How to Build a Software Company From Scratch Solo
Summary
TLDRThis video offers a comprehensive guide on starting a software company from scratch. It discusses the benefits of high margins and control in software as a service (SaaS) businesses, while also addressing potential drawbacks like initial setup work and costs. The presenter advises starting simple, validating ideas with landing pages, and leveraging existing tools to minimize upfront costs. The focus should be on understanding customer needs and utilizing no-code tools or learning essential coding skills to build an MVP. The video also touches on competitive pricing strategies and effective methods for acquiring early customers.
Takeaways
- 🚀 Starting a software company, especially a SaaS (Software as a Service), can be highly profitable with high margins, often reaching up to 99%.
- 🛡️ A SaaS business offers more control and security compared to traditional e-commerce platforms, as you are not at the mercy of large corporations that could shut you down.
- 🔁 The recurring revenue model of SaaS provides a consistent and predictable income stream, which contributes to business stability over time.
- 💡 When starting a SaaS, it's crucial to pick an idea that already has a proven market, rather than trying to create something entirely new, to reduce the risk of failure.
- 🛠️ Building a SaaS requires more upfront work in terms of product development and marketing, but tools and resources are increasingly available to make the process easier.
- 💰 The cost of starting a SaaS has been decreasing due to no-code tools and easier access to learning materials for coding, making it more accessible to non-technical founders.
- 🔍 To validate a SaaS idea, create a landing page and see if potential customers are willing to provide payment information without actually charging them, indicating demand for the product.
- 🔧 For the technical side, use the programming languages you are already familiar with, and don't worry too much about scalability at the early stages; focus on functionality.
- 📈 Pricing for a SaaS can be determined by looking at competitors and adjusting based on your unique value proposition, with flexibility to test different models later.
- 📢 Acquiring early customers involves identifying where similar software gets its users and engaging with those communities by providing value before promoting your product.
- 🌟 For non-coders, no-code tools like Bubble or Webflow can be used to build an MVP (Minimum Viable Product), allowing you to start generating revenue without deep technical skills.
Q & A
What is the main topic of the video?
-The main topic of the video is about how to start a software company or Software as a Service (SaaS) from scratch by yourself.
What does SaaS stand for?
-SaaS stands for Software as a Service, which typically operates in the web browser and is often paid for on a monthly basis.
Why are margins higher in a software business compared to traditional businesses?
-Margins are higher in a software business because there are usually fewer costs associated with it, such as inventory, shipping, and selling fees, allowing for margins as high as 99%.
What are some benefits of starting a SaaS business?
-Benefits include high margins, more control and security in business, and the advantage of recurring revenue which provides consistent growth over time.
What are some drawbacks mentioned for starting a SaaS business?
-Drawbacks include the need for more upfront work, potentially higher initial costs, and the learning curve associated with building and marketing the product.
What is the advice given for someone starting their first SaaS business?
-The advice is to not create something that has never been done before, but rather to find an existing product that has customers and offer a slightly different, better, or cheaper version of it.
What is Appsumo and how can it be used to start a SaaS business?
-Appsumo is a platform where startups can list their products with great deals. It can be used to find existing companies with successful products and understand what they offer to potentially create something similar.
How can someone validate their SaaS idea without building the software?
-One can validate their idea by creating a landing page and using a payment processor to collect credit card information without charging the customers. If people are willing to provide payment information, it's a good sign that they are interested in the product.
What is the recommended approach to choosing a tech stack for a SaaS business?
-The recommended approach is to use whatever coding language or technology the founder is already familiar with. If the founder does not know how to code, JavaScript, HTML, and CSS are recommended as they are the languages of the web.
How should pricing be determined for a new SaaS product?
-Pricing should be determined by looking at competitors in the same space and charging a similar amount or slightly less. The focus should be on understanding customer needs rather than overthinking the pricing model.
What is one effective method to get early customers for a SaaS product?
-One effective method is to identify where similar software products are getting their customers and participate in those communities by providing value, such as useful content or tools, and then mentioning the new product.
