Defining success with SaaS
I set my sights on “SaaS” (software as a service) back in 2010.
Subscription-based software products like Basecamp and Mailchimp were familiar to me, but I hadn’t considered that as a business model that I could pursue for myself.
…Until I discovered Mixergy, Startups for the rest of us, and TropicalMBA. I heard story after story of entrepreneurs who reminded me very much of… myself. These people had technical skills like web development and design, they were creative and opinionated, a little nerdy and obsessive but also entrepreneurial and ambitious.
For the past 13 years, those stories inspired and fueled my own journey to chasing success with a SaaS business.
Today, I’m marking the end my SaaS journey (in its current form).
I’m moving on with a new definition of success.
How I defined success with SaaS
I’ve been lucky to form great friendships with founders who’ve built incredible SaaS businesses that I admire. I’ve had a front-row seat to observe their path to success up close.
The picture I saw (again and again) looked like this:
- Start with an idea for a SaaS product with a high likelihood of success.
- Grow from zero to hundreds of customers and profitability within 12-24 months… Then sustain and grow from there.
- Hit plenty of challenges at every stage, but fun challenges to work on, since most are the growing-pains variety.
- Assemble a small, high-caliber team and company culture.
- Carve out creatively fulfilling founder roles with plenty of lifestyle freedom.
- Eventually sell the business for a multi-million-dollar exit, or in some cases, hold the business through decades of incredible profitability.
One specific hallmark of successful SaaS businesses that always sparked my envy (jealousy) was the SaaS team retreat. They would fly their team out to a fun locale for a routine culture-building workcation. I envied these retreats because their businesses can support this type of expense, and the success of their products and people warranted this investment.
That picture of SaaS success didn’t feel unrealistic or out of reach for me. It still doesn’t. Having seen this play out (for real) so many times with friends and others, it seemed perfectly reasonable and attainable for me to pursue the same.
That’s what I did.
Where I ended up
“Some base hits, but no home runs.”
Here’s the highlight (and lowlight) reel of my 13-year SaaS journey:
- Started 9 businesses. 7 were SaaS, 1 productized service, 1 education product.
- Sold 6 businesses ranging from low 5 figure to high 6 figure exits.
- Shut down 1 (at a big loss).
- Still running 1 SaaS business today.
- Early on I joined and quit 1 partnership.
- I almost entered partnerships on 2 other occasions.
- All my businesses were bootstrapped/self-funded, except for one.
- I took a (relatively) small investment on 1 SaaS business.
- My teams ranged from just me, to ~5, to ~25 people.
- None of my SaaS products to date reached a level of profitability (on their own) that could support both my small team and my salary.
- I learned a ton and expanded my skills, immensely.
Like I said. A few base hits. But no home runs.
Or in purely binary terms: Did I achieve my mission of building one successful, sustainable and profitable SaaS business? Fail.
Facing the fear of failure
For as long as I’ve been chasing success with SaaS, I’ve been living with the fear of someday reaching this point where I wake up and realize this SaaS thing might not happen for me.
I feared that this would mark the end of my run as an entrepreneur. That I’d have to go back to a job or full-time consulting. I feared what that would mean for me personally, mentally, and emotionally.
Near the end of 2023, it dawned on me that the moment I had been fearing, might actually be here.
In October 2023, I assessed the state of my current SaaS business, (my 7th attempt in 13 years, but who’s counting?). Objectively, this one was more successful than my previous attempts. More customers. Faster MRR growth. My best product work yet.
But a hard reality set in: I’m almost 3 years in on giving this my full-time focus. Its trajectory shows that reaching profitability by next year is unlikely. That would require a major hockey-stick-like growth curve (soon) or a round of additional investment.
That triggered a series of questions and decisions:
- Are we doing everything we can to accelerate growth?
Yes, but it’s unlikely to result in hockey-stick-like growth in a short time horizon.
- Can I inject more personal savings to extend the runway?
No. I have already injected more than I had originally planned.
- Should I seek additional outside investors to extend the runway?
No. Aside from bad market timing, taking on more investment and more years of playing “the runway game” is not something I have an appetite for.
- Should I sell the business now and move on?
No. I don’t want to sell now. I’d like to see this SaaS through more years of calm, slow and steady, self-funded growth, but without the urgency of running out of cash.
- Can I afford to remain focused on this one SaaS business full-time?
No. By January 2024, I’ll need to begin cobbling together new sources of income.
So here we are. My latest SaaS is ending up in a similar place to my previous attempts: Some level of success, but not enough to sustain it past its startup phase and into its sustainable growth phase.
And I’m not in the position, financially, or frankly, mentally, to start a new SaaS in 2024.
So this might be it. The end of my SaaS journey as I knew it.
Then a funny thing happened.
Once I came to terms with the fact that I failed to achieve my initial vision of success with a SaaS, I realized this moment isn’t scary at all.
I don’t feel dismay or regret or frustration or depression.
I actually feel relieved. Excited, even.
Because my mind suddenly opened up. I began to see 3 things clearer than I had before:
- I see my past mistakes in a whole new light now.
- A new vision took form for what I want success to look like.
- My entrepreneurial career is far from over. It feels like I’m starting again, but with a head-start on lived experience.
My biggest mistakes in my SaaS journey
I don’t like to refer to my past decisions as “mistakes” because given the data and my lived experiences to that point, I think I made pretty logical choices, reasonable bets, and generally sound decisions.
But now with the benefit of hindsight, I can see why certain moves didn’t serve me as well.
