My impression is that every SaaS that is successful on ProductHunt (PH) or HN gets copied dozens of times within a few months. That's especially true for technically simple products. A good example is maybe privacy-friendly web analytics: I think products like Fathom and Simple Analytics were the first to really go after this angle (undoubedtly there were others before them though), and in less than 6 months dozens (hundreds?) of copycats turned up with exactly the same USP and the exact same look & feel. And interestingly it isn't the first mover who seems to win that market but rather the company with the most agressive (and sometimes outright misleading) marketing. So being the first doesn't guarantee your success anymore, at least if you don't have enough time to grow undisturbed.
Personally I'd avoid posting products on PH or HN for that reason and instead focus on growing organically in a niche market where you're not immediately discoverable by copycat founders. In general PH feels more and more phony to me and I think there's a lot of astroturfing going on.
The availability of SaaS is also a product the values of the various industries. There are lots of marketing-oriented SaaS because it's an easy market to sell to: they are very open to experimenting and taking risks, make decisions very quickly and have near limitless budgets. In industries where decisions happen slowly and budgets are limited it's harder to get a foothold, harder to grow, and if you do succeed you're less likely to be a fast-growing exciting startup that a venture-oriented place like HN talks about.
> But basically anything outside of those two realms feels completely under-addressed by SAAS:
> - industry - public services - waste management - etc
I hear this a lot. Couldn't be that everyone (makers/founders) addresses these PH/PH spaces because they are packed with early adopters instead of the other industries where every new innovation will be taken with FUD?
And that's the cause that it's under-addressed. It's hard to convince "classic" industries to adopt new SW stuff and new paradigms.
This! The biggest opportunity is in SaaS for industries where techies don't see problems or were not really digitized yet. The setback is that they are pretty boring and you have to many times deal with different people in terms of sales. But thats where the gold is.
Agreed. I built an app that was in the Top 5 to Top 10 paid business apps on the Apple App Store for about a year. It causes so much drama with copy cat developers from the the south east pacific. I had people steal my name on the App Store and other victims of these copy cats start to turn on each other because they all think they are stealing ideas from one another. It is absolutely bonkers.
When you reach the top of the App Store you develop a new set of problems. One of those problems is copy cat developers who basically just copy app ideas in the hopes of stealing some of your users. It started with my users reporting about bugs that didn’t make any sense with odd screenshots and non-existent features. I look into it and the fake version of my app with almost an identical app icon, app name and with my name as the author. Apple was basically useless when trying to help me resolve this issue as it was a violation of my trademark. The only thing Apple can do is put you in contact with the email addresses registered to the other developers account. One day, my wife received a threatening phone call. How they got my wife’s number I have no clue. The other person on the phone call said I stole their Minecraft skin app. I told them it wasn’t me and that the same people stole my app, my name and about 30 other apps including theirs. Well these other developers didn’t believe me so they copied my app and tried to steal my users. How do I know this? Well they setup a new LLC to steal my app idea. I wouldn’t have found this out if they had not forgotten to change the name of the business in the privacy policy they copied from their original business name they contacted me at. Their new business that stole my app had some guy who pretended to be a lawyer but when I googled his name and saw his LinkedIn account he also worked at the original company that contacted my wife. That’s the short of it. Basically I caught them red handed, presented all my evidence to Apple and they were handled and pulled down the copy of my app. All the while, the people that stole both of our apps operated unhindered. Apple did nothing with that particular case that I could remember. I wish I was making this all up but it pushed me into some deep suicidal ideation because at the time I was dealing with PTSD from military service and my father passing away. 2017 was rough.
I think it was Justin Kan who tweeted something like:
"if someone else could copy your product, and they have more customers/grow better, then you aren't the right fit for it"
Also, nowadays, product is a small part of your company. Can you remember the last time you saw someone having an initial traction just because they have a great product?
You can copy Airtable/Notion as long as you want, adding some more features to it. But it's not how it works, I believe.
One of the trends I have been seeing, especially in devtool space is there products built by agencies and there are products built by companies where it is their flagship product. When you have a situation like this, then it dilutes the value proposition of your product. Even though, agency driven product might be serious or might not be seriously pursued, it definitely make the space red ocean.
I wonder how people generally combat this kind of scenarios.
One of the weaknesses of agency-driven products is the lack of market understanding and ongoing connection. It's frequently a sweep up of anecdotes from their developers, clients, and perhaps some other research. Sometimes it's a vanity project for someone who ultimately knows that they won't turn the agency into a product company and they ultimately move once the product gets attention. You have to wait them out by being selective in how you burn your resources while developing a "brand" that's different from an agency.
Be genuinely interested in solving the problems that your users have. Devtools have always been attractive as products to developers, but they are notoriously difficult to be successful with. You need to find all of the workflows that your users have and optimize them effectively. Sometimes the things that are needed are dull and boring, but if they visibly take someone's time then there is long-term value. Be careful about supporting esoteric approaches that will disappear, but also be aware that this can help with locking in some customers at the right point.
Agencies tend to be bad at support. They are optimized for making new things and moving on. You have an opportunity to provide a strong support experience which is coupled with intelligence gathering on developer needs.
True but this is valid only for the established companies. A solo dev or bunch of people with a small seed round don't have any of that moat.
AFAIK it's a common practice to copy up and coming indie games from the app store top charts because an established team would have the muscle to catch up and surpass the new ones. I don't see why wouldn't be possible to do it to any other product that is not an overnight success but shows healthy organic growth. I think this was also the idea behind huge early funding rounds, that is to create a large early success so that it's not copied right away.
A healthy organic early growth implies product market fit, or at least some promising alignment. Unless it's technologically hard service, there's no moat that a well funded team can't replicate and surpass.
Until they have sizeable operations, all startups are "company == product". They are pretty vulnerable of being copied.
