A fresh perspective on the stages of building a SaaS business

February 20, 2021

EP1: Meet the guys + Nate’s first attempts with a SaaS business

Can you believe it? Nate has more than 3 failed startup attempts! On today’s episode, Josh pulls out the story and some interesting nuggets on what works and what doesn’t.
Searching For SaaS
Searching For SaaS
EP1: Meet the guys + Nate's first attempts with a SaaS business

Episode Resources

If You Have 10 {Unaffiliated} Customers in SaaS — You Have Something.


[00:00:00] Nate:  Hey, my name’s Nate. I live up in Ontario, Canada. I’m a software developer and I’m here chatting with Josh today. Joshua, tell us about yourself.

[00:00:44] Josh: I am Josh. I live in Maryland and just North of Washington, DC.

[00:00:49]  And I’m also a software developer  by trade. Although I’m at the point where I haven’t really coded too much lately. So it kind of puts me a little further on these SAS journey. I think that’s kind of one of the topics we’re going to talk about a few clicks down the road within my SAS journey.

[00:01:08]And yeah, we’re probably going to a bit about that over the course of episodes. So what about you Nate, on your SAS journey?

[00:01:16] Nate: Yeah. So  I’ve been trying in fits and starts to get a software as a service going. I’ve worked in a software as a service for awhile and at the moment I’m doing consulting some project management stuff and some design build stuff for clients.

[00:01:31]Yeah, that’s kind of where I’m at right now.

[00:01:34] Josh: Cool. So in your words, why did we start this podcast?

[00:01:39] Nate: We started this podcast because it is thinking hard to figure out what to build as a software product . what to build in like  what people will want. And there’s just so many factors going into it.

[00:01:52]I feel like it’s somewhat of a mystery and this is kind of a way to think out loud and tap into some of Josh’s experience.

[00:02:00] Josh: Okay. Yeah. I think, I think that kind of hits in a similar note for me.

[00:02:05] Cause we’ve already been having these conversations over the past six months or so as you’ve had your fits and starts with different ideas and things like that. So might as well record it. I’ve  always had in the back of my mind, you read my Twitter feed every six months or so. I’m like, I want to start a podcast, but I don’t have time.

[00:02:23] And everyone always encourages me to go ahead and do one. But at the same time, it just. Always ends up on the tail end of the priority list. So we’re talking all the time. We’re like, Hey, let’s hit record and see what happens.

[00:02:38] Nate: Yeah. Do you maybe want to talk a little bit about referral rock and what you’re doing over there? Just so people get a sense of what your experience has been.

[00:02:46]Josh: We are self-funded I am a sole founder. Although I did, I have picked up people to help me along the way I have a, now we have a team of 17 people as of. A few days ago.

[00:03:00] Nate: Yeah. That’s not,

[00:03:01] Josh: that’s not that little, that little it’s jumped a lot recently brought on our first product manager.

[00:03:08]We’ve added two new devs this week. That was the big job. So we are meandering into like low teens for, you know, probably a year or two. But yeah, that puts me, I’m been at this for. Yes. Technically the domain, if you look it up, it was probably registered, I believe in December of 2015.

[00:03:31] Nate: Oh, there you go.

[00:03:33] That’s a bit of a run.

[00:03:35]Josh: But yeah, but like startups and like you’ve done, I was in this space of where it’s meandering, right. Where I think the first year was was you know, customer interviews As we know in any ideation phases, I think of a lot of founders, we all probably have a bucket of domains.

[00:03:50] And for me the first time, I actually think it’s a reasonable idea. I registered a domain and it probably sits for a long time until I decide to do it. So that’s why that timeline of there. The next significant milestone is like, we’ll just beat up that the first paying customer was like June of 2000. 13 I believe.

[00:04:11] Nate: Okay. Yeah. And so like maybe just to give people a bit of an idea, what’s, what’s the one-liner of what referral rock is.

[00:04:19] Josh: Oh, that’s tough. The easiest way to explain it, as I explain it to those people is it’s referral marketing software. So refer a friend programs that if.

[00:04:32] Explaining it to mom, test types of people that it is you know, the same types of programs you see with like Uber and Lyft and Dropbox and things like that. You refer a friend and essentially we built platform to help businesses of all sizes and scopes just to run, run referral programs.

[00:04:53] So they get word of mouth, you know, maybe it’s incentive-based things like that.

[00:04:57] Nate: That’s cool.

[00:05:00] Josh: Cool. So let’s talk a little bit about you and your fits and starts. So I know about status list. I don’t even know if that’s the first.

