Diederik van Houten


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The initial stages of a SaaS product

Diederik • @jdvhouten • • Part of Day 4

These are the phases you’ll typically go through when you start a SaaS product:

  • Idea phase. Here you try to figure out if there is a hypothetical market for your idea. What kind price you can charge and how you will reach your audience. If possible, explore multiple ideas and let them marinate. Don’t rush this stage. At this point anything is still in play. But the decisions you make here will affect what kind of customers you’ll have, what kind of technical challenges you’ll work on, whether you’ll make money, and everything else. Any business has fun and not-so-fun parts, so choose wisely! Owning a business that operates smoothly and profitably is a lot of fun, and you’re unlikely to get bored. By contrast, working on a product you’re passionate about that has no functional business model is painful and you’ll start to doubt yourself sooner or later.

    If you’re a techy (like me) you want to choose a startup idea that has a relatively straightforward customer base and business model. That way you can succeed if you have an excellent product but mediocre marketing.
  • Prototype phase. Good taste and good design sense matters. If your product looks good users will assume it’s is a good product, and you’ll get the benefit of the doubt when something doesn’t work right. If your product looks sloppy you’re going to lose people who would otherwise be interested. Prototypes are by their very nature flawed, but you don’t want to make an app only a founder could love.

    You might think you can save time by using cookie-cutter CSS templates/frameworks, but these frameworks make your product look bland. Your product should be visually distinctive. People are far more willing to try products that look different, and this also makes you more memorable. The world is a diverse place and people have different tastes. By being different you’re going to alienate some people and attract others. That doesn’t sound great, but the alternative is being bland, and then you won’t have any enthusiastic users. Big businesses can afford to be bland, startups cannot.

    The press also likes to cover things that look new. It’s tech fashion, basically. Design styles go in cycles. Do products use a lot of whitespace, or very little? Skeuomorphic design or Swedish minimalism? Muted pastels or saturated colors? When a startup becomes super popular you’ll see many other startups copy their visual style. It’s pretty funny when you notice it happening. Of course, there are no right and wrong answers in fashion. And what looks fresh in one year can look tired two years later. A sloppy and amateurish look will do you no favors.

    Your product should have very clearly defined core functionality. Businesses with money to burn can afford to have their product be a confusing mess. You can’t. Your users will simply move on if they don’t “get it”. And you can’t blame them. In this prototype phase it’s your job to figure out if your innovations actually make sense. And because you’re going to rewrite these prototypes anyway you can cut corners if you have to. In addition, you can experiment with the software architecture of your program. Changing your mind in this stage is cheap, but refactoring a live service with millions of users is painful. The prep you do here will pay off handsomely.

    In this stage you figure out the identity of your product. How you interact with it. What it feels like. What it does.
  • MVP phase. Here you build the real thing. It has to be good enough so people can actually use and derive value from your product. The goal isn’t perfection in this stage, but you don’t want launch anything half-assed. As Wim wrote earlier today, you want the core functionality, and nothing else.

    Everything that can reasonably be postponed to after the launch you postpone, even those features that you know people will be asking for from day one. The goal of the MVP is to get good user feedback. The most important thing is whether you believe the product is any good, but if you’re the only person on the planet who believes it is then you’re in trouble.

    What you really look for in this stage are people who think your MVP is great. It doesn’t matter how many people hate it, or don’t get it, or are indifferent. None of those people will become customers anyway. You only need a handful of passionate users at this stage. Talk to them and judge if you can actually turn your MVP into a business. If you can’t find any passionate users, then maybe your idea wasn’t so great after all. Or maybe your execution sucked. This is really the critical junction. At this point you can still walk away without having invested too much. Delete everything and go build something else. If you go ahead with the commercial launch before you have clear evidence that people need what you’ve made you risk running a zombie startup: one that’s neither dead or alive. This sucks because you might thread water for years. Barely surviving, but not going anywhere. Don’t let this happen to you. But if you proceed and turn this into a real business, then you also have to accept all the responsibilities that come with it. Onwards!
  • Commercial launch. Whoo-hoo! Your first paying customers. Hopefully, you didn’t have any trouble converting your beta users to customers. Now you have to fix in a hurry all the shortcuts you took while building the MVP. And you have to figure out billing, invoicing, refunds, customer support, backups, failover, GDPR compliance and everything else. This stage is schleppy but the excitement of growing your tiny business will help you power through it.
  • Scale. Don’t get distracted. Focus on your product and the customer. Setting the right priorities is everything. Learn to say “no” a lot.