So before I charge ahead with building anew, I need to take stock of what I learned from those past moves that didn’t serve me well.
Confusing inspiration for vision
I’ve been (and continue to be) inspired by the stories of my peers who started with very similar skills to mine and found their way to success with a SaaS product.
My mistake was confusing that inspiration for a specific vision of what my success should look like. I convinced myself that what I wanted was what they have.
It’s not that I didn’t want the success that they had. It’s that I became resistant to things I was naturally drawn to, because they were in conflict with that vision of others’ success.
This played out in a few ways:
- “Distractions” were far from it.
In 2014, I launched a course product that provided steady passive income. I never executed on its full potential because it felt like a distraction from my stated goal of building a SaaS. But that distraction was one of my most profitable and loved products to date. Its passive revenue accounted for at least 20% of my income during the 6 years I ran it.
Ignoring my unfair advantage
Creating content, building in public, and teaching worked well for growing my audience—which translated to consistent sales for many of products. But I became convinced that audience-driven distribution wasn’t the way most SaaS found customers, so I heavily pulled back on my audience-growing efforts in recent years. I still found spots to scratch my content creator itch (like my podcast) but it’s been relegated to “just for fun” status. I shouldn’t have let up and instead leaned into this strength and made audience distribution my unfair advantage.
- “Portfolio” became a dirty word
Since the beginning, I’ve been most fascinated and inspired by founders who built a portfolio of multiple product businesses. Rob Walling, Josh Pigford, Syed Balkhi, and Andrew Wilkinson come to mind. These portfolio success stories are the minority. There are far more success stories of founders who stayed focused on growing a single business. That trend grew into a dogma that focus was king, and I bought into it. It influenced decisions that were counter to what my gut truly wanted to go after all these years: Stacking small product wins into a growing portfolio.
Going “all in” on a single SaaS business too soon
In 2021, I decided to burn the ships and go “all in” on one SaaS business. I sold and exited all my other businesses. I took some investment to pad my runway. And for the first time in my career, I gave the “focus on one” strategy a go.
In hindsight, it was far too early in this SaaS business’ trajectory to justify committing years of my career to it, at the expense of all other opportunities.
It had very real signs of early success. Fast traction with early customers. It seemed to touch a nerve with the market. But by its second and third year, product-market-fit challenges arose, which heavily slowed its trajectory.
The lesson I learned there was that early signs of success do not mean a SaaS is destined to “make it” to the promised land (profitability), certainly not on a time table you can predict.
I don’t regret selling those businesses when I did though. There were more factors that went into those decisions to sell. But one of them definitely was my desire to follow conventional wisdom and go “all in” on one SaaS business, which I don’t think was the right move, at least not yet.
Choosing a strategy that didn’t leverage my strengths
About a year into my latest SaaS product, I decided to go with a freemium pricing and distribution strategy.
The logic behind this decision made sense, on paper: The product was shareable and viral by nature, so offering a free plan that would encourage usage and spreading the product to more people could, theoretically, work.
But I failed to account for one thing:
A freemium strategy requires a high volume of users and top-of-funnel traffic to work. And generating volume at the top of the funnel has never been my strength as a marketer.
I’d go so far as to say it might be my biggest weakness as a marketer. I’m much more natural when it comes to content, brand, and direct sales. But orchestrating systems to drive tens or hundreds of thousands of visitors to my website was never something I had done.
Not only was I was betting on a strategy that was particularly difficult execute, but I also chose a strategy that I thought I could “figure out” as I went along (just as I had done with other things before).
If there’s one area where you should lean into your personal strengths and advantages (and avoid the unknown and unproven), it’s your go-to-market strategy. I leaned away from my strength when I chose this strategy (and stuck with it for over a year).
Time for a change.
My goal for the past 13 years won’t be my goal for my next 13 years.
I won’t be aiming for success with a singular SaaS product.
Would it be great if one of my products eventually reached that vision of profitable, sustainable success, like I initially hoped to achieve? Of course. And over time, it might happen. But right now, that’s not what I’m working toward.
Am I done with software products altogether?
No. In fact, in this next chapter I’m leaning in even more deeply into the craft of software product design and development. It just won’t take the form of grinding one single SaaS product through the gauntlet of finding product-market-fit.
In a way, I’m going back to my roots to focus on leveraging my strengths and interests.
My new vision of success (and a roadmap)
Here’s my new definition of success and what I’ll be working toward going forward:
- Leveraging my strengths as a creator and communicator to grow my audience.
- Deepening my product skills and craft through teaching and building.
- Remain self-funded and profitable from here on out.
- Growing a portfolio of products. Some software, some not. Starting small and growing the portfolio over time.
- Keep my core team small, remote, and async.
And here’s my roadmap:
- Commit to full-time content creation and audience growth.
Primarily through YouTube and my newsletter. My content will be aimed at helping founders go “full-stack” (like I did) by learning to code, design, ship and bootstrap products.
- Launch new revenue streams that fit my audience.
Think: Courses, community, events, and sponsorship.
- Maintain and grow my current SaaS product.
Slowly, steadily, without the urgency of needing it to pay my salary.
- Grow my products portfolio.
Build and/or acquire small software products and educational products. Potentially services and other types as well.
- Sell, buy and build portfolio assets as opportunities arise.
Rinse and repeat.
This journey will take several years to fully execute.
Having gone through this process of reflection and redefining what success looks like, I decided to start collecting my set of rules to keep myself on track.
A weight has been lifted. I’m moving forward with clarity and purpose. And I’m more fired up than ever.
Let’s get to it.