Forem: Jakob Greenfeld

Business Idea Framework: Strapping yourself to the back of someone else's rocket 🚀

Jakob Greenfeld — Fri, 11 Jun 2021 12:51:25 +0000

Hey,

I'm Jakob. I regularly do research on unique business opportunities and you can find all of my posts here.

Let's dive in.

💡 The idea

It's much easier to piggyback on someone else's success than to start something from scratch.
Examples include building a plugin for a new piece of software, launching a browser extension that automates and simplifies workflows on a new platform, creating a course that explains how to effectively use a new technology, or building a user-friendly wrapper around a newly launched API.
As the rocket you've attached yourself to takes off, so does your business.
The earlier you strap yourself to the back of a fast-growing business, the higher your chance of success. When a software or platform is already huge, it's much harder to stand out and make a name for yourself. But during early days founders are often very approachable and happy to support plugins, extensions, or really anything that enhances the ecosystem around their product.
There is of course platform risk. When the rocket crashes or simply decides to "shake you off", you're screwed. However, as many successful examples demonstrate the upside in many cases outweighs the downside.

🔥 Highlights

🚀 Roam Research

Roam Research is a note-taking tool that supports bi-directional links. It quickly developed a cult-like following on Twitter and just recently raised $9M at a $200M valuation.
Nat Eliason made $300,000+ from his Roam Research course.
Athens Research, an open-source clone of Roam, recently got funded by Y Combinator.

🚀 GPT-3

GPT-3 is a machine learning model developed by Open AI that made big news because many of the texts generated by it are indistinguishable from something written by a human.
Copy.ai started as a simple, user-friendly wrapper around the GPT-3 API, quickly grew to $100k MRR and recently raised $2.9M. (They now started to develop their own machine learning models.)
Many tools with similar features are doing really well, including Conversion.ai and Copysmith.ai.
OthersideAI uses the GPT-3 API to generate emails based on a short summary and recently raised $2.6M.

🚀 Figma

Figma is an online collaborative design tool that's now valued at around $2 billion. Think Adobe Illustrator but in the cloud and multiplayer. It is a popular choice for design teams and individual designers to use to create high-quality interactive prototypes and graphics for web and mobile.
Set Product offers custom templates for the software and currently makes around $20k/month.
Pitchdeck by Figmatic is a Figma plugin that allows users to turn designs into a presentable slide deck, or export them to PowerPoint that's currently generating $10k+/month. The same company also owns another plugin called Tiny Image which is equally successful.

🚀 Next.js

Next.js is a minimalistic open-source framework for server-rendered JavaScript apps that's developed by Vercel.
Gabe Ragland made more than $20,000 in revenue from his Next.js boilerplate tool Divjoy.
Nytro, another Next.js boilerplate, is generating around $1k in monthly revenue.
The Next.js course by Maximilian Schwarzmüller sold more than 15,000 copies so far, meaning he netted at least $150,000 in revenue (assuming that most students only paid the discounted price of $9.99).

🚀 Discord

Discord started as a chatting app for gamers to communicate while they're playing, but is now used by all kinds of teams. According to news reports they recently walked away from a $12 billion acquisition offer by Microsoft.
MEE6 is, despite its strange name, one of the most popular Discord moderation bots. Given that MEE6 is installed on more than 3 million servers and is used by more than 12 million users, it seems obvious that they're doing very well.
Emoji.gg is a bot that makes it easier to add custom emojis to a server. It currently generates $8k+ in monthly revenue and is installed on more than 100,000 Discord servers.

🚀 Apple Watch

The Apple Watch is a personal device that is worn on the wrist and can be used to do a variety of tasks, such as making phone calls, reading and sending text messages, listening to music, playing games, and providing information about the wearer's physical activity.
In Q4 2020 Apple sold around 100 watches per minute which boils down to 1.5 watches per second.
Nate Schmidt was able to grow a store selling third-party Apple Watch straps to $1.5M in sales in less than 12 months.
The WaterMinder app for the Apple Watch is netting $40k in revenue per month.
The Outcast podcast app for the Apple Watch is generating around $1k in monthly revenue (all from $0.99 one-time payments).

