Micro-SaaS is a term that I use to describe my business, Storemapper, a simple app that helps merchants add a store locator to their website. If you’re reading this book you likely know that SaaS means Software as a Service.
To a programmer the key difference between SaaS and other software is that the code is hosted on a server in the cloud, rather than installed on your computer. But in reality the biggest difference is in the business model: customers pay monthly or annually for continued access, as opposed to a one-off purchase, like back when you bought MS Office 2000 in a plastic-wrapped cardboard box. The software is a service, rather than a thing they buy once.
This is a huge shift for reasons we will dig into later.
And of course “micro” just means small. A SaaS business targeting a niche market, run by one person or a small team, with small costs, a narrow focus, a small but dedicated user base and no outside funding. Hence, Micro-SaaS.
This book is about my experience building and running a Micro-SaaS business. I won’t claim to be a world expert. I’ve built exactly one successful Micro-SaaS business, with a slew of other failed businesses under my belt. Nor will I make any guarantees that anything I have done is replicable. But I think a Micro-SaaS business is possibly the most powerful lifestyle business model out there right now. In this book I’ve tried to distill some of the things I’ve done right and the many things I’ve done horribly wrong into some more generalized principles. I probably didn’t invent a single one of these principles and in many cases they were blatantly stolen from writers and entrepreneurs who’ve been around the block several times. Where possible I’ll link to the people and resources that were tremendously helpful to me.
Why Would You Want a Micro-SaaS Business?
This is the standard “Who should read this” section of the book. I’ll assume that you want to build some kind of business. So specifically why SaaS relative to other businesses like consulting, online courses, mobile apps, ebooks or a food truck.
Warning: below are some buzzwords like lifestyle design and digital nomad that have (rightly) developed some groan-worthy connotations. I’m using them here simply to avoid re-defining the whole lexicon from scratch. Stay with me.
Owning a Craft
One book that had a huge impact on my thinking is Shop Class as Soul Craft. The author leaves his well-respected white collar think tank job for a life as a motorcycle mechanic. The book constructs the very compelling ethical and philosophical argument that, in a world filled knowledge workers obsessed with abstract career ladder-climbing, the life of an artisan of practicing and refining a craft can be as purposeful and rewarding a life, if not more so. His craft is fixing motorcycles, but the idea is more generalizable and can apply to software. People have problems, the artisan solves them. People pay for it and everybody is happier than they were before.
If you’ve spent a career as just one small component in a vast Rube Goldberg machine, it can be very rewarding, bordering on glee, to build a product yourself and see people get immediate value out of it. The Micro in Micro-SaaS, running the entire product yourself or with a small team, affords the opportunity to see the fruits of your labors directly delivered. Your customers arrive, behind schedule, stressed and with too many things on their plate. You remove one of those things from their plate, in exchange for a reasonable sum of money.
I find the process very fulfilling. Taking your craft seriously shows through to your customers. I regularly get unsolicited emails from customers who found the experience of using the app so pleasant they decide to write me a thank you note – and these folks are the ones paying me money!
Location Independence
I absolutely love to travel. I didn’t get my first passport until I was 20 but it has been one of my top priorities ever since. A huge part of why I invested the time and energy to build a Micro-SaaS business was a burning desire to have a business that I could work on remotely while traveling.
Before 2011 I knew literally nothing about coding. I never took a coding class when I was kid and never mucked around with HTML on geocities or angelfire. I dove in head first because I wanted to build a software company and I couldn’t convince anybody to build an app for me for equity in my non-existent company (I tried and failed for over a year). Writing code for a living is the most powerful tool in the lifestyle design toolkit because it is completely, 100% location-independent.
I started writing this book from Chiang Mai, Thailand, procrastinated on it through much of Southeast Asia; picked it back up for a bit in Budapest and Cape Town and wrote a bit more in Bali, did some editing in Oaxaca and will finish it up in Barcelona. I have no plans and can travel wherever I want in the world on a whim. In the past few years I’ve spent at least a month in Barcelona, Cusco, Buenos Aires, Bali, Tonsai Beach in Thailand, New York City, San Francisco, Washington DC, Budapest, New Zealand, Japan, South Africa and counting.
You can certainly do things like freelance consulting, or work for a startup that allows remote work, and that can be a really great option, but it isn’t the same. In the past few months I spent nearly two full weeks completely offline hiking Kilimanjaro and going on Safari in Tanzania. My girlfriend and I did a 2 week road trip across South Africa, two weeks diving in Fiji and a week rock climbing in Mexico. I’ve tried doing this kind of thing while managing client work (I once did a conference call from the cafe at Iguazu Falls, Argentina) and it’s possible but very stressful. With a Micro-SaaS business up and running at scale I’m able to really travel and disconnect and when I come back, the business is still basically fine without me.
