like to know this as well. A friend and myself are building a VR based software that will be distributed via SAAS, but we don't have domain expert in SAAS or web based app building.

We're still testing out the MVP on Wordpress and getting the software to be as good as possible, but at some point we need to look at look at this issue. I'm very reluctant on hiring a programmer to help since they have no skin in the game and we're simply another project to them. Not to mention, the potential of them installing malware inside.
 

Shield

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May 28, 2021
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Shopify is not really good for a ecommerce brand, rather you should build your website on your own individual platform on which you have full control, i have no idea why would any serious ecom retailer will use something like shopify when he can have the full control of his store on his own local CMS.
 

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