I got done with all my planned tasks early on Friday, so I decided to do an anonymous AMA (ask-me-anything) on Twitter :) Here is what went down:
Choosing a startup business idea
“How did you decide to build your current SaaS venture? Identify customer needs & willingness to pay for it?”
"How to build sustainable revenues/earning when choosing lifestyle first work?"
Most people will tell you to solve your own problems, and then find others like you to sell the solution to. This is good in philosophy, but horrible in practice. If you want predictable income that scales while you sleep, you need to choose large, fast growing markets, and the rest will follow. Stay away from high risk, high reward ideas - which are usually b2c tools, marketplaces, social networks etc.
My first SaaS idea in 2018 was a “Calendar Analytics Tool”. I built a plugin that will go through all your calendar events, and then give you a report that shows you how much focus time you have, how much time wasted in meetings etc. Personally, I loved the tool! I was using it almost daily. I launched it with great fanfare on ProductHunt after hard work of 3 months. I earned $45 in total sales!
And that is when I learned to simply follow the demand. I have written about this topic exclusively here before. Once you shortlist some ideas, do some customer interviews to understand the real pain points customers have in that industry. Read this book called “The Mom Test”.
"Have you failed previously at building a SaaS before Kaapi? If yes, what's the point you decided to stop working on the product?"
I have been part of early stage SaaS twice before in my career as an early employee. Kaapi is my first stint as a SaaS founder. When do you stop is fairly simple! Either one of these two things should be true -
- You find the industry / work / problem statement boring
- Nobody is buying your product. If you have built a simple email tool, and other email tools are growing fast, then maybe you need to look at your sales skills & strategy.
On building a micro / sustainable SaaS business
“Those who take the VC route too are doing it for financial freedom/early retirement. Same destination- different paths?"
I am getting sick of saying this, but lemme repeat myself :) I do not think VCs are evil. Neither is that path bad. VC vs Bootstrapped is a wrong debate to have.
Both paths work, if applied in the right context. My rants are usually about the media & startup ecosystem fooling starry eyed youngsters into thinking that raising funds is the most desired path. Just know the rules before you play the game.
“What's your current lifestyle burn rate? Are you able to recoup all the money from your business or eating into your savings?”
Me and wife keep our best to keep our monthly expenses super low. We track everything on YNAB. We are currently living 100% remotely, with a new base every few months. Monthly expenses would be roughly $1000. Kaapi is roughly at $900 MRR today!
I need to get it to $5000 MRR to be able to pay for vacations, insurance, save some money etc.
"Don't you sometimes fear 'failure'? What if.."
All the time! But there are enough ways now to derisk yourself. There are four possible options in front of you -
- Do side projects, and quit only when your projects are making good revenue.
- Do consulting / services to pay for your SaaS product. I have personally been applying to jobs now and then to make sure I don't run out of money
- Get a high paying job, and save at least for 18 months of low burn runway
- Lean on your family to pay for your bills. I survived on my wife's business revenue for the first few months of Kaapi. I also stayed with my parents for 2-3 months to save extra money. Only now (April ‘21) has Kaapi MRR grown enough for basic groceries + rent.
Do not put yourself in a desperate situation. That will stop you from playing the long game. Always have options in front of you.
“How did you decide between setting up a C-Corp in the US? LLC? Why not India? How did you go about doing the whole process?”
I had a pretty bad experience with my last Indian company. There is just way too much bureaucracy attached to running a company in India. I used Stripe Atlas to quickly set up a C-Corp in Delaware. Choosing an LLC will actually further reduce your admin hassles, and it is a great option if you are looking at keeping your shop small as an independent contractor.
It’s not as if these issues go away when you have a US entity as an Indian citizen. But let’s hope that I have chosen the lesser of two evils.
On the Localoye days
Context - Localoye was the name of an online services marketplace I founded in 2013. Raised $5 million from top VCs. Shut it down in 2017.
"What did urbanclap do differently than local oye to succeed?"
Urbanclap (now Urban Company) built a better product than Localoye - and they made sure they didn't burn out all their money. I am sure their unit economics was better too, especially after they moved into a full stack marketplace model.
Raising money is easy. Deploying it well is super tough.
"Did you try selling to UC or finding an acquihire for your team?"
Of course I tried selling Localoye to bigger startups like Urban Company, ShopClues, and Flipkart etc but nothing materialised. My name in the market as a founder was pretty bad around those months. Localoye was a distress asset with nothing unique to sell.
Businesses are bought, not sold.
"What did the investors say after you shut down? Do you feel a moral obligation to return the money?"
The VC investors moved on fairly quickly. It's just another failed punt for them. I returned as much money as I could to angel investors + all laid off employees got 2.5 month severance package.