Time Leverage: The Magic of Recurring Revenue
You can get some of the above benefits of location independence and owning a craft from any remote software business but there’s something special about SaaS. Recurring revenue is unequivocally the most powerful revenue model in the world today. Evergreen content, ebooks, drop-shipping, affiliate deals, AdSense, ecommerce, all seem incredibly risky compared to knowing that the vast majority of the customers that paid you last month, will pay you the same amount again the next month and very likely the month after. Once recurring revenue reaches a comfortable level, that predictability allows you the flexibility to start spending less and less time on your Micro-SaaS while still making the same or more money. I doubt it’s possible to get it down to zero (the mythical “passive income”), but it’s certainly within reach to make as much money as a full-time salary on 15, 10 or even FOUR (wink wink) hours a week. SaaS can be a business that not only yields money, but starts to give you back your time. Of course you don’t have to spend less time on it but having that option gives you much more control over the time vs money equation in your life.
Here are a few things I was able to do over the last few years thanks to my Micro-SaaS:
- Freelance 20-30 hours per week for several periods on top of running the business solo, which combined with my SaaS income allowed me to make twice as much money in a month as I ever had before.
- Pay down nearly $60,000 in debt (from a previous failed startup) in less than two years.
- Travel the world for a year with my girlfriend. Rather burning through savings I actually netted a good profit on the year despite spending months in areas with virtually no internet connection.
- Move back to the US and devote the majority of my working week to projects that I find interesting, like writing this ebook, without having to worry whether they would generate any revenue.
Building a Financial Launchpad
Venture backed startups still get all the attention these days while bootstrapped and profitable “lifestyle businesses” are deemed unworthy of unambitious and talented people. But if you dig back in the histories of really successful founders, you very often find they had already secured a high level of financial security before they ever built a world-changing risky startup. Stories of founders truly putting their entire financial future on the line before coming out on top will achieve almost mythical status, but they are by far the exception to the rule. Most world-changing founders had a more boring traditional business success first, or more commonly came from wealthy families who could backstop their risk.
During the same period of my life that I built my Micro-SaaS, I bootstrapped, raised angel funding for, and ultimately was forced to close a venture-scale startup. It was the most stressful thing I have ever done and it did damage to almost every other aspect of my life: relationships, health, sanity, bank account. I really did put my entire financial future on the line, getting enormously in debt and without a backup plan.
I doubt that will be my last attempt at a legacy-building company, but I have learned my lesson. The biggest problem by far in my first attempt was that the moment I quit my job, my income evaporated. I was trying to run a startup while drawing down on my meager savings and frantically trying to raise more funding just to pay for rent and groceries on top of business expenses.
Now that I own a Micro-SaaS business, I can work on a new startup without drawing a paycheck indefinitely and it is absolutely the route I would recommend to any aspiring startup founder in a similar financial situation. You can also replace “startup” with anything ambitious and risky. A Micro-SaaS business could fund you while you spend six month writing a novel or trying to make it big in the acting or music business. One Micro-SaaS founder I know used it to pay the bills while starting a travel publishing business.
If you are interested in starting a big risky ambitious project some day, Micro-SaaS could be the perfect launchpad.
Who is the author and why should you care?
Before we get to the meat of the book, one more brief digression – Who am I and why should you care?
I’m Tyler Tringas. In a former life I was an Economics major and a consultant for investors in cleantech (solar, wind, electric vehicles, etc). In 2011 I quit my job to build a cleantech software startup. It took a long time to get traction, we launched, raised some money, and in early 2014, we shut it down. There’s a whole epic story there in itself, but through the same period of time I taught myself to code, built a consulting and software development practice for ecommerce startups, and built a ton of side projects. One of those, Storemapper, was a nice little Micro-SaaS business that did well and now generates over $250,000 in annual recurring revenue. I started blogging very transparently about my experience with Storemapper and it turned out owning a Micro-SaaS product was an aspirational goal of a lot of people. So I wrote this ebook. I hope you get some value from it.
Next: Chapter 2 What Makes a Good Micro-SaaS Idea? >>
Building Micro-SaaS Businesses
All the stuff I did wrong building a six figure Micro-SaaS business and how to do it better yourself. Anecdotes, pseudo-philosophy and self-deprecation.