On competition and disruption

Diederik • @jdvhouten • • Part of Day 3

Wim just wrote about what our product is going to be. In this post I’m going describe how our task/planning IDE relates to other products in the space.

State of the market

To-do/planning apps can be roughly categorized like this:

1) Pen & paper. Making plans on paper is pretty fantastic, provided you’re meeting in person. After the meeting you have to manually transfer your paper plans to a calendar. That’s a bummer. And then every person has to keep a separate todo list for their daily responsibilities. And then you need regular meetings to coordinate the info from the notepads on each person’s desk. Pen and paper might work if you’re by yourself, but it doesn’t cut it when you work in a team.

2) Glorified shopping-list apps. Apple’s Reminders app fits in this category. Apps like these are only suited for casual use. They don’t allow for any higher level planning. Collaborating with multiple people doesn’t really work. Creative work can be chaotic. You want to be able to type in free form, but you can’t. And modifying or reorganizing tasks is tedious.

3) Kanban boards like Trello. It’s a pretty decent solution for planning in a team. It’s like moving post-its on a digital whiteboard. Trello is a good product but Kanban boards address maybe 20% of the problem.

4) Single user (desktop) apps like Things (for casual use) and Org-Mode (for power-users). No matter how great these apps are, in 2022 people want software that’s suitable for remote teams.

5) Enterprise team scheduling apps like Asana. Products like these have decided to appeal to large businesses by shoehorning in as much features as possible. If you add everything and the kitchen sink a product will look great in a comparison table or during a PowerPoint presentation. But who wants to use bloated and slow products like that? Not us.

In 2020 people download 1.7 billion task/productivity/do-apps in the USA. It’s a huge and growing market and people are clearly clamoring for better software. This is matched by our personal experience. We’ve tried a bunch of todo and planning apps over the years and none of them really work the way that feels natural to us.

We think a major product category in this space is missing: the IDE. A task/planning IDE that is for teams, primarily text based, friendly to power-users, and that can be used for high level planning down to disorganized note-taking. None of the popular products try to solve this problem.

Because we’re going to be the first product (to our knowledge) in this segment it remains to be seen if there is a sizable market for it. For the time being we’re delusionallycautiously optimistic.

Market disruptors

IRC never got into the mainstream. Not user-friendly enough. Difficult to share files. A few products like HipChat and Campfire tried to bring IRC-like chat to the mainstream, but ultimately failed. The user experience as a whole wasn’t very compelling. Then Slack set the world on fire.

The story of Spotify is similar. Many people predicted that online music streaming was going to be huge and many startups tried to make the killer app. Spotify was the only one where you could click play on any song and immediately hear music and enjoyed explosive growth as a consequence[1].

GMail was the first email client with search that worked, spam filters that worked, and you could keep a staggering (at the time) 1 gigabyte worth of emails in your account. GMail has stagnated for a decade now but back in the day it was transformative.

Slack, Spotify and GMail all completely transformed their markets by making a product where the –core functionality– was leagues ahead of everything else out there. When you nail the core experience your app can be deficient in other areas. Your users will understand and forgive, provided the core experience makes up for it.

When a segment of the software market feels stagnant it’s because the apps have converged on a local maximum. The different players try to keep ahead of the others by piling on features, but this backfires. By copying each other the products end up in the same spot.

We believe that the task/planning apps out there are stuck in local maxima, and are ready to be disrupted. That’s not to say we’re going to be the ones to do it. We can’t see the future, and our hunches are wrong more often than not. Nonetheless, our concept is solid. Now we have to create some prototypes to discover what feels right and what doesn’t.

[1] The real story is more complicated. Spotify also has to get all the critical licencing deals done and, like many startups, almost died multiple times. However, Spotify’s strong initial growth can be attributed to technical excellence of the product.

Honing in on an app idea

Diederik • @jdvhouten • • Part of Day 3

We’ve been brainstorming in the past couple of days about what we’re going to make.

