How to Build a Software Company From Scratch Solo

Summary

This 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

00:00

🚀 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.

05:00

🛠 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.

10:01

💻 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.

Keywords

💡Software Company

A software company is a business that develops, produces, and sells software products. In the context of the video, it refers to a company that creates software applications or services, often with the goal of providing solutions to specific problems or needs. The script discusses the process of starting such a company from scratch, emphasizing the potential profitability and the steps involved in its creation.

💡SaaS (Software as a Service)

SaaS stands for Software as a Service, which is a model where software is provided over the internet, rather than being installed locally on a user's device. The video explains that most SaaS operates in the web browser and is typically paid for on a monthly basis. The script highlights the benefits of SaaS businesses, such as high profit margins and recurring revenue.

💡Margins

In the video, margins refer to the difference between the cost of producing a product and the amount it is sold for, which indicates profitability. The script points out that software companies can achieve very high margins, sometimes up to 99%, because the costs associated with creating and distributing software are generally lower than those of physical products.

💡Control and Security

The terms 'control' and 'security' in the script relate to the autonomy and stability a software company has over its operations. The video contrasts software companies with businesses built on other platforms like Shopify or Amazon, where the business owner might be at the mercy of the platform's policies. Owning a software company provides more direct access to customers and control over the business.

💡Recurring Revenue

Recurring revenue is a business model where customers pay for a product or service on an ongoing basis, typically monthly or annually. The script mentions this as a benefit of SaaS businesses, as it provides a steady and predictable income stream over time, unlike one-time sales that can lead to inconsistent revenue.

💡No-code Tools

No-code tools are software applications that allow users to create applications or websites without having to write code. The video script discusses the role of no-code tools in making it easier and less costly to start a software company, as they enable individuals without a coding background to build and launch their own software products.

💡MVP (Minimum Viable Product)

An MVP is a version of a product that has just enough features to be usable by early customers, who can then provide feedback for future development. The script suggests that even without coding skills, one can use no-code tools to create an MVP and start getting customers, which can validate the product idea before further development.

💡Landing Page

A landing page is a single web page that appears in response to clicking on a search engine optimized search result or an online advertisement. The video script describes using a landing page as a method to validate a software idea by collecting payment information from interested customers, which indicates their willingness to pay for the product before it's even built.

💡Tech Stack

A tech stack refers to the combination of software products and programming languages used to develop a software application. The script advises that the best tech stack for a solo founder is whatever they already know, emphasizing that early on, the focus should be on building a functional product rather than one that scales to a large number of users.

💡Pricing Strategy

Pricing strategy in the context of the video refers to how a company sets the price for its products or services. The script suggests that early on, the pricing strategy for a SaaS product can be as simple as matching or slightly undercutting competitors' prices, and that more complex strategies can be tested and adjusted as the business grows.

💡Early Customers

Early customers are the first users of a product or service, often crucial for providing feedback and validation. The video script discusses strategies for acquiring early customers, such as participating in relevant online communities and providing value before mentioning the software product, which can help build trust and interest.

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