The company is more than “techology”. It also marketing, sales, regional, leadership, market size, etc. That can be (and it is) a big moat preventing a well founded startup to replicate.
In short one needs to have something is hard to replicate - but that does not need to be technology.
I know, the point is that at early stages there’s little of it. That’s when they copy you, just like that unless you have something else that’s hard to replicate.
That could work in my favour though. I've got a couple of things I've wanted for a while, that existing projects don't quite work like but I have no time to make myself. Maybe if I publish an MVD (minimum viable demo!) making it look like an attempt at an MVP, people will copy the idea and do it well enough I'll be able to use it…
The main argument against that working is that I'd prefer OSS self-hosted options — no one chasing the quick buck is going to go that way!
Is PH really still relevant these days? Based on the comments it feels more like a circle jerk of a dozen die-hard users and the rest being semi-automated spam mostly from India. No tough questions, just self-congratulating Emojis.
Luck is also part of the equation, perhaps more than people want to acknowledge.
To take Hacker News as an example, there are many excellent projects posted in the 'Show HN' section that get no traction at all. And then there a few lucky ones that suddenly take-off. There's no "wisdom of the crowds" moment that propels one project to success over another because it's more worthy or excellent - it really is random in so many cases.
We think success = product excellence: how else could a product rise to a leading position in the market or to such pre-eminence unless it was better than the alternatives? But the mountain of successful products ranging from mediocre to terrible quality shows that product excellence isn't always the key ingredient to a product's success.
Lest this all sounds too negative, I would never discourage anyone to pursue their product idea. But when it comes to promoting a product, developers should be cautious about relying on just one source for promoting their product (Hacker News, Product Hunt etc).
People tend to think startup or new product when they hear SaaS, and forget that many mature businesses are turning their domain software into a SaaS. This is currently huge. Internal software that was previously only used inside the company. Now they get to recoup on developer cost by opening it up to the market as a subscription service. At least that's the idea.
I still don't understand the purpose of Product Hunt - and I don't mean this in a sarcastic way. I'm hoping someone can tell me where it fits into the ecosystem vs. what I think my role is.
I buy software, as a customer, both in my personal life as a consumer and also in my role at a tech company where I'd buy more B2B software. I don't use PH as a resource, but I hear about it a lot. What's it's role in the startup ecosystem / what am I missing out on?
It's like Show HN and Reddit combined. Comments and upvotes on brand new products and services.
For founders/makers, it's obviously a great source of traffic, leads, and exposure for your product.
For users, it's more about being in on the ground floor with a hot new product. Sometimes that means getting an exclusive deal or free features. Other times it's just the exclusivity of being one of the first customers for something that may be very big one day (think lower user IDs on Twitter or GitHub, for instance).
I think a lot of people like playing with new toys, and PH is a good way to do that without having to spend actual money buying something new to play with. I think it fits in the same niche as those that watch unboxing videos. It's fun to play with new stuff.
This comment made me realise how little software I actually buy. My most recent software purchase was a password manager subscription, a year ago. Otherwise I use the free version of tools and the G Suite.
Whenever I go to a site like product hunt, I always wonder who buys it. I have to guess its mostly a b2b market.
PH gives you a score, something #1 product of the day. It can be used as a benchmark or reference to investors and customers that this is product has a market need. It is kickstarter for software except the money part. It is also gives you some kind product and market validation. But like any other system, you can game it.
> It can be used as a benchmark or reference to investors and customers that this is product has a market need.
Is this actually true? The thing I'm trying to figure out is who is sitting in the audience at PH. Is it really potential customers, or networks of folks somehow connected to the poster that are there just to upvote? Am I atypical in not looking at PH when I'm interested in a solution to a problem I have? (I suspect I'm the norm)
You are absolutely right. Sometimes, it is not about technically simple things. It can be complex but hot on trends. For instance, I have been tracking PaaS like platforms for past 2 years on hacker news. Every month, you have atleast one PaaS or on-prem heroku deployment platform on Show HN. Similarly, I see lot of airtable clones once in a while.
I don’t understand how the Product Hunt community keeps upvoting the same product idea, cloned 100x. It feels like it is being gamed somehow, because I can’t be the only one that sees this happening…
Funny, because I've started a privacy-friendly analytics tool [0]. It really happened by "accident", as I initially tried to solve my own problem (analytics for my website without an ugly cookie-banner) and only later discovered there were many existing solutions.
Now that I went all-in on it, I think there is much more to it than what you can see at a first glance. There are a lot of dividing factors, like support, features, ... or in our case a unique design and good support for resellers (agencies) and technical people (server-side integration). We have been called copy-cats, but that doesn't mean different people won't find similar solutions for the same issue like it happens with us or in science from time to time.
There have always been copycats. It’s better to worry about usability and business model.
Before Google became a monopoly, it was just one of many search vendors. Google’s advantage was that they made search easy and simple enough for grandma to understand and use it.
Seems like this might be the driver behind longer timelines. Lean approaches work if you don’t expect others to clone you and catch up. If you expect to have copy cats it’s better to be 2 years ahead.
I usually think if the business cannot sustain once the idea is copied, it's not a good business idea.
Maybe it's fine to continue as a hobby project, but for business, if it cannot sustain without a significantly large market share, or have too competitive environment, better to work on other problems.
You don't compete on just the product though. I've had companies with plenty of VC money outbid me on Adwords and employ lots of cheap labour on SEO. Often their product offering looks quite weak.
You are right though, if that's the environment you face you just need to move on.
Ironically, the increase of SaaS businesses have made me more vary of actually using them.
It seems like so many wants to have a successful semi-solo SaaS that pay their bills. They aren't longer a way to sell a product and a startup idea, but an attempt at a lifestyle. Some people throw up smooth landing pages for barely working products, and quickly move on to the next idea if it doesn't stick.
