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In episode 706.5, join Rob Walling as he reconsiders some of his most common advice. He explores why lowering prices might make sense and discusses the benefits of a B2C business model. Rob also walks back his prior advice on bootstrapping two-sided marketplaces and launching multiple products to see what sticks.
Topics we cover:
- 1:04 – What would happen if you lowered prices?
- 3:56 – Benefits of a B2C approach
- 7:05 – Two-sided marketplaces allow to reach two audiences
- 8:47 – Launch a bunch of products to see what sticks
- 10:52 – This episode was released April 1, 2024
Links from the Show:
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
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Rob Walling:
Welcome back to another episode of Startups For the Rest of Us. As always, I’m your host, Rob Walling, and in today’s very special episode, I’m going to be walking through some advice that I’ve been giving over the past 10 plus years on the show, in conference talks, even in some of my books that I’ve really started to rethink as new evidence has presented itself recently. The more conversations I get into on Hacker News and Twitter around these topics of being a founder and launching a startup, rules of thumb and things that I’ve made recommendations on where, look, I’m not the person who says always never. But I will admit with many of these, I’ve said 90%, 95%, 98% of the time, I believe that this advice is sound. And in today’s episode, I’m going to talk about how I’m rethinking that on a few key points.
The first point that I’m rethinking and want to maybe offer different advice than I have in the past is around pricing. And you’ve heard me say that pricing is the biggest lever in SaaS, and I still believe that. And I know that if your annual contract value is $500 a year, you have maybe 5 or 6 B2B marketing approaches that you can do, and there’s a bunch you cannot because you just can’t afford to do them. And if you’re charging, I don’t know, it’s in the 5 to $7,500 a year, then you probably have 10 or 12 that you can do. And if you’re charging 30,000, 40,000 and up, then all 20 of the B2B SaaS marketing approaches that I talk about on the show and in my book, The SaaS Playbook, are available to you. And all that’s true and I stand by that.
But what I’ve realized is I think myself and the rest of the MicroConf community have gotten a little too hung up on increasing prices and feeling like raising your prices, A, that it’s the solution to everything. But B, that it’s always good. And I’ve started to take the other side of that argument pretty seriously. Like, what would happen if you lowered prices? A lot of good can come out of that. Imagine that instead of having a product that you’re selling for 200, $300 a month, even $100 a month, you go down market and you charge $10 a month, $20 a month. So many benefits can come from doing that. Things like you’ll attract a lot more customers because how many people or businesses can afford to pay hundreds a month? Well, there’s obviously a lot more that can afford to pay 10 or $20 a month. And so this increases your potential market, your total addressable market, as the VCs would say. I always like to call it the term, the total reachable market because who cares if it’s a total market if you can’t reach them in the ways that you’re marketing.
But as I’ve thought about it, I’ve realized there are so many benefits. It widens your market. I know that I’ve talked about lower prices increasing churn, and that is true, but realize that there’s a plus side to churn as well. It means that the people who don’t need your product will leave, and you don’t need to support them anymore, and you don’t need to provide them with whatever hard disk space respond to their emails. There are a lot of benefits for people churning out. And so what I’m saying is that 2024 for me is going to be the year of going down market, and that’s going to be my default advice for founders coming to me with issues in their startup. “Are you plateaued? Have you thought about lowering prices? Are you not finding enough customers? Have you thought about lowering prices? None of your marketing is working. Nobody wants to use your product. Have you thought about lowering prices?” 2024, the year of going down market.
Speaking of down market and lowering prices, there’s another paradigm or piece of advice that I’ve been giving, it’s got to be 14 years, probably more than this, 15 years. And it’s that if you’re going to build software, whether it’s SaaS, downloadable, whatever, that you target businesses, that B2B is superior to B2C. And I’ve really started rethinking that based on evidence again, that I’ve seen Twitter, Hacker News and folks who are charging these $5, $10 downloads for sometimes they’re one time and sometimes it’s monthly. But think about the benefits of targeting consumers. There are a lot, and there’s a lot that I ignore and don’t talk about on this show, and I feel kind of bad about it, which is why I’m recording this episode and putting it out like this because I wanted to get it to you as soon as possible. But think about if your entire addressable market of businesses in your space is 20,000, 50,000, 200,000 businesses, if you shifted your focus and went after consumers, billions. Billions of potential customers.