So far we’ve determined that:

  • we want to build a web app, because we need the friction to sign up to be as low as possible
  • we want to make something we can personally get excited about
  • we’ve also decided that we want to make something small in scope (only 80 days!), that is cheap to operate (no budget)
  • we’ll make at least one version of the product free (100% free, no ads) in order to get as much word of mouth advertising as possible
  • we ideally want some kind of subscription service (SaaS) for small business. We’ll write about the economics of SaaS businesses later
  • and we want to make something that’s unique enough that people can get genuinely excited about it
  • our app has to find a niche in an established market with plenty of competitors
  • we want to tackle some fun technical challenges. This will be harder for us in the short term (because it might turn out that people don’t care about our app at all), but it should work in our advantage in the long term (it will set us apart from the competition)
  • this means the core functionality has to be unique. If you only have 80 days you don’t want to waste it replicating common functionality, except for the bare minimum like account sign-up, login, and subscription logic.
  • we want to make something that can rapidly grow to millions of active users
  • we want to make something that has broad appeal among regular people (“horizontal” in business speak, as opposed to “vertical” apps that target a specific industry or profession).

This narrows down the universe of app ideas tremendously. Right now, we can only think of a few potential products that meet all these criteria. And that’s okay, because we only need one!

Startups are all about constraints

Diederik • @jdvhouten • • Part of Day 2

You can start a web startup with the money you find between your couch cushions, but good luck trying to start a rocket company that way. Web startups are unique in that they require no upfront investment whatsoever. For all of history you needed to have money to make money. No shortage of corny expressions saying so. But not anymore! The internet is the great equalizer. And the internet is still growing rapidly, which means there is an abundance of opportunity. That’s pretty sweet, too.

However, even web startups face significant constraints. But that’s alright. It just means you have to be a little creative.

Constraint 1: Web Tech

You have to use Javascript and CSS which greatly limits what you can create. Essentially you’re restricted to using a tiny fraction of the computing power on the device and you’re locked into a browser sandbox that is crufty and constantly shifting under your feet. Code you write today might stop working tomorrow or next year, but almost certainly by the next decade. The more you push at the boundaries of what’s possible within the constraints of a browser the more likely your code is to suddenly stop working on one of the major web browsers. Windows and Linux utilities written 20 years ago still run fine on modern machines. On the web everything breaks for no reason. If the web is so bad, then why build a web app at all? Because the web takes care of the distribution problem.

I suppose the silver lining is that many of the web products out there that you’ll end up competing with will be barely functional. The quality bar you have to meet is low on the web, but despite that we still intend to make something that’s rock solid.

Constraint 2: Time

We’re giving ourselves 80 days. That’s not much, when you take into account we also want to document what we do. We risk running out of time if we waste even a couple of weeks going into technical dead ends. We have to ruthlessly cut all non-essential functionality. We have to say no to almost all the thing we want to include. After we cut nearly everything will we be left with something that’s not just a pointless toy? It’s a fine line to walk. If we don’t get the core set of features right nobody will get excited about our product. But if we build too much we’ll have to rush at the expense of quality. Tomorrow we’ll create a rough timeline of how we think we should allocate our 80 days. Err, I mean, 77!

Constraint 3: Audience

Even if you have the technical skills to make something, and the time in which to do it, you still won’t get anywhere if you don’t have a way of reaching your target market. We’re no good at marketing, and we don’t particularly enjoy it. Which means we can only build products that can –at least in part– sell themselves by word of mouth. In addition, we want to make something that we can directly drop people into so they can play with it. The product must largely sell itself, because we’re not going to. This means we’ll have to put a lot of our attention on onboarding. We have to make a great first impression and our app has to feel fresh. When the traffic to your website is only a trickle you have to convert a large percentage of your visitors. We’ll have to compensate for our lack of marketing skills by making a sticky app with good curb appeal. This means we can’t build anything that confuses people or that is too weird.

Constraint 4: Money

I’m adding this constraint for completeness, and because money and time are interchangeable. We could self-fund several years of development before launching anything. That way we could do exploratory programming and we could tackle much more difficult technical challenges. But we’re not giving ourselves a budget here, except for the bare minimum. We’ll need some server space. A MacBook maybe. We won’t spend anything that would put a big dent in your savings. There is no money for ads. We’re not flying to conferences. We’re sticking to the basics.