How can I invest time and money in using a product if I'm afraid the founder will bail after a few months?
It made me more wary of SaaS businesses with teams and venture capital behind.
In my experience companies with VC money are much more likely to "flip" a business and sell to someone else causing disruption, or bad updates who make the product worse.
I still haven't had any of the subscriptions for products made by indie developers get significantly worse or change significantly.
They keep the lights on, add some features without breaking existing stuff.
If they're in for the lifestyle more than the money, I think they're less likely to sell and more likely to hold and maintain (assuming they're charging enough to make a living).
Yep, sustainable dependencies are a key criteria for us. I'm happy to see OSS with a big community or paid hosting. OTOH, grown wary to see VC-backed (esp. big rounds) or corporate side-projects (esp. at unicorns with high churn in teams + tech, or bigco's with no OSS community governance track records).
Yes, it's doable to replace things after a year or two. But, if a bunch of dependencies have risk, that turns into a rip-and-replace treadmill of negative customer value and burns out a team.
This is definitely one of the downsides- but also possible that Google for example gets bored of one of its products and shuts it down, or acquires a product just to shut it down.
Personally I think one of the upsides is that the semi-solo team might actually decide that the successful product is "done" and move on or go into maintenance mode. IMO products like Spotify and Slack could have reached that point a while ago- sure they could still work on uptime, data compression, etc. But there is only so much you can tack onto a music player or a chatroom. They keep shipping more redesigns and new features that don't make users any better off but need to keep people busy.
I mean at sometime, you may as well just shift the engineering team onto another/newer product. Spotify could have totally made something like clubhouse.....
> How can I invest time and money in using a product if I'm afraid the founder will bail after a few months?
Would you rather a risk a much bigger one-off payment? For software? Sure, it works now, but it might never get updated, and eventually stop working altogether due to OS updates or other factors.
The one-time payment model is a much greater risk to the consumer than monthly subscriptions.
I don't agree with this at all. If a software product doesn't get upgraded you have
1) time to look for an alternative according to your own priorities
2) ways of mitigating potential risks (if it's a security problem, like airgapping the solution)
3) the ability to make value-based calls on the risks of not having updates
With SaaS you have all of these same constraints (as there's no guarantee they update the service either), plus the risk that they just turn it off one day on a timeline you can't control, plus potential risks that they will leak your data if they don't maintain security (or want additional money), and with the added risk/cost that they may decide to no longer support something you need due to a forced "upgrade" (like API compatibility).
Anecdote: A company I know used to have an on-premise product. The customer paid for a yearly license*. Then they developed a cloud based offering, a SaaS. In order to force customers over to this solution they simply stopped updating and giving support to their old product.
* Sometimes we forget that the old software model of offline or customer-installed (client, or server, on premise) also has fees attached to it, in the form of a license you have to keep maintaining. Often yearly.
If the customer wanted to keep using the product, they could not stop paying the license fee just because the vendor stopped updating and supporting it.
> Sometimes we forget that the old software model of offline or customer-installed (client, or server, on premise) also has fees attached to it, in the form of a license you have to keep maintaining. Often yearly.
A lot of the enterprise on-premises software that I use (from Atlassian, Microsoft, Oracle, etc.) come with perpetual licences. The annual maintenance cost is for support and for updates. I can think of a few exceptions that only have term licences, like IBM PurifyPlus, but based on my personal experience, a majority of on-premises software falls under the former category.
Yes but basically all of that software is so mission critical that you simply cannot not pay for support and upgrades. Ergo you have an annual license fee to be able to actually operate it.
> For software? Sure, it works now, but it might never get updated
That's often good rather than bad, as many products are optimized away from usability over time.
> and eventually stop working altogether due to OS updates or other factors.
There are means to mitigate that (e.g. running software in VMs), that work fine as long as software isn't fighting it.
Arguably the biggest factor causing software rot, making one-time payment risky, is purposefully adding dependencies on vendor's servers (e.g. for "collaboration") where they don't belong[0]. This is also what is used to justify the continuous stream of updates - whereas in reality, it's just there to create a plausible reason for why a perfectly good product now requires a subscription. Software that's designed to be paid one-off from the start doesn't require these kinds of anti-features, and doesn't rot nearly as fast.
--
[0] - It's famously said that Dropbox was doomed from the start, because it's a feature, not a product. Unfortunately, that view is part of what's making SaaS so incredibly user-hostile. Syncing data is a feature completely orthogonal to applications, and even operating systems. There's no need for a SaaS vendor to make their own synced storage for app data, unless they're purposefully trying to entrap their users.
> The one-time payment model is a much greater risk to the consumer than monthly subscriptions.
Short term - yes. But long term? It seems there is no point in planning to use a software for years now. And I don't like to migrate my knowledge base to new tool, every 2 years. But is there a way other than mastering org-mode on weekends?
Long-term? Not much beyond org-mode + org-roam at the moment. I've seen one or two alternatives (open-source products), but I don't remember their names.
The rule still applies: whatever you chose, do not become dependent on a SaaS offering. The problem is in the name: service. A service is something other people do for you. They can stop at any time.
That's true. We're all dependent on plenty of services. But the difference between those and SaaS is that they're all commodity services. This means you have a steady selection of service providers, all providing equivalent service, and there's no risk with any individual provider disappearing - you can just switch over to a different one, and get the same thing.
An important aspect of most SaaS businesses is that they're not commodities. It's a core part of most SaaS business models - they're purposefully sticky. When you become dependent on one, and it shuts down, or gets acquired, or decides to discontinue the features you care about, there usually is no drop-in replacement. There may not be a replacement at all, for the combination of features you need. And whatever alternative you find, migrating all your data is usually difficult, and often not possible.
