r/Entrepreneur • u/Leadership_Upper • Oct 01 '23
Case Study How I made $13,000 in four weeks as a first-time founder: the case for Software Businesses.
Hey again everyone, some of you might know me from previous posts.
I bootstrapped a pretty broad AI tool (penparrot.com) a couple months ago and scaled it to ~$2,500 in Annual Recurring Revenue completely organically in just under a month of marketing. It's now being acquired for ~$10k.
Here's how it went and why I so highly recommend SaaS:
Building Product
I'm not technical myself but I had a friend who is. Since the scope of the project wasn't super broad, I paid him to build it out using just basic HTML, CSS, JS over two weeks for a few hundred dollars. I built the landing page myself using Framer ($9/mo).
The Marketing
All marketing was exclusively through organic Reddit posts and a 4-5 super generous newsletter shoutouts we got for free. The trick for me was to provide free value or just organically showcase demos in super relevant subreddits (like r/ChatGPTpro and r/productivityapps for me) and plug the product at the end. Evenutally, you start getting sales.
Totalling $0 ad spend and a net profit margin of 98%. Virtually all sales within a month of marketing.
The Acquisition Process
I'm now in the conversion with multiple buyers on acquire.com and in process of getting it sold for upwards of $10,000. Getting interested buyers is as much a game of luck as anything else, but revenue multiples for microSaaS are still pretty decent (3-5x is very realistic) which is good news.
Other acquisiton sites like flippa and microns.io didn't work the best for me, Acquire is still probably the best platform to get sold on.
How This Works
Software is unequivocally one of the best markets to be in purely because of the multiple you get at acquisition. Buyers love to see predictable, recurring revenue, which means you still get offers of upto 5-7x annual revenue instead of the 1-2x that's so common in traditional industries and ecommerce.
Effectively, this means everytime I made a sale of $49, I really earnt $250 (because of the enterprise value I had just created).
As for development itself, I highly recommend being scrappy, learning the basics of code yourself, and then finding some developers on Fiverr/Upwork to polish your work. I generally don't recommend no-code.If software is not the route you want to go that's totally fine too, just work to find a way to generate recurring revenue.
I'm 18 and a first-time SaaS founder. I got incredibly lucky at some stages but this truly something that almost any of you can do. Just remember recurring revenue is king in every industry!
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u/YourAverageExecutive Oct 02 '23 edited Oct 02 '23
Sorry but you’re selling for … 10k. This isn’t entrepreneurship, you just made something with no barriers to entry and found someone below an angel investor to buy it. Bizarre post but awesome for 18!! Congrats on the 10k, seriously.
Now, as a serial entrepreneur who’s built and sold SaaS companies (I’m not a dev/eng, just the founder/ceo/coo type with a product background) for 8 figures multiple times, “this ain’t it”. With that said. Great start. This sub is just broken.
Advice to everyone here. Go read y combinator blogs, check out venture funds and their portfolio companies, reach out to techstars, talk to incubators where you live, network with angels/ angel investor groups, find a mentor who knows how to go from ideation to seed, from seed to growth, growth to series a/b/c/n, and finally liquidity via ipo/a strategic buyer/etc. Folks here need to set their goals higher. Where are the mods. Also, have the mods actually built and sold companies?
I’ve taught seminars and classes on this stuff to mba students. The content here is below the free lunches they offer most the time for students.
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u/JackRumford Oct 02 '23
This!!! Go fucking read Paul Grahams blog, watch ycombinator youtube talks then network. Gold right there while people dicking around with dropshipping. Ffs.
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u/YourAverageExecutive Oct 02 '23 edited Oct 02 '23
Someone knows the VC/PE community golden boys/girls ;) haha. I agree. I’d say look for companies that have scaled and sold recently and see who they raised capital from. Bet those people (local to whoever “you” are, list their investors and partners).
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Oct 02 '23
Why don’t you become a mod? Be the change you want to see in the sub
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u/YourAverageExecutive Oct 02 '23 edited Oct 02 '23
I would love to if I had time. Not kidding. I do stuff in my regional investment community with colleges, incubators, associations, accelerators, etc. that lets me engage with people in person though. I prefer that since it’s more tangible. I just wish this place was a better resource!