Outlines
🚀 Starting a Software Company: Pros and Cons
The video begins by introducing the topic of starting a software company from scratch. It discusses the potential profitability of software as a service (SaaS) businesses and addresses common concerns about the process, such as cost and complexity. The speaker outlines the benefits of high profit margins and greater control over the business, as well as the drawbacks, including the upfront work required and the initial costs. The video promises to cover ideas generation, customer acquisition, and the overall process of starting a SaaS company.
🛠 Choosing the Right Idea for Your SaaS
This paragraph focuses on the importance of selecting the right idea for a SaaS company, especially for first-time founders. The speaker advises against creating something completely new and instead suggests building on existing successful products by offering a slightly different or better version. The paragraph also mentions the use of platforms like AppSumo to find inspiration from existing companies and emphasizes the importance of validating ideas through landing pages before fully committing to product development.
💻 Navigating the Technical and Business Aspects of SaaS
The speaker discusses the technical side of starting a SaaS company, recommending that founders use the programming languages they are already familiar with and not to worry too much about scalability at the early stages. The paragraph also touches on the ease of learning to code and the use of no-code tools for those who do not know how to code. Additionally, it addresses the common concern about pricing, suggesting that early pricing strategies should be based on competitor analysis and emphasizes the importance of focusing on customer needs rather than getting hung up on technical details or pricing models.
📈 Acquiring Early Customers for Your SaaS
The final paragraph of the script provides insights on how to acquire early customers for a new SaaS product. The speaker suggests identifying where similar software products are gaining their customers and engaging with potential users in those spaces. The paragraph highlights the importance of providing value and being helpful to the community before mentioning the new software product. It also encourages the use of the software itself to create useful content that can be shared with the target audience, thereby attracting early adopters.
Mindmap
Keywords
💡Software Company
💡SaaS (Software as a Service)
💡Margins
💡Control and Security
💡Recurring Revenue
💡No-code Tools
💡MVP (Minimum Viable Product)
💡Landing Page
💡Tech Stack
💡Pricing Strategy
💡Early Customers
Highlights
Starting a software company can be highly profitable, but it may seem daunting and expensive for beginners.
SaaS stands for Software as a Service, operating mostly in web browsers and often requiring monthly payments.
SaaS businesses can achieve very high profit margins, often reaching up to 99%, due to lower operational costs.
Software companies offer more control and security compared to platform-dependent e-commerce businesses.
Recurring revenue from SaaS models provides consistent growth and reduces the risk of customer churn.
Starting a SaaS requires more upfront work, including product development and marketing.
The cost of starting a SaaS is decreasing due to no-code tools and easier access to coding education.
Even without a computer science degree, it's possible to build a SaaS by learning the necessary coding skills.
For a first-time founder, choosing a software idea that already exists and improving upon it is recommended.
Appsumo is a platform to find successful software companies and understand their offerings for inspiration.
Validating a SaaS idea can be done using a landing page without building the actual software first.
Choosing the right tech stack is crucial; starting with what you know is better than overcomplicating.
JavaScript, HTML, and CSS are recommended for those new to coding and looking to build web applications.
No-code tools like Bubble or Webflow allow non-coders to build functional SaaS applications.
Pricing strategy for a SaaS should be based on competitor analysis and can be adjusted with customer feedback.
Early customer acquisition for a SaaS can be achieved by engaging in communities where potential users are active.
Providing value to communities, such as through useful content or tools, can lead to organic customer growth.
The video offers insights on overcoming common challenges faced by solo founders starting a SaaS business.