>How can I invest time and money in using a product if I'm afraid the founder will bail after a few months?
I'm sorry to say this, but this just shows lack of empathy.
You're looking at your belly-button, because you're a particular type of user that's aware of product/company life-cycles/spams... very few people are thinking about the problem of a founder bailing out after a few months when they're subscribing to something.
Plus if you're so afraid of that when you're looking to use the product, then it must be a really good product and most likely the founder knows he is onto something. In that scenario the most probable outcome would be the founder selling to someone else, or stop updating, then people just naturally migrate to something else.
I'm a founder at heart; I've loved creating - and have a software background. I really resonate with the paraphrased vibe of way, way more SaaS companies. I've been looking outside of SaaS to potentially harder science companies rather than SaaS for future endeavors.
It is too easy to: splash page, Wordpress, "rails new saas" for a product and then try to sell via SEO / outbound, etc that the field is quite saturated - and un-discovered niches are a lot harder than say 2013.
Can you help me understand how a billing model gets saturated exactly?
I never got this about SaaS. People talk like it is a vertical. How is saying "I want to start a SaaS" different from saying "I want to start a one time payment ecommerce business?"
I say this btw from having worked at a SaaS business for years.
Because it is, for many founders. Those who think, "I want to start a startup, make lots of money. A SaaS business is the easiest to start and most investor-friendly." What the business will actually do is irrelevant, something to be picked along the way.
I see it as a vertical too - a column of a larger vertical I call "toilet paper companies" (with no offense meant to actual toilet paper manufacturers and sellers): companies run by people who couldn't care less about what the company is actually producing/offering, and have zero interest in the thing they're selling (beyond pretending to, for marketing reasons). Companies that would gladly switch from making rocket parts to making toilet paper, if they believed it has better long-term ROI.
And yes, people who think "I want to start a one time payment ecommerce business" (aka. "a web store") are a part of that larger vertical too.
I understand your sentiment which I believed has a negative tone to founders that are more business focused - but I'll flip it.
Yes a company can be started along a founders personal passion... for this example, lets call it bikes [could be anything]. A founder following passions will create something around bikes - and in most cases fail due to saturated market, competition which they cannot outspend, etc.
Other founders approach business AS the passion. Surveying the competitive landscape, capital models, future growth potential - and marry that with building something for people, helping them solve their problems is the passion, creating a business structure designed around them.
> Other founders approach business AS the passion.
Yes. And my feeling is, this is where our market economy has jumped the shark. People running a business for the sake of running a business are able to put more focus, effort, knowledge and skill into optimizing its success. Many ways of doing so involve reducing the value delivered to the customer, but compensating it with manipulation (e.g. more marketing) or abuse (e.g. lock-in, dark patterns) - and all advantages gained this way compound. Thus, in a fair competition, a business run for the sake of its value has little chance of prevailing against a business run for the sake of being a business.
The problem I see with this is that the value of a business to its customers, and to the society at large, is in the product or service being delivered. The business as an entity is incidental, a necessary evil to generate the value. Businesses being run for the sake of running them seems, to me, like optimizing for precisely the wrong thing - putting the cart before the horse.
My bank account is filled with SaaS products. Want to read the news, get a premium “bank” account, automate stuff, watch TV or movies, etc? pay up buddy. It’s only a few more of your dollars a month.
It’s at a point where most consumers have to decide between one SaaS or another; it muddles retention. A one-time payment business is better these days (or a hybrid) especially if you have a product consumers are willing to come back for.
For me, it's the same problems but the opposite conclusion -- unless you're my rent, utility bills, a handful of subscriptions to print magazines or professional bodies (or my mother), you will not get a subscription out of me. I will simply not do it. One-off payments are fine, but the expected cost of a subscription is huge over my lifetime and the value of your product probably isn't worth it.
B2B SaaS have a much clearer/easier value proposition than B2C.
There's already a cash flow and profit motive in a business, so if a SaaS can demonstrate that it enables more value than it costs, there's a tangible advantage to paying for that service.
In this context saas isn’t actually the opposite of say “one time purchase software” but more analogous to “low hanging fruit low cost easy problem to solve with software”.
IMO saas is muddled so it’s meaning is not as much about the billing model anymore.
I personally use SaaS as shorthand for a business which mainly simplifies, eases, or improves business or personal problems or processes with software - and get paid for it.
I relate with your sentiment. I'm from a product background, not a research one. What do you think is the best way to eventually transition into deep tech companies over the next five years?
By deep tech, I mean getting to solve complex challenges through technology. It could be solving problems using machine learning, or a hardware product that's genuinely useful. I believe we're going to see a rise in hardware technology soon. After being in the phase of building a product to get upvotes on ProductHunt, I was trying to capture the essence of being an inventor by following a prescribed recipe, which wasn't satisfying. I ended up moving to a more business role and it's much better this way but we're barely building anything.
I'd like to play a role of an inventor and a builder of crazy technologies. Imagine https://www.noya.co/ or https://frame.work/. My only concern is that not being from a research background or a first world country could hinder my chance of doing that. Hope that made sense.
Yeah, that makes sense. I think the best way to do that is just to invent stuff. I've followed a similar-ish track in the past, and I can promise you that nothing upskills you more than actually building things.
Absolutely agree. The model of recurring revenue as applied to more than software is still powerful and I believe under explored given everyones focus on SaaS, mobile, enterprise, etc.
I agree, I think it is way more competitive in any pure software cloud type space. I think if you can bring something else to the table such as hard science, domain expertise, hardware, or electronics, it may eliminate a lot of the competition.
> It is too easy to: splash page, Wordpress, "rails new saas" for a product and then try to sell via SEO / outbound
Not even that, these days people simply start newsletters...