[00:05:09] Nate: No, no, it’s not the first one. So way back I when I was working at a software company and I had this inventory management software who was basically like an ERP system, but like for small, small companies and I had one client for that.

[00:05:27] Right.

[00:05:28] Josh: About where did you get that idea? Was it something that. Like was that consulting? I know some things lead from consulting, but what it’d be that the owners of that.

[00:05:38] Nate: Yeah. So that came from a friend, a friend said, Hey, you know, my work sucks right now because I have this problem. And I said, Ooh, that sounds cool.

[00:05:45] I want to fix that. And Yeah. So they were my one and only customer quit my job to work on that. And yeah, it didn’t really pan out. So how

[00:05:58] Josh: long ago was that? What’s this

[00:05:59] Nate: the timeline, I think about two, two and a half years ago or so.

[00:06:04] Josh: Okay. So before that you were working full time, you got this arc of it idea from a friend and you’re like, this is it.

[00:06:11] I’m all in. Like, I can do this. There’s a pain here. I’ve, I’ve, I’ve listened to all the podcasts. I read all the stuff. This is, this is my moment. Yes,

[00:06:19] Nate: exactly. That. Whereas like, I’ve, I’ve read all the literature. This has gotta be it, you know, it’s going to be golden and yeah. Didn’t didn’t really work out that way.

[00:06:30] So I think that that’s what kind of led on the journey of this, you know, there’s no, there doesn’t seem to be a clear answer to how this stuff all goes together.

[00:06:40] Josh: We went through enough. Yeah. I could tell, I’ll tell you a little bit more about my previous, previous to referral rock. Maybe I’ll save that for a little bit later, but let’s, let’s stay on that on, on your trend right now.

[00:06:51] So, so how long, how long do you still have that? Is there still a customer on that?

[00:06:58] Nate: No. So they I, I basically told them that, you know, this wasn’t, this wasn’t working out and I’m not gonna build this software for one person. It’s going to be too expensive for you. And so we we sunsetted that and yeah, moved on

[00:07:12] Josh: for a little while.

[00:07:13] Nate: Yeah. So they were, they’re a customer for a full year. And they were using the system in house. It was working as they wanted it to They were by all accounts, very happy with it. The only thing that it just wasn’t sustainable to only have one customer on it, just the price point, just that it makes sense for a company that size, like they had, I don’t know, 10, 10 or 20 people working out this little manufacturing plant and you know, paying a couple thousand dollars for software every month.

[00:07:39] Wasn’t really in the budget for them.

[00:07:41]Josh: Okay. So it’s like a, two-fold like you needed to charge that much to maintain. Things. And, and did you try to market it to other companies or anything or,

[00:07:52] Nate: yeah. And so that’s kind of where I  fell flat and kind of realized my, my bad assumption which is.

[00:08:00] Yeah, building, they will come and that’s, it that’s pretty much what it was. Oh. And I had the perfect tech stack and all I analyze over there. Oh, it’s brutal. But yeah, I called, I called all of these manufacturing places and I went in to visit them and, you know, did every thing that I could think of.

[00:08:16] And they all said we hate software. Don’t come back and wow. I was like, Oh, well

[00:08:23] Josh: really? Like I’m going to do IOT stuff. I got QR code scanning mean, I’m sure. I’m sure your brain was like, Ooh, the stuff I could build and crossover physical and digital, and this could be a lot of fun.

[00:08:36] Nate: Yeah. And in fact, we had RFID and tablets built into the system.

[00:08:39] It was pretty neat.

[00:08:43] Josh: All right. So speeding up that, that sunsetted. You couldn’t find out any additional customers and essentially you’re in a, I guess, a no man’s land where they’re willing to pay, but probably not enough to keep it up. And essentially you’ve found it to be somewhat of a dead end of finding additional customers.

[00:09:03]Do you feel like it was like in a sweet spot where you said they were like 10 to 20 person company? So I would assume like massive. I hadn’t been touring management companies probably have potentially other software, but it’s these like smaller middling ones, like, well, We can’t spend, like you said, thousands of dollars.

[00:09:24] Nate: Yeah. And it was exactly that market I was going for. Cause I was kind of going off the concept of, you know, there’s, there’s larger players in the market, but they don’t have time to make their software easy to use for the little guy. Or they don’t have the price point that The little guy would like.

[00:09:39]And so I was trying to go downmarket from them and there was a reason that they didn’t go down market.

[00:09:45] Josh: Interesting. Cause we, you know, in, in past conversations we’ve always talked about having, having an insight or having a position, which I, you know, keep, keep harping on you and you have one, it wasn’t, it just wasn’t a, you had a position.