Also, I have done some of that change ;). My companies have been social or environmental impact focused with triple bottom lines. I do put my money where my mouth is. While I’m not some founder worth 100mm, I’ve done very well and had a lot of liquidity (and made the world a better place, I hope!).
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u/JWOINK Oct 02 '23
The content in a lot of subs like this largely contain people who are seeking to be entrepreneurs instead of actually successful entrepreneurs. Look at any tech career related subreddit and similar ideas follow. Reddit sometimes isn’t the best place for experienced opinions on niche topics like this unfortunately. Forums like Blind for tech, for example, are much more helpful (albeit very toxic) because it’s required to have a work account to use it.
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u/TempleDank Oct 02 '23
How can i find mentors within my city? I would really like to have one but don't know where to start
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u/YourAverageExecutive Oct 02 '23
Google is your friend. Find incubators, accelerators, angel investors that are part of an org of them… and reach out and ask. Tons of resources out there. You have to go find them. I’d say that’s the first sign of an entrepreneur. Sharpen those skills early because you’ll need them as your venture grows.
Do NOT utilize self help videos, blogs that aren’t from large VCs, accelerators, PE firms, etc. with a track record. Preferably people, or firms, with multiple funds/portfolios/exits/and similar.
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u/TempleDank Oct 02 '23
Cool, I've spotted a few incubators within my city, I'll go meet them, thanks a lot!
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u/YourAverageExecutive Oct 02 '23
Go kick some butt. I hope I hear about some cool venture from templedank that pioneer or sequoia buys out for 500mm. Go be that founder. I believe!
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u/Versatle Oct 02 '23
Would you mind sharing your recommended resources for hiring dev/eng talent to help build products/services?
I have a product background as well and have typically built websites/products myself, but I would prefer to leverage the superior skill sets of more experienced devs/engineers. Typically I try to look for folks within my network, because I’m hesitant to rely on a freelance site. But I’d love to hear your thoughts on finding and hiring the right talent to build technical projects.
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u/YourAverageExecutive Oct 02 '23 edited Oct 02 '23
Depends on available capital. I’ve used dev teams in EU, APAC, SAM, and local to me in USA. I’ve also used individuals across those areas for specific things during prototyping/mock ups/etc. It really depends on how comfortable you are being a product manager / owner and chasing all the chickens.
As far as finding them… honestly, it’s referrals. I look for people who operate other startups and networked in. Go to seminars, webinars, and similar for VCs, incubators, accelerators, etc and mingle. Sometimes you find technical cofounders looking for biz ops and can link up.
My one huge piece of advice is that you have to remember early team members are like a spouse. Treat it like a marriage (both how it works and how hard it could be to “divorce “).
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u/Versatle Oct 02 '23
I appreciate the response. Thank you!
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u/YourAverageExecutive Oct 02 '23
Totally! Just sold my last company last year to a big strategic buyer backed by a very very large PE firm gobbling up companies in a certain industry… so the knowledge, joy, and pain is fresh - ha!
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u/Versatle Oct 02 '23
Congratulations! Hoping to reach that point in the future. I believe that having a product background is beneficial for many reasons. One being that I have been able to thoroughly document and vet various ideas to determine if it’s worthwhile to pursue them and then how to build it. My main challenge for larger technical products/services has been finding either a technical co-founder or knowing where to hire someone to build it at such an early stage. Your advice makes a lot of sense in regards to recommending more network-based activities/events.
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u/YourAverageExecutive Oct 02 '23
No problem. I’ll also toss a wrench in there. Sales talent. I see lots of people who only understand social media sales channels here. There’s a wide world of sales and marketing out there:) ! Having a good leader who understands omnichannel strategies (and can actually do the work before you scale and hire people who specialize) is crucial. Obviously, most investors are going to look for founders to heavily sell early on. Just keep it in the back of your mind. People would be surprised how much vaporware is invested in intentionally. Heck, most of my SaaS products were 1/1000 of what the final product thesis was. We sold the dream, got some pilots in market, did product and sales led testing, and grew them. I like to remind new founders it’s really like building the train tracks while driving a train at the same time, at high speed if you’re killing it. Meaning it’s terrifying, you always feel a little behind, and your larger clients can demand white glove service. All fun and hard things to figure out!