Our goal with #80daystartup is to show how you can bootstrap from nothing. No money, too little time, no audience. You just have to be very mindful of the constraints you face. Our goals here are intentionally modest, in an effort to show that starting a very simple startup is still totally worthwhile. And if all goes to plan we can show that something that starts as a very modest startup can easily pivot and grow into something far more ambitious. But that’s something for a later update :).

Not all Startup ideas are created equal

Diederik • @jdvhouten • • Part of Day 1

Okay, so we have 80 days to build something. 80 days means 16 weeks at 5 workdays per week. We’re in Europe, after all!

0 to profit in four months. Two people. And we’re doing everything ourselves. We’ll be generous and consider anything that covers our hosting costs profit 😉

Now what can we make in four months that is useful enough to charge money for, and ideally, has broad enough appeal that it might grow quickly?

And that brings us to the subject of this post. Let’s that you have the technical software skills (or willingness to learn) to build pretty much anything, and let’s assume you have enough common sense to figure out the business side. How do your approach the problem of deciding what to build?

I’ve heard people argue, time and time again, that ideas don’t matter and that ideas aren’t worth anything. I know it’s fashionable to be contrarian on the internet, but let’s get real. Of course ideas matter. If you don’t have a good plan of what you’re going to make, how you’re going to make it, why people need it, how you will reach your audience, and how you will make money, you’re really just hoping to get lucky. A good idea doesn’t guarantee anything, but with a bad idea failure is a given.

The equation changes when you take outside investment. Friends, fools, and family. Angel investors. VC. When you’re spending other people’s money you can have a great career even when you run your startups into the ground.

Bootstrapped startups are fundamentally different. You’ve got to make something people are willing to pay for or you’ll fail. In my book that’s a good thing, and I think way too many people sit at the extremes. Either they work on hobby projects that have no chance of becoming self-sustaining (e.g. github projects that the programmers dream of working on full-time), or they go for disruptive moonshot startups (that have a tiny chance of making a huge impact). Don’t get me wrong, there is plenty of value in both but most businesses are going to be in the middle: regular products that people pay for because they solve some problems.

Okay, let’s zoom out a bit and consider our options. We’re good at software and we enjoy writing software. No surprise here: we’re doing a software startup. But the universe of software is large. So what kind?

Indie Game

Games we can immediately strike from the list. Building a game can be a ton of fun but making games for a living is absolutely unforgiving. The downsides are too numerous to list all, but these are the main ones:

  • You can’t know if your game concept works (meaning: whether it’s actually fun to play) unless you actually build it and play it. If you’re unlucky, you’ll spend the better part of a year before discovering your idea is no good and can’t be salvaged.
  • Games demand a high level of polish but are sold cheaply thanks to regular Steam sales on high-budget AAA titles. A low sales price implies the indie game dev needs high volume to recoup their investment. The indie dev also needs to cover the costs of the inevitable dud; breaking even on your successful games isn’t good enough.
  • Indie devs make most of their money in a single big sales spike when the game is new. This means you need a lot of marketing and hype going into it. Otherwise your game will languish on page 17 of some game marketplace. And that’s a real bummer, because your game needs to be a hit or you’ll go broke.
  • Which is the next problem. Indie game devs are completely dependent on 3rd party platforms for distribution. These platforms take a large cut of revenue and they have their own obnoxious systems for pushing updates and saving games to the cloud. This is going to take up time you don’t have.
  • No common platform. Want to support Windows, Mac, and XBox? You’ll have to do a ton of duplicate work and you’ll have to fight through many painful debugging sessions. And everything better work perfectly when you launch otherwise you’ll have angry gamers to deal with and all your effort will be for naught.
  • It’s effectively a winner-takes-all market. People want to play popular games with rave reviews. If you make a game that’s merely good in a category that has some truly great games then you’ll still lose.

It’s a cold and unforgiving world out there, especially if you’re an indie game dev. Thankfully, there are other options.

