Rob Walling
13 HN recommenders · recommended in 16 months, 2020–2024
1:05:37 · 552K views · Dec 4, 2019
Jason Cohen's MicroConf talk on designing a bootstrapped business by starting from your own strengths, goals and constraints. He works backward to the business model, pricing, market and product that fit, with practical points like annual prepay and pricing tiers.
It is the go-to talk HN commenters recommend to anyone asking about bootstrapping, SaaS pricing, or choosing bootstrapping over VC.
20 comments from Hacker News
Jason Cohen has an amazing talk on bootstrapping, with some very solid advice from his own experiences: this video Personally I think there is a lot of “kudos” for getting VC funding, so founders often get lured just for status reasons, joining the competition to become a unicorn. Unless you want to (or need to) “swing for the fences”, why give up ownership? Being a founder is already hella risky, and accepting VC money increases your leverage and your risk, which is just uneconomic for an average individual to do (unless they are already wealthy). Don’t double down on a risky bet. VCs get preferential shares, and they have a lot of different ways of taking control in the clauses of the contracts you sign which disempower you, and in return you get shitty common shares and often lose control for the worst reasons. I helped found a small business, and we retained full ownership which worked out great for us, although we will never get those mystical 7/8/9 figure payouts. The majority of founders only make wages[1]. We were in an incubator during our inception and I saw a lot of businesses get sidetracked by all the funding bullshit, control issues, stress, wasting time chasing investors, trying to follow conflicting or bad advice. If you do want to chase funding, consider applying for [LINK] which will help avoid you getting shafted. Other VC transactions are highly negotiation information asymmetric, because they have done many many transactions and you are doing your first, so
A couple of things need to be balanced, I think, as I'm doing just that with PriceUnlock ( [LINK] ) PriceUnlock will help SaaS owners finds the perfect pricing for their product, with more upside and less downside when trying new prices. Besides, it helps you stop leaving money on the table. * THE THINGS* 1. You can "scratch and claw", as Jason Cohen (founder of WPEngine) puts it. He talks more about this in the YT link below and he also puts out this idea of 150 customers, not "1000 true fans". I highly highly recommend watching the video, regardless of going VC/bootstrapped. He also talks about 2 other ways besides scratching and clawing this video 2. Building in public is an upward trend these days. Basically you share as many milestones/ups/downs about your journey of building it. This can be a trap as well: it only works if your audience is A) interested in you sharing that, B) probably hackers/builders etc. I asked PG about this and he pretty much summed it up: [LINK] 3. As I'm building PriceUnlock, you'll also notice that I'm collecting emails (the ol' way) to get people's interest. I don't want to make a mailing list, I want to build my product, so I'll aim to be better doing the second rather than the first. But it doesn't hurt to, as Rob Walling did with Drip, launch with some MRR hopefully... or at least with some interest. [LINK] 4. The usual set of things hackers do when they launch their thing: ProductHunt, Betalist, etc. Don't forget to join my subreddit on [LINK]
In Australia our major commercial banks offer unsecured loans to businesses based upon the business' cash flow. Example eligibility requirements: turnover of at least $75K per year ; have been operating as current registered business for 1 year+ ; you can provide 12 months of business financial data from your accounting software. You'd need to convince the bank that your business is a relatively reliable and sustainable cash generating machine. Example terms: 9% p.a. interest rate, borrow up to $250k, no fees. Another trick you can do, orthogonal to finance, is the annual-prepay trick. Offer the "sign up for 12 months at a X% discount" plan to customers. If you can get some fraction of customers to pay you for a 1 year subscription in advance at e.g. a 30% discount that might really help the business' cash flow. Edit: if your SaaS business is the one linked in your profile then since you are not currently offering your customers an annual prepaid plan then you MUST watch Jason Cohen's talk about optimising SaaS cashflow from his 2013 microconf talk "Designing the Ideal Bootstrapped Business" this video
I looked into that book, looks like it's really for venture backed companies trying to form a founding team. I'd recommend that you instead look up micro-SaaS, where you just target making $10k+ monthly recurring revenue and be set, rather than going on the VC treadmill and trying to raise capital, hire a team, etc which is often overkill for first time founders. Rob Walling coined that term initially through his conference on it called MicroConf, he has a new book called [LINK] which I'd recommend. His older book Start Small Stay Small is also quite good. But to start off with a free resource, Jason Cohen's video on designing a bootstrapped business can't be beat: this video
A good place to start with pricing is tiers at $49/$99/$249. (As recommended in Jason Cohen’s classic and awesome talk “Designing the Ideal Bootstrapped Business”: this video ) Customers at very low price points (such as $9/month) tend to churn quickly, and, counterintuitively, send more customer support interactions per customer than at higher points. You’ll never earn enough from them to cover your customer acquisition costs. Getting rid of the cheap plan also removes the, shall we say, more difficult customer.