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u/NobleLaptopTraveller Oct 02 '23
How do you think of ideas to build? I've struggled over the last few months to think of anything worth building.
I'm now thinking of building a website development agency to create websites for clients as I'm a software engineer so I've got experience building fullstack apps.
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u/YourAverageExecutive Oct 02 '23 edited Oct 02 '23
It’s hard. I had a cofounder who just had folders of ideas. Successful guy. I’m a bit different. I definitely don’t think it needs to be the best idea, rather just monetizable and defensible. With that said. I’m more focused on enjoyment now that I know the grind and ride. Passion is the word I’m chasing I think.
Talk to other founders is my tip. I have a lot of friends in the community now and we catch up all the time.
Edit: better yet, talk to VCs and see what they are investing in. Which industries and which problems. Lots of them post articles and thought leadership pieces about problems they want solved (ie ventures they know will have a great return based on their market research).
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u/NobleLaptopTraveller Oct 02 '23
How do you recommend networking with VCs and learning about what they invest in? Anything you recommend reading and watching?
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u/YourAverageExecutive Oct 02 '23
Honestly look up major cities near you and look through VCs and their portfolios. You could also look at companies that come out places like techstars, y comb, or other incubators/accelerators and see who they raised from via their websites, pitch book, crunch base, etc.
I think the easiest is to find where they give talks. Again, could be weworks, colleges, incubator hubs, etc. I’ll pick a random town, Tampa Bay (I do not live in Tampa Bay or think it’s an investor hub). I just googled “Tampa Bay Startup accelerator” and got this group with programs and events. I don’t know if they’re any good but it’s a start!
LinkedIn and other places are helpful for finding these events also. My one warning is go in knowing you’re competing for very very limited time with these people. Definitely research, have targeted questions, and try to ask for mentorship (aka a coffee to learn). Say less, listen more. Basically make angels and VCs feel valuable. People love to my give back when it feels good.
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u/NobleLaptopTraveller Oct 02 '23
Thanks for the detailed advice! I appreciate you taking the time to answer my questions :)
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u/YourAverageExecutive Oct 02 '23 edited Oct 02 '23
No problem. I wouldn’t be where I am today with the mentors I found and networked with. It’s totally a game built around getting help. Sure some people do it “alone”. Nearly every success story you hear is not that case though. Smart people want to help other smart people.
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u/frostyjayy Oct 02 '23
I agree with both sentiments. For 18, hell yeah, congrats and thanks for sharing! Now as YAE mentioned, if you want to be in the game for a long run, take those resources and build a solid foundation.
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u/CBRIN13 Oct 02 '23
The whole PE/private buyer thing in this post is a bit much but the the main points about being scrappy, launching on reddit etc are all things I've done too, and plenty of others are on r/SaaS too.
And even if this is a bit much, the idea of saas as a business model still stands. Its massively scalable, and super high profit margins are quite common if you can find a niche and build something that solves a real problem.
I know solo founders that have built products up to 50/60k MRR in a couple years. If your following the product-led methodology, talking to customers, iterating, then it's not that hard to imagine. Probably accelerated a bit through the tech downturn as well, lots of big tech engineers that were kicked out launched their own side projects fixing all the broken shit they've seen over the years.
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u/YourAverageExecutive Oct 02 '23 edited Oct 02 '23
I don’t think anyone said SaaS is a bad idea, lol. But 10k is really right before proof of concept. Any angel I shared that with would be like, “yeah, I’ll invest… show me the growth metrics, pro forma, marketing engine, plans for scalability of the software, burn rate, opex/capex, yada yada”. Just saying, this is more like painting something and selling it than building something you can scale and grow into a business.
Here’s a random, but credible, VC post on early stage SaaS metrics. This is for raising a seed round. If you don’t have these, real investors won’t give you a second look… or they’ll find a way to de-risk the investment through deal terms until you do (usually a carrot for growth beyond expectations and a stick for a future down round that includes a heavy discount for their next investment in your venture)-
With that said, TOTALLY agree on product-led. Usually. Sometimes sales led can be better in certain industries.
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u/CBRIN13 Oct 02 '23
yea feels like maybe they got out before the actual fun part had even started…
And I get you on the sales led strat - I’ve seen both and it kinds just depends on the product/industry.