So why would you focus on a small market with tens of thousands or at best hundreds of thousands of potential customers when you can have billions of customers? And not only that, but B2C apps, they are just a lot more interesting than B2B apps. B2B apps are kind of boring. Who wants to build CRM software for realtors or the business operating system for gyms and fitness studios when you can build software that’s used by people like you and I, and my brother, and my uncle, and my parents? It’s a way to not only sell to customers, but also to get recognition from people who will finally understand what you do.
Your mom will no longer say, “My son or my daughter who’s a startup founder, they fix computers.” She might actually be a user of your app. And think about how much cooler that would feel than trying to explain email marketing to someone who has no idea what you’re talking about. And then they basically summarize it by saying, “Oh, so you provide software for people to spam you” which is a response that I got when building Drip a little too often, especially at family reunions.
But not only that, there’s one other thing that B2C apps have that B2B apps very, very rarely have, and it’s virality. And I have not leaned in nearly enough to that incredibly powerful marketing approach of going viral that B2C apps allow you where consumers just talk and they spread the word for you and you just build the product and you don’t have to market it. And what’s a better dream than building an app with billions of potential customers who market it for you and maybe even your mom or dad will understand what you do? So on this show, I am going to start embracing B2C. And look, I’m not saying it’s better than B2B, but it’s at least on the same level, and I’m going to see how my opinion shake out over the coming year.
The third thing that’s been bugging me, and I finally was able to put my finger on it last week, is I’ve talked a lot about two-sided marketplaces and how bootstrapping them is difficult and how you shouldn’t do it. And on this episode, I’m taking that back. What I’ve realized is that a SaaS app is a one-sided not marketplace, and a SaaS app has to do a lot. The software is the value. The job to be done is whatever the software is doing. With a two-sided marketplace, not only do you have two sides and much like going B2B to B2C, you now have so many more options for customers. Going from a one-sided not marketplace to a two-sided marketplace gives you so many more options. You now have two audiences that you can market to and sell to. You now have two audiences that you can provide different value propositions to, and you now have two audiences that you can build your product for. So I’ve realized the error of my ways in thinking that just because something is simpler, I.E. a B2B SaaS app doesn’t make it better.
In addition, the job to be done of a two-sided marketplace, it’s done just by connecting people. All you have to do is take an Uber driver, pair them up with a rider, and it’s done. You don’t need to build a bunch of software that’s really hard to build. You could almost do this with no code or a Google sheet. Imagine eBay and Upwork and how simple those would be to launch today in terms of the software you’d have to build. The value is in connecting the two sides, and that makes these much easier and in fact, much simpler businesses. And I want to apologize for leading you astray on that point for the past many years.
The fourth and final point I want to cover today is again, something that I want to backtrack on that I’ve talked about. I no longer believe in the value of focus, and I no longer believe that you need to launch a product, solve a problem, find product market fit, and invest time and energy into an idea and iterate on it and get it to the point where you’re providing value. Some people call it product market fit. I call it building something people want and are willing to pay for. Instead, I think that we should all be launching a bunch of things to see what sticks. We’re makers. We should make. We’re builders. We should build. Since it’s all just luck anyway, why wouldn’t I make a bunch of apps and throw them out there and see which ones get traction? If I’m in Las Vegas and I’m playing blackjack and I know that it’s all just luck, why wouldn’t I just play 10 hands figuring one of these will win eventually.
The best part is I’m now giving you permission as the builder, the coder, the developer, the maker to just go build. All you have to do is build and launch. That’s it. I’m not going to talk to you about selling, about talking to humans, about listening to people’s pain points about marketing. I mean, who wants to learn SEO, who wants to deal with ads and creating content and cold outreach and trying to figure out what to do next amid the pain of launching a startup? No one does. So don’t do it. Look inside and ask yourself, “What do I want to do? What fits my personality?” And I bet if you’re really honest, what fits your personality is to make stuff and launch it and not do any of the hard things.
