I thought for a long time that my path to financial independence was through building a SaaS. I'd keep it a one-man shop, get it to around $10,000 a month and let it grow slowly after achieving sufficient traction. I'd write incredibly good documentation, have only a small amount of support requests to deal with, and never get carried away by my success.
Once that was all set up, I'd get to spend my time doing what I loved – coding, writing, playing music, spending time with my family – instead of slaving away at a corporate 9-5.
This idea came from the fact that like many people, I desire financial independence, and I'm a software developer. Since I can build software for other people, and since I enjoy doing it, surely I'd enjoy building software on my own behalf, right?
I did, of course, read about all the disillusioned software developers out there who came to the conclusion that running a SaaS isn't all that fun, because it's 80%-90% Business Stuff and they'd rather be coding. Those cynical, pessimistic naysayers [/s] never got me down, and I bravely and proudly ignored them, never imagining I might one day join their ranks.
I assumed that I could push through the "boring work" of market validation and idea generation and get to the cool parts – building the actual software – with ease. Or, if not at with ease, then at least through a lot of focused effort.
I thought I was more business-minded and results-focused than many software engineers, and that because of this I'd be able to focus on the critical business stuff at first and knock it out, spend a bunch of time building a cool product, and then launch to wild acclaim.
It turns out that assumption was bad.
I really love coding, and trying to build a business around my passion – where my passion has to take a back seat by necessity – has been grueling, disheartening, and frustrating.
Several years after conceiving of this idea, I still haven't made it happen. I tried, really hard, a bunch of times, and I learned a lot about how bootstrapped SaaS companies are built... but none of my projects ever took off.
What did I work on?
Here are a few of the more mature ideas I worked on:
- Oxbow Domain Scraper: Was getting way too many support requests and the purchase volume had nearly vanished. ROI for my time was negative, so I shut it down. In hindsight, I wish I'd spent more time marketing it before deciding to move on.
This piece of software made me thousands of dollars, more than any other product I've launched, but it never came close to reaching ramen profitability.
- Bicycle: Gave up because I came to the conclusion that I couldn't charge enough because of the price point the competitors could afford to offer similar software.
Turns out they were offering comparable products at a loss to drive traffic to their main services, and I didn't care to spend five years trying to break into a market where prices were already in a race to the bottom.
- HomeschoolHub: A tool for people to build, share, and rate homeschool courses based on their fields of strength. As a homeschooler married to a homeschooler who plans on homeschooling, I thought I'd be able to pull this idea off, especially given the current climate.
As a consumer-oriented product for which I could charge very little (I found my audience is rather price-sensitive and decent solutions exist for most of this already), I came to the conclusion that I would have had to scale larger than my bootstrapping budget would allow for in order to reach profitability.
- HackerTracker: Wasn't able to build traction; nobody seemed to be that interested in it. I left the site up, though, and if it ever blows up I'll build out the solution.
Looking back, this doesn't seem like a long list.
Most of the effort over the past several years sits below the waterline, and went into coming up with ideas and invalidating them far before they ever reached the stage where I started building something (even if it was just a home page).
Here's a list of ideas that I've come up with that I could possibly tolerate working on and/or have looked into, that seem more viable than others:
- Wordpress theme
- Invoicing software
- Website interaction analytics e.g. Hotjar
- Cloud image processing e.g. Blitline
- SMS blasting
- Payment management software
- Resume generating software
- Form building tool
- Email popup collector e.g. OptinMonster
- Ad design
- Software license management
- Serverside analytics
- Note taking app (thought.app)
- Mailing list software
- Scheduling software for plumbers
And a list of possible niches I could serve or build software within:
- Web design
- Design Systems
- Web developers
- VR developers / enthusiasts
- Email marketing
- 3D art
- Website agencies
- Graphic design agencies
- House construction / general contractors
- Real estate
Obviously, these aren't terrible ideas – there's lots of software in every one of these categories that is doing very well. As well, there are a ton of niches that I have no idea about where people are doing incredibly well (see Patio11's Law).
So why didn't I just build one of those ideas or something serving one of those niches?
The simple answer: I couldn't force myself to build Yet Another SMS Meeting Reminder Tool (no shade-casting intended) or serverside analytics platform, despite trying to for years. I had zero motivation to code solutions to these already solved problems, and my willpower wasn't answering its phone.
I have yet to determine if this is because I'm lazy or because I'm smart, but the result is I never fully committed to building any of those things, instead focusing all of my effort on ideating and fantasizing about how awesome life was going to be.
I did have a few toy ideas that I started working on, like a note taking tool called Thought.app – spent a couple of hundred dollars on the domain and everything. I knew from the beginning that the value per customer for it was quite low, likely less than it would cost to acquire them (in terms of personal energy or marketing dollars, both of which in a bootstrapper's case are interchangeable), but I was so excited about the idea that I started building it anyway.