[00:09:57] It was like, I can do this. But the little guy, I can do this for the smaller, the smaller player.

[00:10:03] Nate: And I think, I think the biggest lesson with that startup it was called mortar Q the biggest startup for less than there was the I took too long to validate. I must have built for at least a year of like evenings and weekends.

[00:10:16] And I had this one customer and so I felt like I had enough validation that I could just go ahead. And I didn’t think that I needed to, like,

[00:10:28] Josh: you felt one was enough. Well,

[00:10:30] Nate: I thought one was proof that there is probably more right. . Nobody is so special that, you know, only they would like that software.

[00:10:39] At least that was my thought.

[00:10:40] Josh: Right. I mean, there probably are more out there, but the problem was access and like finding them. And if they’re not really looking for that type of solution, that makes it, you know, more challenging. If you don’t mind my sharing, some of my experience in those, some of the things you said resonated with me, was,  when starting referral rock,  it was a similar,  type of angle where.

[00:11:02] My first thought about it was finding there was a gap in the market and it’s because I thought no one was handling,  refer a friend programs for smaller SMB things too. So,  everyone was doing them for e-commerce or these big SAS companies . I knew all the competitors then.

[00:11:21] Cause I, when I even thought of the idea, it was like pick Google search away, like seeing, okay, who’s doing it for. Our dealerships, yoga studios, like service businesses, your local mom, and pop, exit that thing. So I’m like, cool. There’s an angle there. Yeah. What’s interesting is it did take me down a certain tunnel in the way we built the software, which today has actually given us quite a strong position


[00:11:44] Nate: so that’s neat. You went down market as well. You’re like, there’s these big companies that I’m going to build something smaller,

[00:11:50] Josh: sort of, yeah. It was more of like, they have a different process So, that thing is people were looking for still refer a friend programs, referral software. So that was probably the different thing.

[00:12:01] And our, our big  ability to  find customers. Largely through, intent. So people were doing search and as you know I’m not bad at I’ve done pretty well with that. I kind of knew a little bit about that even before referral ops. So that kind of aided in that and , provided early on all dependable customers.

[00:12:25] Yeah. Yeah. One of the other interesting things that resonated with me that you said too is like the, the one customer. So I went through the beta phase, we went through different types of things. I did the typical interviewed a bunch, actually. What’s funny is I interviewed a whole bunch. Like everyone, I knew I have my, my accountant the person that did my mortgage, all these small business owners that I knew.

[00:12:47] And all of them told me like, Hey, is kind of a lukewarm idea. So I. Can’t even say I followed the typical.

[00:12:55] Nate: He didn’t listen

[00:12:55] Josh: to them for customer interviews stuff. Yeah. So it was, it was, it was sort of funny. So  don’t take exactly my or advice necessarily. So

[00:13:04] Nate: that’s it, that’s interesting because that’s like the opposite of what most people say when they interview people.

[00:13:09] They know when people interview people, they know it’s typically. Oh yeah, your idea is awesome. And we love you. So we’re going to tell you how great your idea is.

[00:13:18] Josh: Right. There’s that,  other effect that people often talk about because they want to encourage you. No one wants to tell you, you have no idea.

[00:13:24] No one wants

[00:13:24] to

[00:13:24] Nate: be that person. Yeah. So you had a, an idea that people were lukewarm about and then .

[00:13:29] Josh: I  did a MVP in a very rudimentary way and. Because I’ve been burned enough on like little other projects that I’ve brought up. It was like, you know what, I’m going to make this the lightest thing possible, which I used, I think at that time, it might’ve been , like Wufoo forms, like, survey monkey, that type of thing.

[00:13:49] That was the admin interface for the whole beta. Like, so essentially I had people fill out a form, upload their logo. I asked them a bunch of questions and then I actually took the CSV file. And translate into  like an XML resource file. And then if it matched their name, under little subdued,  that’s the data it pulled up.

[00:14:09] So I didn’t even have a database. It was like, so, yeah. So, I mean, I could have done all that, but I was like, let me see. So the whole beta was that for like year I got people. How did you using it? So it was like, okay, I don’t know any of these. I initially sent it out to. People I knew

[00:14:28] Nate: Yeah, but I think that’s great that you spend such a short amount of time getting that thing off the ground because  I think that’s one of the pitfalls for a lot of us founders who are developers first, as we want to build this amazing, awesome piece of technology.

[00:14:43] And we don’t think about the amount of time it’s taking us to build that thing. Like, that’s what I did with that mortar Q thing is I had the perfect stack. It took me, you know, however long to build it well, and

[00:14:54] Josh: you like doing it, like you’re excited about doing it. It’s not to take away from that.