So 2024, along with being the year of going down market, B2C, and bootstrapping two-sided marketplaces is going to be the year of launching a bunch of things to see what sticks. Obviously, the show is going to change quite a bit, and I bet you’re super curious to hear what tomorrow’s episode is like in light of my recent revelations. But I do want to point one thing out to you in case you haven’t checked your calendar. Today’s date is April 1st of 2024, and in many countries, today is a April Fool’s Day. So I apologize in arrears and I can be held responsible for nothing I’ve said in this episode.
The views expressed in this episode of Startups For the Rest of Us are neither the views of MicroConf, TinySeed nor of Rob Walling. They’re the views of April Fool’s Day, 2024. I was really trying to steel man those arguments though, trying to look at the bright sides until it just got a little crazy. I was going to go on. I have three more things. Shouldn’t you build a second product if your first stops growing? What about multi-language support? How about take investment in the launch of the products? What about defining a new category when you’re bootstrapping? No, there’s a lot, I realize. I think I’m taking the joke too far. So I appreciate you listening today. This does not preempt the normal episode of Startups For the Rest of Us this week, so we will be back tomorrow with your normally scheduled episode that will be on topic, super serious as always, not an April Fool’s joke.
Appreciate you hanging with me today. If you thought this was funny or if I actually got you for even a bit, please hit me up on Twitter. You can send an email to questions@startupsfortherestofus.com. I’m curious at what point most people realized that this was a joke episode because I started getting a little crazy with some of the B2C stuff. And if this is your first episode, if you’re listening to this months down the line, I’m probably putting an introduction, a warning, a disclaimer if you will, not to listen to it, just to skip to the next episode. But if this is your first episode, you may want to go back and listen to the 2, 3, 4 prior to this to see what this show is actually about. If you liked this one, thought it was funny, hit me up on Twitter, and if you didn’t, don’t bother. I’ll be back again in your earbuds tomorrow for another regularly scheduled episode. This is Rob Walling signing off from episode 706.5.
Welcome back to another episode of Startups For the Rest of Us. As always, I’m your host, Rob Walling, and in today’s very special episode, I’m going to be walking through some advice that I’ve been giving over the past 10 plus years on the show, in conference talks, even in some of my books that I’ve really started to rethink as new evidence has presented itself recently. The more conversations I get into on Hacker News and Twitter around these topics of being a founder and launching a startup, rules of thumb and things that I’ve made recommendations on where, look, I’m not the person who says always never. But I will admit with many of these, I’ve said 90%, 95%, 98% of the time, I believe that this advice is sound. And in today’s episode, I’m going to talk about how I’m rethinking that on a few key points.
The first point that I’m rethinking and want to maybe offer different advice than I have in the past is around pricing. And you’ve heard me say that pricing is the biggest lever in SaaS, and I still believe that. And I know that if your annual contract value is $500 a year, you have maybe 5 or 6 B2B marketing approaches that you can do, and there’s a bunch you cannot because you just can’t afford to do them. And if you’re charging, I don’t know, it’s in the 5 to $7,500 a year, then you probably have 10 or 12 that you can do. And if you’re charging 30,000, 40,000 and up, then all 20 of the B2B SaaS marketing approaches that I talk about on the show and in my book, The SaaS Playbook, are available to you. And all that’s true and I stand by that.
But what I’ve realized is I think myself and the rest of the MicroConf community have gotten a little too hung up on increasing prices and feeling like raising your prices, A, that it’s the solution to everything. But B, that it’s always good. And I’ve started to take the other side of that argument pretty seriously. Like, what would happen if you lowered prices? A lot of good can come out of that. Imagine that instead of having a product that you’re selling for 200, $300 a month, even $100 a month, you go down market and you charge $10 a month, $20 a month. So many benefits can come from doing that. Things like you’ll attract a lot more customers because how many people or businesses can afford to pay hundreds a month? Well, there’s obviously a lot more that can afford to pay 10 or $20 a month. And so this increases your potential market, your total addressable market, as the VCs would say. I always like to call it the term, the total reachable market because who cares if it’s a total market if you can’t reach them in the ways that you’re marketing.