Still, I wouldn't write off the payment model. People seem to prefer subscriptions to one-time payments. If they didn't, Netflix, Spotify, etc., wouldn't enjoy the popularity they do.
That's a very niche and small cherry-pick that you did.
I practically know only 2 people willing to pay monthly sub for note taking or various such trivia. 99% of everyone I know is very conservative about monthly subs. Sure Netflix / Spotify / YouTube Premium / etc. are worth it but most apps out there really are not.
Plus there's such a thing as a "sub fatigue" these days. People feel everybody is after a chunk of their wallet each month and are starting to resist. I don't even mean myself or other tech-savvy people; I really mean mothers and grandmothers who have no clue but still don't want to pay up all the time.
I don't think SaaS and "potentially harder science companies" are necessarily opposed. I think there are still a lot of un-discovered niches that marry the two. Anything hard is going to take longer, but also result in less competition.
Seed rounds are larger because baseline of seed has changed.
Investors expect you to derisk lot of things when you try to raise capital during seed as compared to what it used to be back in the day simply because today barrier to create SaaS product is low. You do not need ton money to create something to validate whether your product works or not.
Yes there are many SaaS products than before but there are many successful SaaS products than before too.
You really have to standout and innovate now more than ever.
That means, when you launch in Hacker News or Product Hunt, your product cannot be premature.
My opinion is that if you are a serious company you should delay launching on HN or PH as much as you can. Once you are out, the destiny of the product is not your control.
Imagine if the campaign fails, you are going to have hard time explaining to investors why the campaign failed. Instead, I think one can control all the odds around the product, de-risk by making sure there is a pre-existing group of dedicated users already and then launch.
I strongly disagree. HN/PH launches are short lived media events with (usually) little lasting impact. If you blame a failed HN launch campaign for a failing company then I don't believe your company was ever going to make it in the first place.
Your product should be easy to find as early as possible. You need the customer feedback to build the right thing and you need the compounding effects of an early internet presence (eg SEO). Don't hold back launching, launch while you're still at least somewhat embarrassed of your product.
I understand what you are saying. But your argument is true when you are bootstrapping a product. When you have already raised a pre-seed, whichbis what many companies are doing today. What have told a narrative to the investors to raise capital. When campaigns fail, it implies your narrative was incorrect and your understanding about the domain and market was wrong. Which might not be on entrepreneurs favour. When you are building a high growth startup these little lasting events can make or break. I have seen it happening with many companies.
> Customers expect polish, and they expect a lot more functionality than the bare minimum.
That's why it's the minimum viable product, and not the bare minimum product. Determining what's needed for viability is an important part of the MVP design process.
Or that MVP isn't just about your product in isolation but also about the marketplace you're going into.
If there's no-one selling drinks in the park on a hot day, a homemade lemonade stand might do good business. If there's a café and a food market in the park & 5 ice-cream shops nearby it would be harder to get the same outcome for the original product
Couldn't it just be that resources are more abundant and know-how is more spread?
You have way more designers, software devs, libraries, etc, now in comparison to 2013. The trend will be for these things to be almost "commodities"... even for solo founders, you don't need to know design to copy/inspire yourself from a plethora of examples out there.
With no code tools you can quickly slap things together to validate stuff, before outsourcing the development to somewhere else if you need to get things going, or hire a dev.
Things are just easier and more abundant, so to make the classical "MVP" or a more polished "MVP" probably doesn't require that much extra effort/resources.
Also you need to realize that standards have changed, some small things that were valuable are now taken for granted.
Yeah, still feel like MVP is a great way to start. If people want your product without it being polished, then you know you really solved a problem. And not just any problem, but an overlooked one (because nothing solving this is polished yet).
I think Ravi (the author) is spot. The difficulty is the table stakes features for SaaS products have increased so much as the industry has grown and so have expectations.
That being said I think people have erred way too much away from the MVP concept and aren't fundamentally testing the biggest unknown with their MVPs. Of course you're going to need SSO at some point but you don't need it for a MVP.
Interesting, why do you think would that be? Difficult to reuse code/infra from the mvp for the final product? Or is it that the mvp is hard to define and ends up being the product? None of the above?
Interested to hear the thoughts behind the comment
MVPs used to look like the rest of the web. Now people expect a “design” in a product. The web looks much different than it did even 10 years ago, but browser defaults haven’t changed much in 30 years.
I don't think people expect it so much as that the designs that put form over function are pushed so hard that it seems as though people expect it because there aren't any function-over-form alternatives. Fair chance that if you bucked that trend that you'd end up with happy users and a higher retention for the longer term even if in the shorter term your conversion rates may be a bit lower.
Similar to how the quality tools rarely look as snazzy as the wanna-be's, and are sold to a more professional audience at a higher price but lower volume. They also typically need much less advertising and marketing, they are sold by reputation and word of mouth.
Maybe, but I will admit that I trust a SaaS product more that has a better design with slick front end components. When I see a rudimentary but functional product, I shy away
Would you still shy away if the product was uniquely solving an important problem for you? I am in the same boat as you but I think as though I would only shy away if the product was marginally useful to me and I probably would have stopped using them eventually anyways
It's peacock feathers. You demonstrate company/product health by burning cash keeping your design "modern", even if a simpler but less-expensive-looking design would have been better for UX.
This is true, but as a signal it still does work. If the front end is flashy, they definitely put some money and resources into it, which means they have those to begin with
This is a good point and ties into the whole funding trap. I imagine some founders find it difficult to show a shitty looking MVP when you have investors looking
It's apparently true if you s/cake/wedding cake/ (and s/Instagram/wedding photos/), though. I remember the shock I felt when I first learned that in the US, the cake-cutting ceremony features a fake, plastic cake (in order to support shapes and sizes otherwise prohibitively hard to make with food), and guests get served a different cake, shaped for mass baking and cut in the back.