Mobile iOS app

When Apple launched their App Store over a decade ago a veritable gold rush took place. And for a good reason, iPhone users were eager to try new apps and the App Store made trying and buying apps super easy. For a few years you could make an app in any category and do very well. But the good times don’t last (they never do). Eventually the App market got saturated and prices were pushed down. People got used to paying 99¢ for an app, and at that price point indie devs can’t really sustain themselves. Combine that with competition from free ad-supported apps and that’s that. It’s a race to the bottom where app developers have no pricing power and Apple still takes a 30% cut.

Even if you beat the odds and build a successful business on the App store you can still get kicked off without notice, your updates might get rejected, or your product might get shamelessly cloned by Apple. Apple can’t be reasoned with, can’t be bargained with, and it doesn’t feel pity, remorse, or fear 🙂

Android’s ecosystem isn’t any better. The verdict here is clear: don’t build an iOS app unless you’re happy to submit to Apple’s arbitrary and capricious ways.

Desktop App

Web tech is pretty much broken. On the server side it’s not hopeless because you are fully in control of the stack. Client side? You’re stuck with CSS and Javascript or a myriad of languages that sort-of-but-not-really have CSS and Javascript as compile target. You can use OpenGL, or a subset thereof, WebGL, but it’s buggy and doesn’t work on mobile devices. You have offline storage, with IndexedDB, but no guarantee the data you save will actually persist. And the web is insecure by default, which means you’re always one typo away from catastrophe. I’m sure we’ll write extensively about web security in the coming days and weeks.

If the web is such a mess, clearly the solution is to write a desktop app, right? Well, no. The web gets one thing right and that’s distribution. People can just click on a link and they’re immediately in your app. Within 30 seconds you may have caught their interest and after that they’re hooked. By contrast, if you have a desktop app you need to persuade people to download the app using your website, YouTube, or by other means. If your software is actually good you want people to experience that for themselves, but if you write desktop software you’ll lose the majority of prospective customers before they’ve even downloaded a free trial.

The distribution model for desktop software desperately needs to get solved — not by app stores but by sandboxing. Let people freely download and try software without having to put their entire machine at risk. This requires a major change in direction by Apple and Microsoft who are both committed to the distribution model of curated app stores. I really hope desktop apps will make a comeback, but until distribution, cross-platform, and security problems are addressed I don’t see it happening. Until then indie devs who make desktop software are fighting an uphill battle.

Hobby/leisure/marketplace app

This shouldn’t really be a category by itself, but I see too many techies take the advice to “scratch your own itch” too literally. There is no shortage of minor annoyances in life but very few of these problems can be solved by software.

In this category I’ll also include marketplace apps that don’t solve real problems. You don’t need an app to keep track of which neighbor borrowed a lawnmower. That’s not to say marketplace apps can’t work, but they’re notoriously difficult to bootstrap. If you really want to go this route build a hobby blog/community first and grow a large audience. This will take at least a couple of years. After you have a captive audience you can start the marketplace service. Marketplaces need a critical mass of buyers and sellers, otherwise it provides no value, and you can’t bootstrap that from zero.

This means, unless you’re already running a community website of some sort there are better options elsewhere.

Enterprise Web App

When we talk about Enterprise software we mean software that’s used by larger businesses. The fundamental difference between software for the Enterprise and Small/Medium sized businesses (SMB) is in the sales cycle and the kind of support the Enterprise customer demands. And Enterprises only like to purchase software from established companies. If you’re a bootstrapped startup you don’t have the time to engage in contract negotiations, extended talks, product demos, and other handholding the Enterprise customer expect. That sucks, because it means you won’t win the customer even if you have the “best” product.

Many Enterprise software products are qualitatively bad, but entrenched. If you want to disrupt a market like that you’re going to need a team of engineers to quickly reach feature parity with existing solutions and you need a sales team to push your software. There is also a general lesson here. If you’re thinking about entering a market where the existing solutions are suspiciously bad, don’t ignore that feeling. It might mean that the people who make the purchasing decision are far removed from the people using the software. And that, in turn, means that you can’t win by making better software.

In every Enterprise software market you have to compete with entrenched players and lavishly funded startups that will happily lose money for a decade if that’s what it takes. As a self-funded bootstrapped startup you won’t stand a chance in direct competition against them. Some markets belong to VC backed startups, and this is one of them.