Transcripts
hello and welcome in today's video we're
gonna be talking about how to start a
software company from scratch by
yourself so you probably heard about you
know starting a software company or
starting a sas and you know how
profitable it can be which it is and you
may not know where to start where to
begin you know is it too much is it too
much to do is it too expensive so i want
to jump into all that kind of stuff the
pros the cons drawbacks uh you know how
to actually do it how to get customers
how to come up with ideas we're going to
be covering all of that in today's video
so strap in and let's get started
so first off a very brief definition of
what exactly is a software startup or a
software company or sas these are all
kind of the same thing uh sas stands for
software as a service and there's a lot
of
a lot of them out there basically most
sasses operate in the web browser online
and most of them are paid monthly now
there is you know probably lots of free
sasses that you've probably used there's
a ton i mean basically any piece of
software that you use on the internet is
probably a sas or software company in
some way shape or form so you've
probably used them you've probably seen
them
odds are they're making a lot of money
and the thing is you could too so let's
talk about the benefits of starting a
status and then we'll talk about the
drawbacks because there are some
drawbacks
the benefits are it's very high margin
so in a traditional business you know
maybe you have a physical product
business e-commerce shopify fba whatever
uh your margins are usually maybe like
30
so you know you have to buy inventory
you have to pay selling fees shipping
there's a lot of costs associated with
running a traditional business
with a software there's usually not as
much of a cost
you can honestly get margins as high as
99 and the great thing about that is you
know if i say i'm making 100k in revenue
on my amazon business or my shopify
business i'm probably only making
thirty thousand dollars in profit but if
i say i'm making a hundred thousand
dollars for my software company i'm
probably making a hundred thousand
dollars in profit and that's the great
thing about it is the very very high
margins so you make the same amount of
profit with three times less revenue
with software companies so it's actually
a lot easier to make a good bit of
profit the next benefit is you have more
control and ultimately more security in
your business
when you build a business on another
platform like shopify or amazon or
anything like that uh you you kind of
are at the mercy of a large faceless
corporation being able to kind of just
shut you down at any point in time and
so that was something that you know i
dealt with and something i didn't really
like and so i see this as a really big
benefit of starting your own software
company is that you don't have to worry
about being suspended randomly you are
in more control you know you have direct
access to your customers you can talk to
your customers you can see what they
need you can sell them more products you
can sell them upgraded packages et
cetera so it makes uh makes it so that
you are in more in control of your
business and you have more security um
because you also have that recurring
revenue right it's um your customers are
sticking with you month after month
they're paying you every month it's not
just you have a customer come in and
then they disappear so you have that
recurring revenue and i would say that's
probably a third benefit is that the
recurring revenue but that kind of ties
into the security uh you know it's more
consistent over time you know it's it
doesn't go like wild ups and downs you
have a very consistent growth over time
as you get more and more customers so
let's get into some drawbacks because
there are some drawbacks and one big one
is that it requires probably a bit more
work up front you know it's pretty easy
nowadays to just throw up a shopify
store or some website and sell some
random product out of china um when
you're starting a sas there's a little
more work to be done obviously building
the product is more work usually but
there's more work in terms of getting
customers and doing marketing and things
like that
so i would say that's potentially a
drawback though what i've seen is even
with
these more easier business models
they're becoming harder and harder
anyway and the way i see it is starting
a software company is actually becoming
easier and easier there's a lot of tools
and other pieces of software that make
it a lot easier to get your software
company up and running now another
drawback that you probably have already
heard of is that it's more costly to
start and that actually depends i would
say it's becoming less and less costly
as time goes on because of all these
different no-code tools and the fact
that learning how to code is becoming a
lot easier so even if you don't know
anything about how to you know create a
software product you can actually learn
pretty quickly and really inexpensively
you know you don't need a computer
science degree to build a sas i don't
have a computer science degree and i
built a sas i learned how to code over
the span of a few months and i learned
what i needed to learn to build a sas so
you don't have to learn everything about
everything you don't have to learn about
binary or machine code or all this stuff
but you just need to learn what you need
to learn in order to build an actual
working product
so it's actually i would say less costly
than it's been in the past and that cost
is continuing to come down and if you're
doing all this solo by yourself you can
pretty much do it for free right you may
have to buy a domain name or you know
