Designing the Ideal Bootstrapped Business with Jason Cohen

Background information

Bootstrap - Self-funded

He is talking about SaaS

Pretty cash machine

Can your business provide you even if you’re not working?

For him - $10,000 in revenue in month

you should not quit your job if your business is not paying you

Revenue Model

One-offs

If you’re not securing sales in this month, you will wake up in panic in midnight thinking how you will pay out your burn

Recurring Revenue: The only way

It is the only for business to grow.

It was said that getting 100 users is hard, but let’s look it this way:

You can get 150 customers through some streams

It is hard to get 1000 customers who will pay 10 dollars, but it easier to get 150 customers to pay 70 dollars

Boutique

Shop that has 1-2 people are buying in high price.

But, you get incredible attention and people feel good for their customer experience even if it costs 2-3 times more

Nice positive experience justifies this charge of money.

Cash is King

annual pre-pays is ‘have to’.

personal comment - I would rather pay every month but be free to switch to another supplier.

It is infinite money because you will get customers through marketing.

ARPU - Average Revenue Per User/Customer

You cannot infinitely increase horizontally. By increasing amount of revenue, you will still increase the burn on ads (which is not exponential growth). Do not try to increase customer flow, better approach would be to raise prices.

Free trials

it is fine, but he hates it, especially for bootstraps. You never get money back. Most of the time, you never get revenue from them. So better approach is…

And sales went up.

And people would email us: ‘You know, 15 days do not seem enough, so buying for 60 days is better for us’ (c) Customers

it is not revenue but number of sign-ups.

No picking up pennies

He doesn’t like any bootstrap startups where they are scraping pennies. Donations, and so on. Kickstarter: 100 mill dollars of funding in which they revenued 6 mil and they lost their money.

Go get customers and charge a lot of money

Do not sell to customers directly (for SaaS). Direct customers won’t buy it even if it is good, Gmail for example.

Because:

you need to catch them while they are wedding.

It is only one or twice buy

It is not recurrent

1000 mobile devs asked how much they earn with their app:

30% said 0

30% said IDK

IT-focused apps average 1500$ in month in revenue, financial-based companies average 6000$ (financial cycles)

SEO for example. SEO testers will be recurrently used.

Support - Dangerous place for bootstrap, but still is recurring

100$ per months for priority in support and so.

They almost never work

It’s hard to get going

It is not important that the user gets in the instant or it is over.

Because marketplaces almost never work. There are 2 jobs - getting sellers and buyers. Chicken and egg thing. If you’re successful - your are defendsible (monopoly). For self-funded startups it would be super hard

In simple terms, where feature is the differentiator and key factor. (It aligns with ExO’s Goal conflict). Do not compete in there, especially for Bootstraps