But as I’ve thought about it, I’ve realized there are so many benefits. It widens your market. I know that I’ve talked about lower prices increasing churn, and that is true, but realize that there’s a plus side to churn as well. It means that the people who don’t need your product will leave, and you don’t need to support them anymore, and you don’t need to provide them with whatever hard disk space respond to their emails. There are a lot of benefits for people churning out. And so what I’m saying is that 2024 for me is going to be the year of going down market, and that’s going to be my default advice for founders coming to me with issues in their startup. “Are you plateaued? Have you thought about lowering prices? Are you not finding enough customers? Have you thought about lowering prices? None of your marketing is working. Nobody wants to use your product. Have you thought about lowering prices?” 2024, the year of going down market.
Speaking of down market and lowering prices, there’s another paradigm or piece of advice that I’ve been giving, it’s got to be 14 years, probably more than this, 15 years. And it’s that if you’re going to build software, whether it’s SaaS, downloadable, whatever, that you target businesses, that B2B is superior to B2C. And I’ve really started rethinking that based on evidence again, that I’ve seen Twitter, Hacker News and folks who are charging these $5, $10 downloads for sometimes they’re one time and sometimes it’s monthly. But think about the benefits of targeting consumers. There are a lot, and there’s a lot that I ignore and don’t talk about on this show, and I feel kind of bad about it, which is why I’m recording this episode and putting it out like this because I wanted to get it to you as soon as possible. But think about if your entire addressable market of businesses in your space is 20,000, 50,000, 200,000 businesses, if you shifted your focus and went after consumers, billions. Billions of potential customers.
So why would you focus on a small market with tens of thousands or at best hundreds of thousands of potential customers when you can have billions of customers? And not only that, but B2C apps, they are just a lot more interesting than B2B apps. B2B apps are kind of boring. Who wants to build CRM software for realtors or the business operating system for gyms and fitness studios when you can build software that’s used by people like you and I, and my brother, and my uncle, and my parents? It’s a way to not only sell to customers, but also to get recognition from people who will finally understand what you do.
Your mom will no longer say, “My son or my daughter who’s a startup founder, they fix computers.” She might actually be a user of your app. And think about how much cooler that would feel than trying to explain email marketing to someone who has no idea what you’re talking about. And then they basically summarize it by saying, “Oh, so you provide software for people to spam you” which is a response that I got when building Drip a little too often, especially at family reunions.
But not only that, there’s one other thing that B2C apps have that B2B apps very, very rarely have, and it’s virality. And I have not leaned in nearly enough to that incredibly powerful marketing approach of going viral that B2C apps allow you where consumers just talk and they spread the word for you and you just build the product and you don’t have to market it. And what’s a better dream than building an app with billions of potential customers who market it for you and maybe even your mom or dad will understand what you do? So on this show, I am going to start embracing B2C. And look, I’m not saying it’s better than B2B, but it’s at least on the same level, and I’m going to see how my opinion shake out over the coming year.
The third thing that’s been bugging me, and I finally was able to put my finger on it last week, is I’ve talked a lot about two-sided marketplaces and how bootstrapping them is difficult and how you shouldn’t do it. And on this episode, I’m taking that back. What I’ve realized is that a SaaS app is a one-sided not marketplace, and a SaaS app has to do a lot. The software is the value. The job to be done is whatever the software is doing. With a two-sided marketplace, not only do you have two sides and much like going B2B to B2C, you now have so many more options for customers. Going from a one-sided not marketplace to a two-sided marketplace gives you so many more options. You now have two audiences that you can market to and sell to. You now have two audiences that you can provide different value propositions to, and you now have two audiences that you can build your product for. So I’ve realized the error of my ways in thinking that just because something is simpler, I.E. a B2B SaaS app doesn’t make it better.