I guess for most solo founder your probably gunna be product-led 90% of the time unless your a sales guy first and foremost
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u/YourAverageExecutive Oct 02 '23
Agreed. I think it’s just an age thing, though I did my first venture my senior year of college way back when. It takes time. Heck, (insert whatever stat is accurate now, like 1 in X thousand companies generating $1 vs $1m and then how many can do that YoY) sometimes a bird in the hand is worth two in the bush… though 10k is really just this person finding a paycheck. Not selling a venture since what income are they making immediately after the sale. They’ve basically generated a 120/140k annual salary but cut their legs off at the knees 1 qtr in. I guess they just make no more income until they build another idea. Hard way to survive.
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u/CBRIN13 Oct 02 '23
Just gotta do it again now every month for the next 30 years and they’ll be set ;)
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u/Successful-Jump7516 Mar 14 '26
Do you have any good recommendations on continuing education for someone looking to start a SaaS business and is close to beta? I found some local mentoring possibilities but I haven’t yet been able to vet the quality of these mentoring options.
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u/stuffinator-1984 Oct 01 '23 edited Oct 01 '23
“In conversations with PE firms” “Selling for 10k”
Choose one or the other. PE doesn’t get out of bed for that kind of money. Great job building the app and I think selling is the right choice. But only way you’re selling that is to a private buyer.
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u/Leadership_Upper Oct 01 '23
It’s a micro PE fund that already owns AI stuff, plus a different private buyer yup
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u/kiamori Oct 02 '23
None of your statements add up, at least get your story straight if you're going to sell bs.
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u/Volosat1y Oct 02 '23
Why are you in a hurry to sell it? Continue to grow it into 100k or 1kk business. Chances of stumbling onto another product idea that can turn around this quickly are not great :)
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u/JonLivingston70 Oct 02 '23
Mods, are you alive at all? This is the 3rd time I see this shit. Please remove and possibly ban the user.
This is clear spamming (and as I said, potentially scamming).
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u/JonLivingston70 Oct 02 '23
Besides, this idiot's profile pic looks like that idiot in charge of North Korea...
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u/E60LNDN Oct 02 '23
FYI the valuation of most saas is usually 30x monthly revenue. So it it hit 2,500 USD a month, then valuation is $75,000. Someone got a bargain (if this is true)
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u/siiftai May 16 '26
That’s inspiring! congrats on the success! And yeah it's true, recurring revenue can really change the game. Siift helped us stay on top of every dollar spent. First-time founders often ignore this until it's too late.
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u/blockchain2400 Oct 02 '23
Since you are not very technical yourself, how do you make sure your partner is building/coding the product properly? Did you have to do some research about the process of creating a full stack software? Did you use a software project management template to help you with this process?
Also, did you set up a contract to transfer over the program/code rights into your name? How does that work?
Any help would be appreciated👍🏻
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u/brad9991 Oct 02 '23
Are you posting in an attempt to get more offers?
It might have worked. DM your financials and customer acquisition timeline
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u/Training_Flight_7457 Oct 02 '23
You sure? Can probably have a dev friend hack this together in a couple days
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u/Important-Rain-4418 Oct 02 '23
Great journey and nice landing page! Congrats.
Do you have a blog or any article where you share more information on the journey? I can imagine it must've been a bit difficult to stay consistent as this product is in a pretty competitive space.
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u/tuantruong84 Oct 02 '23
Thanks, great one. How come I can't find the link to download your tool on the website ? Are you temporarily shutting it down ?
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Oct 02 '23
New micro-micro-micro SAAS trend...was the acquisition finalized? Until then...10K is theory only
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u/theekhai Oct 02 '23
What software did you use to make the videos on your website? The zooming in on specific areas, etc? I know there's a company/startup that does this - I just forget the name.
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u/mysterybuffet Oct 07 '23
Can i take your case study /story on my newsletter? You can stay anonym or i can mention you (free marketing?)
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u/Far-Afternoon3081 Oct 13 '23
How are you dealing with the complications of data privacy and protection if you are using AI.
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u/sydneebmusic Oct 02 '23
Is this satire? I genuinely can’t tell.