I'm not saying the fake plastic cake doesn't happen in the US; I'm sure it does. But it's nowhere near as common as you seem to believe it is. I've never been to a wedding with a cake like that.
> I had a conversation with a traditional retailer who was afraid of using Heap for analytics because we used AWS for hosting, which is owned by Amazon, their biggest competitor.
It sounds foreign now, but when AWS was new this happened all of the time: Companies who saw Amazon as a competitor in some way usually had someone, somewhere in management who was afraid of using anything hosted on AWS.
It sounds silly now, but I remember having a lot of these conversations back when AWS was new. Typically, the older the company's management, the more likely they were to be afraid of using AWS for anything related to their business.
Anyone in the traditional retail space is trying to avoid Amazon. A. Because anyone in the retail space likely DOES have older management, and B. They're not entirely wrong; even if Amazon doesn't pull the rug out from under them, they're still indirectly writing checks to help fund their largest competitor.
I wouldn’t call it silly at all, it just depends on how strategic your failure is to Amazon’s success. At some point you become materially exposed to their decision making.
AWS promise they don't look at their customers data, but if it turns out they actually are then putting your Amazon-competitor-business analytics data in AWS would be incredibly bad for you.
Would you really trust Amazon enough to take that risk?
There would need to be an massively good reason to do that, and "incrementally better analytics" isn't it.
AWS are not looking at customers data as it would be professional suicide. It would only require one disgruntled employee to leak this. Realistically they don't even have to as a proxies version of this data can be bought.
AWS are not looking at customers data as it would be professional suicide.
This is why it comes down to trusting Amazon. Essentially the question is "Do you trust Amazon not to do something that would be 'professional suicide', like accessing a rival company's AWS data, enough to risk giving them your data?" If you're running an online retailer that's a competitor to Amazon you should probably fall on the side of caution because companies do stupid shit all the time.
Amazon's the scary-looking flea market on the wrong side of town with the barbed wire on the roof and a couple tough-looking guys conspicuously hanging out out front, with half the stalls full of stuff that definitely "fell off the back of the truck" and the rest selling fake Rolexes and shit.
Doing that at scale doesn't make them more trustworthy. Or it shouldn't. Then again I guess if you're a super-creepy stalker at large enough scale then you're Facebook or Google and instead of getting probation and a restraining order you get billions of dollars, so maybe it does work that way.
The line that divides "the data of an AWS customer" from "the data of an AWS product" is rather faintly drawn. The latter is often sufficient proxy for the former to make business decisions on.
Exactly. It's like promising not to snoop phone conversations when all the valuable information is in the metadata, or like promising to avoid using swords in an era where people fight with guns.
Not silly at all. Premise is pretty simple: why would you fund your competitor's cash flow (either directly or indirectly).
GCP and Azure successfully acquired a lot of retailers and ecommerce providers for this reason. This happens even today with medium to large size competitors of Amazon.
Agree that you can choose not to use AWS yourself if you see them as a competitor. But to refuse to use any service that itself uses AWS would severely limit who you can work with.
This still happens. Same for GitHub/Microsoft and Azure. Probably Google, too, though I've not seen that personally. Haven't seen it for CloudFlare but there definitely should be companies close enough to the spaces they're growing into that they'd be well-advised not to send traffic through them if they can avoid it.
There's probably room for niche services selling "we're not hosted on 'the cloud', aren't owned by anyone likely to be in competition with you, and control our hardware" but there's a lot of overlap there with companies/owners/managers who take this to the point of not trusting anything that isn't self-hosted (because there might be security problems, nevermind that DIYing is at least as likely to have such problems, or because they fear vendor lock-in to a perhaps unhealthy degree), so it might be a hard market to sell to.
It's not like AWS controls the sole source of fire. Companies these days have wised up and know they can roll their own 'good enough' solution and customers won't have much choice to do much about it but keep feeding the beast. I remember when I genuinely believed the netflix creation myth, of this fabled streaming service that would swallow up the world and have all movies and TV in one place. Companies who ultimately hold all this IP and have these heaps of cash wised up, wait on the sidelines, poach people, and come out with stuff like Peacock thats good enough, and customers have no alternative if they want to watch stuff that only comes to that particular platform. Streaming services are the most visible examples of companies rolling their own solutions to not be beholden to other companies, but its extending to all sectors of tech.
On the streaming topic: piracy is becoming rampant again due to subscription fatigue and player fragmentation. So there is an alternative if people don't want to pay up.
No clue why MPAA couldn't pull an RIAA and have everything in one place like you see on apple music or spotify. 99 million legitimate music streaming accounts in the U.S. today, what a number. The only service offering something similar for video is piracy software that manages to outclass every streaming service from all these multi billion dollar companies in ux.
Music is sufficiently low cost that the owners of music do not mind giving it up for less money.
Owners of video media apparently want more money, and are betting they can earn more by not giving up control to others and selling for cheap.
I am inclined to agree with the owners of video. If people wanted easy access to all the video/tv shows, they could right now pay the various services. It is not that time consuming or laborious, it just costs a hundred or two hundred dollars per month.
The fact that people do not, means that people are not willing to pay that much per month (on top of tv service subscriptions, which come with live sports).
I think they are leaving a ton of money on the table acting this way, taking their ball and going home out of pride instead of making more money.
For one, subscriber counts would go way up just like how literally 1/3 of Americans are allegedly legitimate music streamers, because paying one fixed price for literally almost all recorded sound is a pretty good deal in the eyes of consumers. For two, you'd end up with higher 'real' subscriber counts with a one stop service; right now its probably $90 a month at least for an individual to subscribe to all the popular streaming services which is why literally everyone I know is sharing account passwords with like three other people rather than shelling out the same price as the old evil cable bill. Personally, I'd be happy to pay $10 a month for a one stop shop and not have to deal with texting my brother to ask when he will be done watching Survivor on the shared netflix account.