[00:14:57] Like shin it be great if those two aligned, but sure.

[00:15:02] Nate: But if the point is to, test an idea that may or may not work then often it’s beneficial to, to get to market quickly.

[00:15:10] Josh: Right. Right. So, so one of the interesting things, that’s just like when you mentioned the one customer, which still even all before that time, when we had the beta, before we got the paying customers.

[00:15:20] So that beta was like the first year, I would say that, that they said we registered the domain. End of 2015. It was essentially like here. Before I actually even had like, okay, there’s going to be a database and some other things. So that whole, first thing was like, you know, a beta list, launch, getting people, getting other, other ones to use a very rudimentary version.

[00:15:46]Nate: Yeah. And so all this time you’re manually doing that import for that first year. How many, how many people did you, did you import that way? Approximately?

[00:15:56] Josh: I think I had maybe 50. So 50, like people using it and again, it’s referral stuff that there was like no login. It would, it wouldn’t if all it really was, was just the sharing aspect.

[00:16:08] And yeah, I mean, it was, there was like barely any tracking. It was just kind of like, Hey, am I going to use this? And am I going to send it to other people? And they’re going to share going to have a, I refer , share my business.  I was basically just tracking,  , like, like any web I was actually using, I think Google analytics and some other things and  you can separate it out.

[00:16:28] I domain. So I would just like send them their stats and that was it. So yeah, like once a month. So it was like, again, how, how can I glue this together and not invest in it? As much as I want it to. Right. You’re just sitting there like, Oh, is this? And I was like, yeah, you know what? I’ll just, just like, Just kind of on the back burner.

[00:16:44] I don’t know if it’s just burnt out by too many other things, not following that. You just get a level of like, not too excited, I guess. Yeah. You just

[00:16:54] Nate: kinda, he just kind of fiddle around, get it working and then you kind of just leave it out there to see what happens.

[00:17:00] Josh: Right. So but yeah, the thing that was interesting after we got the first paying customer, and then there was , A few more.

[00:17:06] And I still  doubted it. It’s funny as I took a different tack that you, you were like, I have one and I’m going to the moon and I had left you and I’m like, Hmm, I don’t know. I don’t know. I had a more pessimistic , I don’t know if this is it. This is a thing. And what’s interesting is there was a.

[00:17:25] I don’t know if you read any of us Saaster stuff like Jason Lemkin is a lot of contents is one article in there that really hit home for me. It’s this one that says, like, if you have 10 unaffiliated customers, like they don’t know you. Yeah. I think as, as one of our friends called it, like stranger money is like, it’s like the whole business of that article is like, if you can get 10.

[00:17:52] You can get a hundred and it’s like, you ha you’re onto something. If you can get a hundred, you can get like 500. So it’s kind of like I had the 10, I had more than 10 at a certain point within a few months with the first penguin. And I’m like, Oh, Okay. Maybe, maybe, maybe I’m onto something. Yeah.

[00:18:08] Nate: Yeah. But you did also have , all of the people you interviewed telling you.

[00:18:12]I’m not really too excited

[00:18:13] Josh: about this, so yeah, maybe, maybe that’s what kind of pulled me. But, it’s funny as regardless of that, I did it anyway, so it wasn’t like it didn’t dissuade me enough. But I

[00:18:24] Nate: think it probably helps you in your building process because you didn’t go crazy and build all sorts of features.

[00:18:30] Yeah. I wonder if there was some benefit to you doing it that way?

[00:18:33] Josh: I mean, I think there definitely was because if it didn’t go well, I wouldn’t have probably felt too bad, you know, it was again, it, but this is all scar tissue, right?

[00:18:42] So you’ve got scar tissue. We’ll talk a little bit more of that in a sec, but like the scar tissue I had from before which I won’t get into too much today, but again, there were other projects and other things like that, that created that scar tissue. I think that,,  patient of like putting all the eggs in, or maybe getting my hopes up or getting.

[00:19:01] Too excited and sprinting down the street versus just like picking a more methodical, slower approach. And yeah. So I think that scar tissue is something that, you know, people see all the, Hey, this guy in indie hackers, Hey, he’s doing all this. Or the stuff on tech crunch, you just see the headline, you just see when they’ve flipped a bit or they’ve made a name for themselves.

[00:19:20] And all the, all the other stuff, this is kind of like. Why I think we’ll be really, this will be interesting because you’re in that phase, you’re not brand new, but you’re not like you have some, some scar tissue and you’re hunting and you’re, you’re looking, looking to find, to find your thing.