pay a few bucks a month for hosting or
something like that but ultimately you
can do it for nearly for free but that
is if you do all the work yourself so
that's like kind of tied with the other
drawback is you know it's a lot of work
but you can do it for free if you
actually go out of the way and learn the
stuff that you need to learn so those
are the kind of some pros and cons but
let's actually talk about how to start a
software company the first thing that
you need is a topic an idea a market a
user base
and the best way that i think to find
one especially if this is your first
software company i'm going to plead with
you don't make something amazing okay
don't make something that's never done
before because if you're making
something that's never done before you
know starting a sas is hard enough
don't make it more difficult on yourself
what you need to do is not pick
something that you personally like or
that you enjoy you need to pick
something that users
want or need okay the best way to do
that is to look at existing software
companies that already have a bunch of
customers and look at their core product
offerings and just do one slightly
different slightly better slightly
cheaper whatever and go with that
because that's going to be a lot easier
because the thing is early on if you try
something really hard and you fail
you're going to be demotivated you're
probably just going to quit all together
whereas if you can start small
and you can get little wins as time goes
on those wins put you into a positive
feedback loop and you you get rolling
and when you do run into a roadblock you
can just crash right through it and keep
going honestly most sasses fail because
the founder picked something that was
too hard or something that people just
genuinely didn't want
so i plead with you again if this is the
first time you're building a software
startup pick something that's already
been done and just do it slightly better
do it differently do it at a cheaper
price point something like that a lot of
really successful you know sasses and
i've reviewed them if you look at some
of my older videos i review a lot of
sasses and a lot of them are not making
anything new they're just taking
something that's already been done by a
larger company and doing it slightly
better a great place to find existing
companies that are already launching
already going is on appsumo appsumo is a
place where you can list your startup
and you can list like a really great
deal and i would just look for software
on there that you know has a decent
amount of reviews so that you know it
has these amount of sales look at what
they're offering and see if you could do
something similar and that's honestly i
think the best way to start your first
sas because odds are your first sas is
going to suck and you should just kind
of accept that like it's not going to be
the best thing that's ever graced the
world um but maybe after you've done a
few of them you might actually be able
to make something really cool really
amazing and groundbreaking but you know
for your first test you really just want
to
get your feet wet and understand how the
whole process works and it's great to
not have to worry a ton about you know
is this product actually something
people want i don't know
you already know because you find a
product that is already selling and if
they can sell it so can you if you're
liking the video thus far be sure to
like subscribe if you haven't already
that's all i have to ask from you so
back to the video now if you don't want
to heed my warning and you want to start
something grandier or new
validate your idea and what i've seen is
as a great way to validate idea is to
not actually build any of the software
uh just put together a landing page and
there's plenty of landing page builders
out there they're like 10 bucks or less
some are free and allow
the software to take credit card
information but don't actually charge
the card so you can basically charge
your customers
and
you know not actually charge them but
they'll put out their credit card
information what that means is that you
have found someone that's willing to pay
for whatever it is you're describing on
your landing page so you describe the
software uh you know put in some details
about it what it does if you could get
someone to pay for it that's pretty good
validation that you've found a product
that people actually want to spend money
on and then you know again you don't
process the card because you don't
actually have the software built because
you could throw all this together in a
weekend you throw together a landing
page with a payment processor very
quickly all you have to do is send them
a notification says hey you know we're
not quite ready but we'll email you when
things are up and running we can
obviously tell them you didn't charge
their card and it's a great way to
verify that your idea is going to work
if you're able to get paying customers
when you don't even have a sas product
built
once you have it built it should be
pretty easy to get customers now i want
to switch gears for a sec from the
business side and talk about the tech
side because this is something you know
as a solo founder you have to do both
you have to worry about the business
side we also have to worry about the
technical side
so from a technical perspective i think
personally it's a little easier than the
business side i think they both have
their ups and downs uh but a lot of
people are worried about the tech stack
you know what language you know and what
frameworks and what libraries
the answer is if you already know how to
code whatever you already know how to do
is going to be the best thing to start