All this would add up to more customers lining up with more money, but its not done seemingly out of some false sense in these executives that their Disney+ or their Peacock will somehow capture market share (which by definition means securing more of the limited available popular IP) in a world where IP holders no longer play ball with eachother.
Seed rounds are bigger: At Heap, we raised $2M on a $12M cap after having a working product and some early traction. Today, it's not uncommon to see a pre-product company raise $5M on $25M or even higher
I'm seeing this as well and it's eye-watering how inflated the valuations have become for pre-product companies with no clear distribution levers.
The consequence of this easy money has been a lot of flash-in-the-pan startups that seem more stable than in eras past (they've got lots of employees, a nice office, and some good press coverage, they must be legit!), but actually can flame out pretty quickly after a couple of years of serving actual customers.
As a result, there are more buyers who are just more wary of new SaaS companies to begin with - they have the legitimate concern of whether you'll be around in a few years to continue supporting their needs, or just disappear with a nice "It was a great journey" blog post.
While capital has become commoditised, the market is still yearning for more good tools, and SaaS is still a good delivery method with acceptable pricing. Founders should certainly think very carefully about why they are raising before they do so, and maybe even skip it altogether.
> Seed rounds are bigger: At Heap, we raised $2M on a $12M cap after having a working product and some early traction. Today, it's not uncommon to see a pre-product company raise $5M on $25M or even higher. However I think there's still a ways to go–SaaS outcomes have grown in size more than 10x in the last 8 years, but seed valuations haven't climbed 10x.
Why would the valuations climb 10x? This makes sense given the author's second observation:
> There are way, way more SaaS companies and getting initial traction is harder
The rounds are bigger because more money is needed to compete. But investors would lose their shirts if they multiplied the valuations by 10-fold.
(I'm the author of the post - thanks to whoever posted this to HN!)
This is a good point, if probability of success decreased 5x while average outcome increased 10x, then a 2x increase in seed valuations would be reasonable. I don't actually know the differences in probability of success / expected value for the typical seed stage startup, but anecdotally it doesn't feel less likely. It is definitely harder to get off the ground, but I see a lot fewer companies (anecdotally) stumbling in the "middle" part of the journey between $2M to $100M in ARR or so, whereas I feel like in the past a lot more hot SaaS companies used to stall out. So I think that washes out against the harder initial stages.
The world is bigger; more people are part of the economy; the average person is wealthier; the average person is more productive; the average person or company spends more of their income on services than in 2013.
In a winner-take-most market, it's easier for the acquirer to leverage a successful SaaS company 10x what they could in 2013. This doesn't surprise me.
I would bet the opposite. Average person in US gets less wealthy, average person globally gets more wealthy. Tenth decile in US gets more wealthy, 9th tread water, and the other 8 deciles revert to global mean.
Wow that Airplane app looks amazing.
It's a little on the expensive side for the size of company I'm in but would be a no brainer for a bigger company.
Thank you! If you send me a note at ravi@airplane.dev I'm happy to discuss a discount or I can bump up the free limit for you. We definitely don't want price to be a blocker to try it out.
Seconding the parent's post on it looking amazing. I'm going to try it out now for our B2C app, we were looking to build some internal apps and you might be saving us a lot of time there.
Airplane.dev is not abandoned - I just messaged the above user to look into the issue. Funding-wise, we have 3+ years of runway so we’re certainly not going anywhere any time soon.
Hmm, sounds like PLG is the hot new buzzword to describe the search for PMF while burning VC cash (wow I realized I used 3 acronyms in this sentence). This article is clearly for people building SaaS with venture capital.
What about founders who don't go the VC route and choose to bootstrap instead? PLG seems to be out of the question unless one has a long runway. I reckon even for the bootstrappers, things have changed between 2013 and 2021.
(VC = Venture Capital, but that should be already common knowledge)
While I found it quite entertaining to imagine that the Polynesian Leaders Group is searching for the Pacific Music Festival while burning Venture Capital cash, I had to dig a bit for the acronym's explanation to come up.
I'm not convinced. In B2B the user of a product in a company is rarely the purchaser of the same product. Has that relationship pattern changed significantly? That article at least doesn't talk about that.
The definition of PLG offered by the article suffers from magical thinking by anthropomorphizing products (unless we are now capable of making products that are sentient):
“Product-led growth (PLG) is a business methodology in which user acquisition, expansion, conversion, and retention are all driven primarily by the product itself.”
Plenty of people mention profits! Companies are rewarded for efficiency and profitability (more so than they were 10 years ago). E.g. see the massive valuations relative to ARR and growth that Zapier, Mailchimp, and Calendly all achieved over the last year.
That said, if you can spend $1 to get $1 of ARR, or even $2 to get $1 of ARR, and your company is doing 100% net revenue retention or better, then you likely will make more money over the long term selling equity, going unprofitable to spend on growth, and getting paid back over then next 12-24 months due to the nature of compounding growth / exponentials.
>Companies are rewarded for efficiency and profitability
Uber would have been wiped out by now if it came out 20 years ago. Burning cash on the promise of future profit that still hasn't come around is a recent concept. Even companies like Standard Oil and Walmart would make money from other streams when they are putting a price squeeze on some competitor. It blows my mind how much slack these companies are getting, probably just because companies operating this way are a dime a dozen these days so there is some safety in numbers if TINA of places to invest in tech.
> Even companies like Standard Oil and Walmart would make money from other streams when they are putting a price squeeze on some competitor.
If you have evidence Standard Oil ever sold anything at a loss please share. I don't know about Walmart but everything I've read suggests that Standard Oil won by getting better at manufacturing faster than its competitors and passing on those cost savings to consumers. Less efficient companies failed, as those selling worse products for high prices are wont to do.
