The only reason I would never go this direction with my business is because you could wake up tomorrow and the features of your app become a standard feature of Shopify and you’re instantly out of business.
Think flashlight apps for iPhone, health apps, etc.
As a former PM at Shopify, I think the risk of this is pretty low. Shopify optimizes for building things into the core product that at least 80% of the merchants can use. On top of that, they are pretty slow to get things to market given they are a big company. That said, the risk is not zero. But if you pick a good niche and stay differentiated, it’s less than you’d think.
Gross Income, for 2 partners. As I wrote, best case you get 100k per partner net after 2 years, ceteris paribus. But they are living from this business so less money for the company.
> Say, you can keep it running for 3 years. This is close to $1 million USD. This could easily pay your cost of living, while you work on the next product.
Yes but that is a truism. If your business does well for several years, you will have a cushion for your next venture.
I wrote because I wanted to write against the naive view many people in HN has about "developing countries", yes COL is lower but there is no magic place where 100k USD will set you for life. You still have to pay taxes, many goods cost the same or more than in the US, good healthare insurance is not low, etc, etc. My rule of thumb is that you need at least a mimimum 1MM to retire, no matter in which part of the world,of course if you pick London or Zurich the amount will need to be higher. This assume a family of 3, no further income, no house owned and to live a modest middle class lifestyle.
Not subtracting anything but wanted to mention that taxes in India are quite high. Also you can actually get paid quite well for a job in Bangalore, so it's not quite that much. It is, if after two years of work it goes into autopilot but as a full time job it might not be with it for two smart engineers in India.
First, your assumptions on net income are too pessimistic. Small founder-operated SaaS can be extremely profitable.
Second, and more importantly, you are ignoring concepts of LTV and NPV of future cash flows.
Assuming 80% SDI and a churn-rate that is < 5% (ideally < 3%) you are looking at a business worth $700-950k right now. Why? An income stream from a growing high margin SaaS business is a coveted and valuable thing.
Finally, when you have a business with 300k ARR you begin to unlock more options for yourself -- small acquisitions (traffic/content/funnel), ads, product improvements.
The likely path here is that their income will continue to grow and they will either be taking $200k a year in income or sell for > $2 million in a couple years, or both.
Having built a small SaaS business to this size myself for many years, i can totally recommend this path for independence and financial freedom.
> First, your assumptions on net income are too pessimistic. Small founder-operated SaaS can be extremely profitable.
Are they? On the contrary. You are telling me that out of 100k of gross sales, after discounting: Operational costs, insurance, income taxes assuming at the end if you get 67K is pessimistic? I didt not even budget money for sales and marketing.
> Second, and more importantly, you are ignoring concepts of LTV and NPV of future cash flows.
I am not, that was not even a question on my initial answer. My original answer was to deny this: Operating a 2-person 25k MRR company during 2 years will set you for life. My answer is no. You are assuming a lot of other stuff that was never in the original discussion.
> Assuming 80% SDI and a churn-rate that is < 5% (ideally < 3%) you are looking at a business worth $700-950k right now. Why? An income stream from a growing high margin SaaS business is a coveted and valuable thing.
Yes, but that is trivially true. If you assume the company will grow the valuation will reflect that. Everybody knows that. That was not in the original discussion. This also depends on the business model of the company, a SaaS company critically depending on a 3rd part ecosystem is significantly riskier than an independent one.
> Having built a small SaaS business to this size myself for many years, i can totally recommend this path for independence and financial freedom.
I agree. But you need more than 200k USD to be set for life.
200k for 2 partners, 100k each. Tell me this magical place where I am set for life with 100k, i will fly as soon as travel is available. 100k assuming a 4% annual retirement rate, gives you 333 USD/month. Assuming a family of 2 and you need to pay rent, insurance,food,car or transportation, etc I dont see this feasible at all, at the very very least you need 5X times that.
And how are they living. For 1500 bucks a month for a family of 3, no other income, unless you depend heavily on external assistance you are going to suffer a lot. Will you stop working if I guarantee you 1500 USD/month. No other income, no house, no car, no stocks,no college fund, no health insurance, all of this will have to come from the 1500 USD. Remember the original point of this discussion for which I have been downvoted to hell here: You need a non-trivial amount of money (in my estimation at least 1MM) to be "set for life".1 MM will give you 3k/month with moderate risk assuming historical returns. You can live with it surely but nothing crazy.
Yes! But even for 1500 USD/month you need 500k on your portfolio. And another thing , just because you live in a developing nation does not mean you dont aspire to nice things. You still need a laptop, a modern car, a cell phone, etc etc.
There's woocommerce/wordpress. You need not use paid plugins while starting out, the free ones should be sufficient. One might argue it's not "nice" enough but there are thousands of successful businesses built on top of it.
Which platform doesn't have issues? I am sure if you go check discourse's official forum, you will see it has its fair share of problems and shortcomings too.
I just did a quick search and found that there is a plugin called advanced shipment tracking for woocommece which seems to be free and gets the job done(i am sure it has a paid version too but the free one seems to be good enough, judging from the reviews)
Also e-commerce site owners are entrepreneurs and the primary goal of any e-commerce site is to make money. The primary goal of a discourse forum isnt making money. E-commerce owners are more likely to invest in tools that help them grow their business, unlike someone who runs a forum, where there might not be such a motivation.
“Once this was done the next step was to get people to choose our product vs the competition. In order to do this we did something that some might consider unethical - we included most of the features that the competitors had and made the app FREE which forced the competitors to go into losses. You cannot build a business by being nice.
Making the app free got us a plethora of users to whom we provided exceptional customer service which lead to them writing 5 star reviews, so even though they were using the app for free, we derived ROI out of them by gently nudging them to write reviews which boosted our ranking and eventually got us to the #1 rank for certain keywords.
This was when something very interesting happened. One of our competitors ran a DDOS attack on our servers. At this point we were getting 5 reviews a day and users congratulating us for our good work but the fact that someone tried to screw us over made it evident that we were on the right track.“
Congratulations on launching a successful business! I enjoyed your article a lot. As someone who knows nothing about Shopify or their extensions it was eye opening. I loved your focus on making sure you were doing the right thing for your users and it seems that’s a huge component of your successes!
This seems like a weirdly elitist/limiting way of looking at things. If you're slightly better off today than you were yesterday, then you're advancing toward your goal. The progress compounds all the time. There is no "being stuck at level 0" unless you're making negative progress.