with do not worry about can this scale
to a million users worry about can this
work at all
once you get to you know 10 000 users
then you can worry about building
something that scales what you need to
do at this point is be able to build
something that actually works for a user
uh so build something that doesn't
necessarily scale and and if you get to
a point where you need to scale later
you can rebuild the platform it's not a
big deal lots of i mean basically every
software company rebuilds their platform
at some point that's just what happens
because early on you shouldn't spend a
ton of time building out this crazy
advanced platform so as far as tech
stack goes whatever language you know
you can probably use if you don't know
how to code i would recommend javascript
html css because those three are the
languages of the web and you're building
an application for the web and so
those are the languages that you're
going to want to know in order to build
sas and most sasses are built using
javascript
and that's what i use for all of the
software that i build pretty much
nowadays unless i'm using python i might
use that for ai so if you want to do
like artificial intelligence do
something there maybe use python maybe
not now if you don't know how to code
you can either learn and honestly it's
gotten a lot easier to learn how to code
i'm actually putting together a course
right now to teach how to code and also
how to build a sas from a business
perspective because again there's two
sides um but there's plenty of courses
out there there's plenty of free
information out there to learn how to
code and i would recommend javascript
with html css those are going to be kind
of the go-to to build most sasses that's
going to get you 80 of anything you
might want to build on the web can be
built with that combination if you don't
want to learn how to code you can still
make assassins i mean you can use things
like bubble or webflow you can actually
build a good bit of stuff uh using those
tools and you can't build
everything you can't build like really
complex stuff but you might be able to
build something
that you can use to kind of get the ball
rolling get some customers
and then make some money and then maybe
from there you can talk about you know a
co-founder or hiring somebody but at the
very least you can get an mvp up and
running even if you don't know how to
code so all in all just don't get hung
up on the tech stack just use what you
already know and if you don't know then
you can learn or you can use a no code
tool another big thing that people get
hung up on is the pricing and i don't
understand why
you know pricing especially early on is
really easy you just look at your
competitor and how much they're charging
and then maybe charge a little less or
charge the same you know don't get hung
up on these things really early on the
thing that you need to be focusing on is
what does the customer want and how can
i get that for them you don't need to
worry about your pricing model you want
to be worried about your tech stack you
need to be worried about how to get
customers where those customers are and
what those customers need and that's
really it
you can split test pricing as you go
along you can try different pricing
models you know the dollar trial or
freemium version or a free trial there's
a lot of different ways
but really for your first sas is
look at what the competitors are doing
in your space look at a similar software
company what they're doing and what
their pricing is and then that's it
again you don't need to spend a ton of
time thinking about this it's a waste of
brain power when you can honestly just
look at what your competitors are doing
go from there and then just focus on
your customer okay the last thing i want
to hit on is actually how to get your
early customers how to get your first
customers now i've done a few different
videos about how to get your first
customers and usually when i review
assass i talk about how that particular
sas got its first customer so i have
plenty of videos that you can look at to
kind of get inspired on how to get
customers but i think the best way to do
it is to just figure out where similar
softwares are getting their customers
and go to the same place
or go to the place where the users hang
out right so if you're building a sas
and
you know there's a facebook group that
uses a similar software and you've made
your software that's got kind of a
unique edge or you know it's slightly
different or it's a little bit better
you know post something useful and
helpful in that group and then mention
your software because most groups
especially on facebook reddit forums
they don't allow you to just go in and
uh you know sell your products like hey
guys come buy my stuff you can't do it
like that you have to actually provide
something useful and valuable and then
usually you can mention that you have a
product that you know does exactly what
you're looking for but if you can
you know what's bonus points is if you
can use your tool that you built use
your software to generate something
that's really useful for you know a
group or a forum or whatever and then
post about it and then just mention that
hey i got this from this software that i
started that's usually the best way to
go about getting customers early on is
just
show them how your you know software
works and make it genuinely helpful and
you usually can get you know a good bit
of customers just doing that so i know
this video is kind of long but if you
have any other questions just drop them
in the comment section i'll be happy to
answer them and that's all for this
video so i'll see you in the next one
bye
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