Once it got to a mostly-done point, I lost interest and stopped working on it. I realized that Roam Research was way ahead of me anyway, and happily proving my point that you couldn't build a mass-market consumer-targeted tool like that as a one-man show.
Why did I keep giving up on ideas so quickly?
A common theme with many of my ideas here is that I gave up on them what feels like "early" to me in hindsight. Yet when I step through the logic for each one of those decisions, I come to an agreement with my past self that each time it was the right call.
Each time I delved into an idea I discovered drawbacks or realized a critical business concept (like product-market fit, marketing return-on-investment, etc.) that presented challenges I could surmount by picking another business idea.
My logic was, and is, like this: if there's another, easier way of getting to where I want to be (passive income, freedom to work on whatever I want to work on), why shouldn't I take it, even though I've invested some energy into my current path?
This logic led me to abandon many ideas in the past, probably for the best (I spent three years building a digital marketing business before realizing that I was completely unaligned with the target market, and I wish I'd quit sooner).
My biggest regret so far is how much time and energy I spent trying not to be a lame quitter, when that's exactly what needed to happen for me to move forward and learn more.
I didn't understand the difference between being a lame quitter (my internal monologue's words, not mine) and listening to your gut. I was too hung up on my insecurity around my ability to work hard to see that it wasn't me that was the problem, it was the fact that selling SEO was a ship that had long since sailed.
Ultimately, it's this logic that led me to conclude that I should not focus all my energy on building a SaaS right now. I love to code too much, and while I don't mind building a business (I enjoy marketing, sales, and focusing on business value), to do it while attempting to build something that I find super cool seems like a conflict of interest that is ultimately just going to make things way harder for me than they have to be.
Building something cool that also satisfies the constraints that a successful bootstrapped business imposes seems to me to be almost impossible. Either one of those is difficult enough as it is – combining them is a recipe for frustration.
So, my conclusion is that I'd rather keep my play and my work separate.
I'm giving up on building a SaaS, because I love to code too much.
Baremetrics: a failure?
The straw that broke the camel's back, my trigger event for coming to this realization, was Josh Pigford selling Baremetrics for 4 million dollars in November.
To many, this might seem a smashing success. To me, it was shockingly demotivating, and hit like a Mack truck to the gut.
We kicked off 2020 by hiring three new team members, and then COVID hit. March was rough for us, but then subsequent months were actually some of the best months of growth we’d ever had. However, this rollercoaster reminded me of all the things I don’t love about running a company.
The majority of my time working on Baremetrics has been spent as a “manager” and not a “maker”. But at my core I’m a maker. I’m at my most fulfilled when I’m creating and am generally indifferent on growing or scaling things. Yet, as the CEO, I’m firmly in the role of a manager and do almost zero on the creative “making” side.
Baremetrics has been the most successful project of mine (at least financially) by a long shot, so I justified staying in the manager role because…why not? It was kind of fun seeing something succeed like this, especially after 15+ years building software!
I'm terrified of this kind of "success", which when achieved takes the form of a ball and chain rather than more freedom.
Josh doesn't delve too deeply into it, so I can only imagine the emotional toll this process has taken on him. Trading seven incredibly draining and involved years spent founding a company – something I've only just begun to grasp the physical, emotional, and psychical cost of – for four million dollars, seems to me a poor bargain.
If it was just about the money, four million dollars is (comparatively) easily had working at a FAANG, and for much less white hair and sleepless nights.
Josh goes on:
Sure, I could have dug deep and stuck it out another couple of years and figured out some new ways to grow it and maybe had a larger outcome, but did I really want to have spent 10 years of my life building a business analytics software company? No, not really.
There’s obviously nothing wrong with building a software company, but for me, on a personal level, that interest had run its course. I’m simply ready to do other things.
Seeing him reflect in this way made me realize that I really didn't want to end up in the same place.
I've looked up to Baremetrics as a paragon of my goals for years. To see it sell for this little after the amount of work Josh put into it was very much a wakeup call. I don't want to sacrifice doing what I love for something I dislike for a long time, even in exchange for an extra million or two – which isn't even guaranteed.
Josh's is a story of rare success, which is what makes its somewhat limited scope so disheartening.
Granted, four million dollars is an absolutely lifechanging amount of money, and I'm sure Josh is quite happy with where it's left him, but perhaps he is made of different stuff than I am. I don't think I could conceive of running a company with a moderately sized team of people dependent on my decisions for seven years as ever being worth four million dollars.