In addition, the job to be done of a two-sided marketplace, it’s done just by connecting people. All you have to do is take an Uber driver, pair them up with a rider, and it’s done. You don’t need to build a bunch of software that’s really hard to build. You could almost do this with no code or a Google sheet. Imagine eBay and Upwork and how simple those would be to launch today in terms of the software you’d have to build. The value is in connecting the two sides, and that makes these much easier and in fact, much simpler businesses. And I want to apologize for leading you astray on that point for the past many years.
The fourth and final point I want to cover today is again, something that I want to backtrack on that I’ve talked about. I no longer believe in the value of focus, and I no longer believe that you need to launch a product, solve a problem, find product market fit, and invest time and energy into an idea and iterate on it and get it to the point where you’re providing value. Some people call it product market fit. I call it building something people want and are willing to pay for. Instead, I think that we should all be launching a bunch of things to see what sticks. We’re makers. We should make. We’re builders. We should build. Since it’s all just luck anyway, why wouldn’t I make a bunch of apps and throw them out there and see which ones get traction? If I’m in Las Vegas and I’m playing blackjack and I know that it’s all just luck, why wouldn’t I just play 10 hands figuring one of these will win eventually.
The best part is I’m now giving you permission as the builder, the coder, the developer, the maker to just go build. All you have to do is build and launch. That’s it. I’m not going to talk to you about selling, about talking to humans, about listening to people’s pain points about marketing. I mean, who wants to learn SEO, who wants to deal with ads and creating content and cold outreach and trying to figure out what to do next amid the pain of launching a startup? No one does. So don’t do it. Look inside and ask yourself, “What do I want to do? What fits my personality?” And I bet if you’re really honest, what fits your personality is to make stuff and launch it and not do any of the hard things.
So 2024, along with being the year of going down market, B2C, and bootstrapping two-sided marketplaces is going to be the year of launching a bunch of things to see what sticks. Obviously, the show is going to change quite a bit, and I bet you’re super curious to hear what tomorrow’s episode is like in light of my recent revelations. But I do want to point one thing out to you in case you haven’t checked your calendar. Today’s date is April 1st of 2024, and in many countries, today is a April Fool’s Day. So I apologize in arrears and I can be held responsible for nothing I’ve said in this episode.
The views expressed in this episode of Startups For the Rest of Us are neither the views of MicroConf, TinySeed nor of Rob Walling. They’re the views of April Fool’s Day, 2024. I was really trying to steel man those arguments though, trying to look at the bright sides until it just got a little crazy. I was going to go on. I have three more things. Shouldn’t you build a second product if your first stops growing? What about multi-language support? How about take investment in the launch of the products? What about defining a new category when you’re bootstrapping? No, there’s a lot, I realize. I think I’m taking the joke too far. So I appreciate you listening today. This does not preempt the normal episode of Startups For the Rest of Us this week, so we will be back tomorrow with your normally scheduled episode that will be on topic, super serious as always, not an April Fool’s joke.
Appreciate you hanging with me today. If you thought this was funny or if I actually got you for even a bit, please hit me up on Twitter. You can send an email to questions@startupsfortherestofus.com. I’m curious at what point most people realized that this was a joke episode because I started getting a little crazy with some of the B2C stuff. And if this is your first episode, if you’re listening to this months down the line, I’m probably putting an introduction, a warning, a disclaimer if you will, not to listen to it, just to skip to the next episode. But if this is your first episode, you may want to go back and listen to the 2, 3, 4 prior to this to see what this show is actually about. If you liked this one, thought it was funny, hit me up on Twitter, and if you didn’t, don’t bother. I’ll be back again in your earbuds tomorrow for another regularly scheduled episode. This is Rob Walling signing off from episode 706.5.
I picked it up in the first 3 minutes 😉
Awesome!
That was a crazy episode man. I’m not American so Aprils fools is not something that is in the top of my mind. I thought you went bananas when you said that building products is all luck, like blackjack.
Ha, glad I got you! 😀