💭 Opportunities

The Facebook Marketplace is still growing like crazy.
There are almost no Chrome extensions that streamline processes for Facebook Marketplace sellers. What would a Closet Tools ($40k/month Poshmark automation tool) for the Facebook Marketplace look like?

Facebook Marketplace dropshipping looks like an interesting new type of side hustle that's just starting to get some traction. Targeting these semi-professional side hustlers and thinking about their needs is certainly a great place to start.

Preply is a live teaching platform with over 40,000 tutors where anyone can become a teacher that recently raised $35 million in funding.
Online language tutoring is definitely another type of side hustle that's becoming increasingly popular. To understand what problems tutors are struggling with you could simply book a call with a few of them on a platform like Preply.
One interesting related data point is that Arvid Kahl was able to grow Feedback Panda (an organizational app that allows online English teachers to manage their courses, students, and feedback) to $55k MRR in two years.

Bitclout is a platform somewhat similar to Twitter where every user has its own cryptocurrency. While the first hype wave is already over, given that they got funding vom Chamath Palihapitiya's Social Capital, Coinbase Ventures, Winklevoss Capital and Reddit co-founder Alexis Ohanian, it seems likely that the the slope of enlightenment is yet to come.
The whitepaper is worth a read as it lays out nicely the features they have on their roadmap.
Since the platforms are so similar, it makes sense to study the Twitter ecosystem to understand what opportunities might open up around Bitclout. Highly successful are automation tools like Hypefury and Zlappo, but also Dan Rowden's analytics tool Ilo is growing nicely (currently at $2k MRR).

Another new social network worth keeping an eye on is Racket. It's a social audio app where users can share short sound bites akin to mini podcasts.

Apple's latest smart device is the AirTag, a small, puck-shaped tracker that can help you locate misplaced or stolen items.
Similar to how there was and still is insane demand for Apple Watch straps, it seems likely that there will be at least some market for AirTag accessories like protection cases.

I hope you enjoyed this report. If you have a minute, please respond and let me know what you think.

Why is there no Shopify for SaaS? I asked Travis Fischer who tried to build just that.

Jakob Greenfeld — Tue, 25 May 2021 13:33:04 +0000

I recently wondered: Shopify does all the heavy lifting and lets me open an e-commerce store in minutes. Gumroad does the same for digital products. What's the equivalent for SaaS products?

To me that seems like an incredible opportunity.

After I tweeted the question, Twitter did its magic and Travis Fischer replied: "Happy to chat about my experience building Saasify (Shopify for SaaS)".

Some background on Travis:

Before he started Saasify, he helped to developed WebTorrent, a highly successful open source streaming torrent client for the web (24k GitHub stars).
He also launched Automagical (AI-based video creation tool) that was acquired by Verblio in Fall 2018.
And before that, he founded Stamped, which was acquired by Yahoo! in Fall 2012.
Right now he's building Senpai, an asynchronous video platform that allows creators to monetize their expertise.

Saasify never really took off, but this isn't necessarily bad news. It just means that the opportunity is still up for grabs and Travis is happy to share everything he learned along the way.

Here is what I learned from our conversation.

Shopify for SaaS

When you want to sell a digital product, say, an ebook, you can focus solely on the product and marketing since platforms like Gumroad handle all the rest. You don't have to worry about payments infrastructure, taxes, or how you can reach your customers if you want to send them updates. It all works right out of the box and takes less than 5 minutes to set up.

The same is true for physical products. Of course you have to find a way to source the products and market them, but Shopify handles everything else.

But when you're trying to sell a SaaS product, the situation is still very different. You can't just focus on the functionality and marketing. Nope. You have to go through the painful process of setting up a payments and authentication infrastructure, find a way to handle taxes properly and to connect with some email service so that you can send your customers messages.