I mean it's _the_ Standard Oil. They used their massive market domination and control of every step of the process to just destroy competitors.
I mean yeah they succeeded because it turns out that for a commodity just having one large network for everything is more efficient (and if you own everything, no middlemen!). But that's just an argument for nationalising commodities.
All that Standard Oil profit year after year came from somebody.
> But that's just an argument for nationalising commodities.
Because the government is so great at efficiently doing things and selling things I can totally see how you'd make the leap to nationalize all commodities.
Standard oil raising prices on customers in a monopoly and cutting prices to the point of not making a profit in markets with competitors was one of the central arguments of the U.S. government prosecution in the antitrust case. In the case of walmart it has been engaged in a price war with Aldi in certain markets in the past decade.
If it had been the norm since the 90s I would be ordering cat food from pets.com today rather than chewy.com. That site had like one unprofitable year and that was enough to close doors in 2000, even though this was clearly a brilliant idea. The concept of buying runway didn't exist then.
The big question is, if customers are going to stay over a long run. Also the assumption is that SAAS companies are to keep growing, while I see them all converging on the same market / same dollar spend (CRM, Support, Workflow). There will be consolidation at some point, and it won't be pretty.
> The big question is, if customers are going to stay over a long run.
Plenty of public companies have had several years in a row of >100% net retention. When Dropbox filed its S-1 it had a graph showing that every quarterly cohort of customers who had signed up had continued to grow massively in value over time, and i imagine the majority of successful SaaS co's could show a similar chart.
Yes, I could have mentioned profits in the article, but I wouldn’t say that profitability (or lack thereof) is one of the primary things that has changed between 2013 and 2021, and the article is about changes.
To elaborate on my earlier comment: Salesforce has been unprofitable during almost its entire 20+ year existence and it’s worth over $200B. It uses debt and equity to finance growth much more quickly than using profits to do so and thus has grown extremely fast. Do you believe Salesforce is in imminent danger of failure?
There are lots of public SaaS companies where the founders and even investors have continued to hold the vast majority of their shares long after the IPO. LPs have much higher tolerance these days for longer periods of illiquidity for the VCs they've invested into. People are going "long" more than ever.
Hope my founding team read this post! The bar to run a company is so high these days that you can't settle for anything mediocre!
Also, if you have a product market fit in 2021, consider yourself lucky and focus on scaling it. It is getting very difficult to find a niche where you can scale as you would in 2013.
> In 2021, there's a dozen really cool SaaS launches on HN or Product Hunt every day. A compelling value prop and demo video is no longer a guarantee that people will just check out your product.
Speaking from the buyer-side of SaaS, I expect this is because users are starting to realize that they don’t want three dozen browser tabs open at all times to accomplish basic business functions. IT departments are realizing that siloing business operations in that many different apps means you need a massive DE team to keep everything integrated and in sync, hoping that these SaaS companies stay in business and keep robust APIs. No wonder data engineer is quickly becoming the hottest new role.
Imagine how many founder thought like you - "I'm obv. not counting on this product making me a full-time income" Because right now "context" your thinking is different. As soon as people taste the blood(success), it ain't this thinking anywhere. We are emotional being at core. Jealousy, greed, ambition affects everyone including Himalayan Monk.
Plus a lot of the time you're not competing against other companies with similar products so much as all of you collectively are competing against customers' in-house excel abominations.
Even thought articles like these (and all the comments here) can give a lot of (good?) information, it can also create a bunch of paralysis.
I'm also working on starting my first SaaS and I completely believe that "you don't learn until you launch".
That my product is copied and 90% of my user have been captured? WOW! I came up and built an idea worth copying and with such potential on the market!? Let's do it again!
I think this is also the freedom of no VC/investors asking for their ROI and an stable income. We can experiment, see what works and go from there. I'd also be flattered if my idea gets copied :-)
I can learn from my competitor and grow even more!
It’s called neumorphism and it got super popular around 2020 but, from my personal observations, it went away as fast as it came. Don’t get me wrong, there’re still a lot of designs that follow this language but I haven’t seen it utilized much outside of mockups.
Do you feel like VCs in general are now more open to funding close to 1 year of runway just to get an MVP out and test product market fit? or is it your background as a 2nd time founder that drives VCs to trust you with less PMF proof?
People are now raising “pre-seed” rounds in the $250k to $1m range that are intended to do exactly what you describe. Generally from a group of angel investors though rather than an institutional VC.
> 3) Product MVPs have a much higher degree of polish and companies wait much longer to launch
The Airbnb story where they launched with no payment solution to get a feel for the market/product always fascinated me. Maybe those days are over, where you can hack something together quickly, just to try it out?
Fundamentally, I still believe that if you can find the right problem to solve, even if it is a hack, people will use it no matter what. But seeing as more people have spent resources on looking for those opportunities, I would assume the fruit is much higher on the tree now, so to speak.
This is super insightful, thanks for writing it up! Any details on the smart GTM strategy between enterprises and SMBs? I feel like enterprise is a dangerous place to start because of the long test/iterate loop, but SMBs could make your initial acquisition cost numbers look terrible.
Its happening in the land of milking people who got lucky, have a lot of money, and think it was by their own merit. Or people who have money from somebody else who is burning in their pocket and so on. You think any of these billion dollar companies is profitable?
Sales GTM's have changed drastically. The movement from Sales led to marketing led to now product and community led is something that can be added to this analysis. Software is no longer bought by CIO's. The user and the buyer are the same for most SaaS companies and ARR is generated through the product now
Personally I'd avoid posting products on PH or HN for that reason and instead focus on growing organically in a niche market where you're not immediately discoverable by copycat founders. In general PH feels more and more phony to me and I think there's a lot of astroturfing going on.