Product Development January 13, 2021

Don't build something for early stage startups

Karl Hughes @karlhughes

I know a lot of people here in this community like to "validate" their ideas by seeing what other Indie Hackers think of their ideas. I get it, it's easy and people here are generally positive, but before you start a product or service for early-stage founders like us, take a step back and consider this market:

1. They don't have money

And what little they do is aimed at making sales or building the early product. If your service doesn't do those two things really well, it's not a good fit.

Founders also tend to be (rightly so) very price sensitive. With large companies, you can leave plenty of room for margin because a middle manager has a budget that is independent from his mortgage. A founder is either giving up a piece of his company (equity to investors) or personal savings to buy your product.

2. They don't know what they need yet

Most startups should begin their market/sales validation by doing things that don't scale. Software tools tend to help with scaling problems, not validation problems. The possible exception here is simple, no-code tools, but that space is getting crowded and the tech bar is high.

3. They won't be around for long

The average lifetime of a new company is just 20 months. That includes the time before they found your product, so you won't get many long-term users if you are working with startups.

4. Startups should take risks on their product, not yours

Finally, experienced startup founders know that technology can be a huge leverage point, but taking unnecessary risk is foolish. They should be building their own product not helping you get early feedback on yours.

What do you think? I look forward to hearing the other side of this debate.

  1. 48

    100% agree, and I hope lots of people read this post.

    Anecdata, but my business trajectory completely changed once I stopped viewing Indiehackers as a target and pivoted my pricing away from IH-friendly levels. Not all, but a good chunk of this segment either:

    • churn fast
    • haggle on pricing ("can you do a plan for $5 per month?")
    • do not have a real pain point to solve (they are still "figuring things out" as you say)
    • require a high level of support as they are doing everything themselves

    The community here has really changed over the last couple of years. It has become quite incestuous - a place where people come to promote products that are aimed at the community. If it continues this way it will become like Warrior Forum, which if you don't know, is essentially a place where senior marketers create get-rich-quick schemes to sell to junior marketers. It's a gross, closed cycle of dubious value creation / borderline scammy behaviour.

    I would love for IH to get back to its roots. A community of people building products for customers who are unrelated to the IH world and we can therefore use this place as a neutral, non-salesy place to share knowledge and experiences that may help each other in our respective target customer segments.

    1. 11

      Exactly this.
      Almost every post here on IH just aims to sell something to other indie hackers.
      I really want this to be more of a place to just share experiences without any intend to selling something (to IH readers)

  2. 8

    Make money through people who make money.

    That's the fundamental motto. Don't have cheap people as your customers, it doesn't usually work out well. This is something I call the Paradox of Price. You'd think the more expensive something is that the person buying it would want more accountability. In reality, it's less, because the people who can afford to pay that much money understand that you're the expert, not them. Cheaper people don't understand that, they want to stretch their dollar, which makes them worse customers.

  3. 6

    Good thoughts.

    @mijustin once wrote, "you shouldn't sell to beginners, new startups, or hobbyists." That really stuck with me when I read it about a year ago — after I'd built two separate products primarily targeting beginners and hobbyists. 😅

    He raises many of the same points in his article. Recommend reading: https://justinjackson.ca/beginners

    1. 1

      Love all of Justin Jackson's stuff. This was a good read!

  4. 5

    I'd agree that you shouldn't solely build for IndieHackers unless you have a one-off $50 content marketing piece that people can buy to give them great advice or something.

    I'd say there is still a ton of value in getting startups from this community and other bootstrapped communities to use your product(s). For example, I've seen a steady uptick in traffic thanks to better search rankings after startups have integrated my product either via the custom domain feature or as a link on their website footer. I'm guessing it is down to the additional backlinks. Sure, in some cases, I've had to work with founders to find a price point that works for them, but it is still revenue/growth.

    I'd say my bigger disappointment with IndieHackers, and why I tend to spend less time here now, is that in general people are really reluctant to even try out products and give meaningful feedback. I feel we can all do better at that. For example, I've recently tried to use an uptime/monitoring tool from this community rather than buy-in one from outside. I also recently tried Syften from @akfaew. Although I didn't convert to a paid plan at the end, I still felt like I offered some feedback and appreciated the discussions we had.

  5. 5

    Early-stage startups are a tough nut to crack for sure.

    I wouldn't necessarily count them out for several reasons though:

    1. Not all early-stage folks are broke. I mentor/advise founders regularly who are self-funded or have managed to get friends n family rounds.

    2. While ideas are not necessarily everything (Bill Gross posits that Timing is the most crucial aspect of startup success) to ignore the innovators is to ignore innovation. I believe that entrepreneurs (nnovators) are the tip of the spear moving humanity forward and anything that can be done to help increase their odds of succeess is likewise increasing humanity's odds of continued success.

    3. The trick is provide value at the top of the funnel for free or very low-cost that helps them get to the next step where they can afford your next tier of services.

    A perfect example of this is LEANSTACK where you can take the Foundations course which teaches you how to break down your assumptions so that you can test and validate BEFORE building, while beginning the customer developement process simultaneously. Once you have completed that course you will likely be well on your way if not already done testing your hypothesis. From there you are likely going to be able to start affording the higher-touch training.

    These kinds of top-down funnel approaches are how you filter throught the good vs bad customers and channel the good ones in to much higher LTV's (lifetime value).

    Another similar approach is YCombinators funnel which now starts with a FUTURE Founders curiculum before Startup School, filtereing thousands of potential canditates down to the hundreds or less full batch applicants that get interviews and less than 200 that get funded per batch with the intention to turn those alums into billion-dollar outcomes (aka unicorns)

    I've been serving all stages of startups for over a decade, and I do agree that early-stage can be a challenge. In my eyes it's a challenge worth endeavouring to succeed in though.

    Just my 2c. Not trying to be argumentative. I think your advice is probably right for most founders though. It's too easy to sucked into the idea that, "oh well here seems to be a good potential audience of customers.."

  6. 3

    I would disagree. It always depends. Say, most of startups don't have money, but almost any has $20 for vitally important things. So, you can sell them if your product is vitally important to them.

    Most startups should begin their market/sales validation by doing things that don't scale.

    Haha, they should but an enormous amount of them don't! Also, "things that don't scale" has a broad spectrum of meanings. For example, it may include a blog instead of service, a social network instead of SaaS and so on... so, if your product is a blog or a social network, you can sell them, even for "free", using ads.

  7. 2

    I generally agree, although, you can still be successful targeting early stage founders if you build a solution to a popular problem.

    Example: carrd.co

    1. They don't have money

    Everyone can spare $19 per year.

    1. They don't know what they need yet

    They know they need a landing page.

    1. They won't be around for long

    There is enough supply of new founders.

    1. Startups should take risks on their product, not yours

    Actually, I don't get this one. If experienced founders use only proven tools, then how can I get through with my new product? Targeting early stage startups seems an opportunity because they can take a higher risk using unproven tools.

  8. 2

    Great points. Also, because they often work for free, they think everyone also does. I created a start-up out of college and we were mostly exchanging services.

  9. 1

    Very correct words

  10. 1

    As an early stage startup, yes no one wants to work for free to build something new that may not pan out except a few people that are rare breeds... I've been building my product up for years and just got it to an MVP. Hopefully, the market proves to be ripe for it, if not I learned some skills to work on my next venture or job. I'm tired of being a team of one though... - https://www.youtube.com/watch?v=_eUutvqChcc

  11. 1

    Having built a product in the blockchain space, this advice applies almost universally to those apps too, even if they are not so early stage. Regardless, this is really smart advice that not enough people heed, including myself.

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