Put another way: you couldn't pay me four million dollars to be a manager for seven years. And if that's what bootstrapping to success looks like, you can just go right ahead and count me out.
You could also argue that Josh's business is a product of his goals – that he didn't mind running a company with a team. Perhaps it was validating to him. I see it only as torture of a cruel and unusual nature.
To be fair, there are plenty of other bootstrappers out there who did equally well (or even better!) while also staying a one-man show, but I'm no longer convinced that this is commonly achievable enough to be worth setting my sights on – exclusively, anyway.
With all that said, my dream of passive income remains, and in fact I feel its call even more strongly after having recently gotten married and having a baby.
The last couple of years have been crazy for all of us, but me personally even more so: I met my wife two and a half years ago, and since then it's been a whirlwind of dating, engagement, three-month European honeymoon, getting settled, having a son, and all of COVID. We couldn't be happier, but it's just been crazy.
Things are calming down now, and my focus is returning. I'm taking January and February off from work to focus on building a business. A business that has nothing to do with code. I'm not sure what it will be, but I'm exploring two ideas: promoting a book I wrote, and real estate.
First, I wrote a book on making more money as a software developer. Without much of a launch to speak of, I sold sixteen copies at $25 (50% off because it's beta release) within a few days, and it seems to be well-received so far.
I'm going to continue to promote the book by publishing great free content and doing joint venture launches with various mailing lists, with hopes of reaching ramen profitability within six months.
I'm going into real estate
For my long-term strategy, I'm investigating real estate. I've identified a strategy that matches my goals of scaling well yet retaining personal freedom: buy commercial residential properties (apartment complexes) that are underleveraged, improve them, and then sell them or keep renting them out, retaining a good property management service to handle the busy work.
It seems simple, but I had two key realizations that together caused me to become interested.
First, I realized that this strategy satisfies my goal constraints when applied at scale. Although owning a couple of rental properties does not a passive income make, running a few dozen gets a lot closer to the dream.
Second, I could do this at scale by partnering with investors and asking only for a tiny percentage of their profit to start. Then, later on, as I build up experience and funds, I can start asking for larger cuts, or even begin investing entirely on my own.
I have no idea if this is a good idea or not – it's just what I've found with a little preliminary research. There's a ton to know about real estate, though, and the long and the short of is that regardless of which strategy I employ, I don't want to treat it like a small side-gig where I'm investing passively in one or two AirBnB properties.
I'm going to approach real estate with the same attitude that I first approached programming: as something that's both necessary for me to get where I want to go (in the case of programming, it was building a game; in the case of real estate, it's building passive income), and eminently interesting in its own right.
I'm going to do everything with an attitude of great curiosity – and entirely in public. I plan on sharing everything I learn and do, including all of my profits, expenses, decisions, and the logic that went into them.
More importantly, though, I'll approach real estate with a long-term attitude.
Interestingly, real estate has always been my endgame: to invest whatever profits I make from building and selling one or more SaaS companies directly into real estate. I'm just starting a little sooner than I expected to. But I feel confident about committing to this for the long term, far more so than I've felt about any of my ideas thus far.
Of course, the other thing to bear in mind is that this approach relies completely on networking and building relationships with other people, which is a critical part of the reason that I'm going to be learning in public and talking about everything I do going forward.
By communicating about my goals, my desires, my plan, and being super authentic over time, I'll become more trustworthy and interesting, which will allow me to reach more people with whom to do business.
Also, I'm going to keep coding
As I said, real estate is a long, long term game. I have a ton to learn, and I don't expect to make any money for a while. To make ends meet, and also because I love it, I'm going to keep coding.
I'm going to code for fun, and I'm going to code for money.
Most importantly, I know that I'm not going to confuse my passion for my business again, and I feel free. I'm finally able to get back to what I've loved doing since well before people ever paid me for it.
I'm no longer subjecting myself to the demands of coding something that must be directly profitable. Instead, I can solve cool problems and work on things that, like all truly interesting work, are parts of a larger whole.
But that wouldn't give me any satisfaction if I didn't also feel like I was making progress towards my ultimate goals – which I do.
So yes, I'm giving up on bootstrapping a SaaS, but it's not a sad thing. I don't feel depressed or like a failure. Instead, I feel excited and energized.
And you know what? In a few months, or years, I might realize real estate is a terrible idea, and that bootstrapping a SaaS is the only way for me. But if I return to the realm of SaaS, I'll do so with greater focus and energy, knowing it's even more likely to be the only, or best, option open to me.
I don't think that will happen, but it's the train of logic that I'm using to help me justify this context switch once more: at worst, I gain renewed energy, focus, and confidence in bootstrapping, and at best I build my passive income real estate empire while having great fun building a business and coding, without ever conflating the two again.