Plugin/extension/integration to existing platform

This is the first software category that has real promise for independent bootstrapped startups. Any business that grows quickly has users clamoring for extra functionality that’s not in the main product. That is where you can find good opportunities, because it’s so obvious where your potential customers are and it’s easy to reach them. In many cases the platform business is eager to highlight and market add-ons/plugins and the like because it allows them to solidify their position in the market.

You can write an add-on for enterprise products like SAP or SalesForce or for SMB products like Slack, Stripe, WordPress, Google Workspace, Office 365, and many others.

The biggest downside with businesses like these is that they don’t last. Why? Because the platform business can see exactly which plugins/extensions are popular and just clone the best ones and turn them into native features. In a sense you’re competing with the platform that you’re also entirely dependent on. This puts a ceiling on how successful your add-on can be. But if the big fish is big enough, and some of them are huge it’s still very much worthwhile.

Prosumer/freemium webapp

Freemium apps are apps that users can indefinitely use for free but they can choose to pay for a premium version that offers some extra functionality. It’s all about scale here. If you have enough users you don’t need to make much per customer to have a nice business.

A typical strategy is to start by giving away your software for free and enjoy the hopefully exponential growth in free users for as long as it lasts. When user growth starts slowing down you introduce a paid (subscription) plan and a fixed percentage (3% maybe) of users will convert. For bootstrappers this can result in a real painful dilemma. Because you want to wait as long as possible before you exchange exponential growth for linear growth + revenue. But if you’re running out of money you might get forced to start charging for your product prematurely.

The cool thing about freemium apps is that you can get many users quickly, the only problem is monetization. And that’s a big one. Go this route if you think you can make something that appeals to millions of people.

SMB webapp

The SMB segment is underserved when it comes to software. They need software to run their businesses and they have money to spend but Enterprise software businesses don’t cater to their needs. SMBs generally want simple software that “just works” and that they don’t have to worry about. Small companies will happily pay $50 to $500 a month for anything. It’s not much money when the alternative is hiring additional staff. For every 1000 customers paying $100 a month you’re making a million in revenue. 1000 isn’t a large number. If you’re willing to grind your way through you’ll get there eventually.

The only real difficulty here is reaching your potential customer base. SMBs don’s spend their days googling for software that might help them with a problem they have. If you have a good product in this segment marketing will be your biggest pain point.

But if you keep growing your customer base and keep improving your product you’ll be able sell to the lower end of the enterprise segment as well. It’s a good place to be. It just takes a long time.

Near universal truths

Let’s zoom out a little bit. When you make a product you want to make something…

1) that people will use regularly and that solves some pain they have. If they’re not using your product regularly they’re not going to be exited about it and talk about it.

2) that people, and ideally businesses, are very happy to pay for. Basically you want to look for indirect competitors. If there are plenty, that’s a great sign. If a single business has a stranglehold on the market, think twice.

3) that you can prototype relatively quickly. Established businesses can create prototypes for products that will go to market a decade from now, but you can’t afford to. You need to move fast and get it out there.

4) that has an audience you know how to reach. Tech people don’t like marketing, and we’re no exception. But if people don’t know your product exist they won’t try it, and that’s no good. If you’re doing something you’re excited about it’s much easier to talk about what you’re doing, and that’s the essence of marketing.

5) that is unique and clever in a way that’s hard to replicate. You don’t want to clone somebody else’s product. It’s uninspired, the customer can tell, and it almost never works.

It can be hard to make sense of all the contradictory advice you find on the internet. But it helps to remember that funded and bootstrapped startups play by completely different rules. You also have survivorship bias: startups that succeed despite the odds are unaware of how lucky they got. One of the biggest hurdles is going from nothing to making a symbolic amount of money. You want some indication that you’re not crazy and that there are actually people out there that like what you’ve built. Once you know you’re on the right track you’ve just got to keep going. The first part is where tons of people get stuck.

We hope to show people with the 80daystartup what you actually have to do to launch a commercial web app.

Spoiler: it’s actually a lot of work. But we’ve done this before and we know what we’re signing up for. Here we go!