Predictable mistakes of the developer-turned-founder
Aug 30, 2023
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In this podcast, Ben and Adam discuss predictable mistakes made by developers turned founders, including starting with SaaS, selling to consumers and struggling businesses, not pre-selling, assuming people are rational, not choosing a likeable customer, being comfortable with pricing, raising VC, and overfocusing on legal and compliance.
Starting with a free offering allows for practicing marketing and gaining buy-in before making sales.
Begin with selling one-time purchases instead of aiming for a subscription-based model.
Utilize platforms or marketplaces with built-in distribution to reach a ready target audience and drive sales.
Deep dives
Starting with Something Free
One of the main ideas discussed in this podcast episode is the importance of starting with something free when building a software business. The speaker emphasizes that beginning with a free product or offering, such as a tweet, blog post, YouTube video, or podcast episode, allows for practicing marketing, understanding people, and gaining buy-in without the pressure of making sales. It serves as a warm-up to test if people engage and find value in the content, preparing the foundation for future paid offerings.
Selling One-Time Purchases
The podcast highlights the value of selling one-time purchases. It is suggested that rather than immediately aiming for a subscription-based SaaS model, it may be more feasible to start with selling products or services that customers can buy once. These one-time purchases provide revenue without requiring ongoing maintenance or continuous value delivery. Additionally, this approach allows for fine-tuning the ability to sell, understand customers, and create products of value before moving towards subscription-based models.
Leveraging Built-in Distribution
The speaker discusses the advantage of building products in platforms or marketplaces that have built-in distribution. Examples mentioned include Shopify apps, iOS and Android app stores, and WordPress or VS Code plugins. Such platforms offer the benefit of already having potential customers searching for products or services, making it easier to reach the target audience and drive sales. Utilizing these platforms can provide a valuable starting point for entrepreneurs seeking to gain traction and generate revenue.
Choosing the Right Customers
The podcast emphasizes the importance of choosing the right customers when building a business. It is advised to focus on selling to businesses rather than individual consumers. Selling to businesses tends to result in higher willingness to pay, lower churn rates, and larger profit margins compared to individual consumers. By targeting businesses, entrepreneurs can tap into the demand for software solutions that simplify operations or provide value in a specific industry, increasing the likelihood of business success.
Understanding Risk and Funding Options
The speaker provides insights into risk considerations and funding options for entrepreneurs. Venturing into entrepreneurship entails certain risks, and it is suggested that bootstrapping may be a suitable choice for those seeking personal financial gains or a favorable work-life balance. Bootstrapping allows for complete ownership of the business and potential higher personal returns. On the other hand, raising venture capital may be necessary for those aiming for significant growth or impact, but it requires relinquishing control and adhering to investor expectations. Various funding options like TinySeed or Calm Fund may provide alternatives to full-scale venture capital investments while still providing some financial support.
So many developers (your podcast hosts included) make the same mistakes when trying to turn an idea into a business for the first time. In this episode, Ben and Adam talk through a bunch of these mistakes, why they matter, and what you should do to avoid them.