There are of course great services that deal with individual components. Stripe, Quaderno, Paddle, Auth0, Magic Links, Mailgun, Firebase. But everyone still spends a lot of time duct-taping them together and in a sense reinventing the wheel. All of this is a complete distraction from your unique value proposition. At an early stage, you should be focused one-hundred percent on your unique value proposition, your core features and your customers. Everything else is a distraction

Another popular solution are boilerplates like Bullettrain, Jumpstart for Rails, and Laravel Spark. While these certainly help, they still require manual work to set up and maintain. Another downside is that they usually require a hefty upfront investment. As a result, they're not viable for people just starting out (who coincidentally would need it the most) and anyone running lots of small experiments.

Given that Shopify is a billion-dollar company and software is eating the world, a service like Shopify for SaaS seems like a billion-dollar opportunity. At the same time, it also would do a lot of good. Productivity from indie developers would skyrocket and it would become much easier for open source creators to finally capture some of the value they create.

Just as Shopify is arming the e-commerce rebels, a similar service for SaaS would be a weapon for software developers against increasingly monopolistic structures.

Now what are the lessons Travis learned by building Saasify?

Lessons from building Saasify

People get very confused if you try to mix SaaS and open source projects (even if the model makes perfect sense). In people's mind, these two terms live at the opposite ends of the software spectrum. So Travis pivoted early away from his initial focus on helping open source creators monetize their projects.
Developers want flexibility. Travis' first idea was a service that would turn any NPM module or encapsulated piece of functionality into a SaaS business. Turns out that this approach wasn't particularly attractive to most developers. Travis' idea that they could just use serverless functions for everything was too restrictive. If developers have to rewrite their whole project to make it work with Saasify it probably would be easier to just figure out all the infrastructure stuff yourself. So the next pivot was from serverless functions to "we help you monetize your API".

I want to pause here for a second because to me this sounds like the perfect way to think about the problem. The core functionality of almost any SaaS product can be wrapped in an API. (Here's an excellent primer on the API-first ecosystem. Also, there are of course SaaS products where a lot of the unique value actually comes from the UX, e.g. Superhuman.)

There is already RapidAPI (which recently raised $60M) - a marketplace that makes it easy to monetize an API. However, you can only sell direct access to your API endpoints. Since only developers know how to use APIs, this is the only customer group you can reach on RapidAPI. So a service that makes it easy to sell your API to regular users would be a huge upgrade.

So why then didn't Saasify become this platform?

Firstly, Saasify is still around. It's still running, there are happy customers.
But a key problem Travis encountered is that most customers were indie hackers, open-source developers, folks who are really good at creating that unique value, but who are not well-suited for marketing and growth and sales and support. These are all things you need to build a successful SaaS business.Most developers just wanted to say, here's my unique functionality, I want to press a button and I want to make money. That's not how SaaS works.This is especially problematic since Saasify didn't charge a flat fee, only a 20% revenue cut. So unless a project made money, Saasify didn't earn a cent.And once a project really starts to take off, they'll leave the platform to save the 20% cut. This is the exact problem that currently, for example, Substack is encountering.

I'm seeing two solutions to this problem. You could charge a flat fee like Shopify does. Their entry plan starts at $29/month, so they make money regardless of the store's revenue.

Alternatively, you can choose a marketplace model like RapidAPI which helps SaaS products get discovered by customers. There are many APIs that earn good money just from the customers RapidAPI sends their way.

However, Travis eventually ran out of steam. He had been bootstrapping the whole time and was running out of money. Also the feedback he got from VCs was not particularly encouraging.

So he took a break. After some time off, he decided that it's time to try something new. Even though Saasify didn't become what Travis imagined it to be, he's still bullish on the opportunity:

"There is an enormous opportunity to do what Shopify has done. Create a business in a box, specifically for API-based SaaS. [...] It is a huge opportunity beyond a doubt."

Thanks for reading!

If you enjoyed it, you might like my newsletter.