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I finally gave up my (failed) SaaS

It all started in 2016 - I was impressed by a wonderful idea. I sat down, did a little research, found the right technology for my needs, created a POC, and bought a domain name. Searched for competitors and found only similiar products, but my product was unique and I was convinced of the idea.

It worked and I was so happy. I had plans. I have to manage to solve some technical tasks, but still - the main concept worked.

I told a friend about the idea and in the discussion he suggested a solution to my technical problem and it worked (again).

I jumped for joy. I was sure I had to start a company and asked my friend if he would like to become a co-founder. He gladly accepted the offer.
We started a company in mid-2016 - self funded - start capital €1337. We dreamed that our side-project will be profitable one day.

So far it sounds like a movie and the truth is it was like in a movie. But then of course the reality hit us.

My friend is working for a big company, important position on a big project and when I wanted to advertise the product and our fresh startup he said, I better not do it because he might get into trouble.

And I did not - we said - it will grow over time. Well, but to grow at all you need at least to tell the world, that you have a product - if you don't do this - your product is like a buried grain of sand in the desert.

I was blinded by my dreams to not see this and I kept working and improving the product. Initially there was only the free version and no API. I added an API, plans and stripe payments, polished the product, wrote documentation and examples.
Still - no one ever found and used the product. Nevermind I thought - I used it.

We applied to Microsoft Bizspark and were accepted. Got credits for Azure, which was awesome, because the monthly credits just covered our monthly hosting expenses.

Our initial self-funding was melting like an ice cream in the open on a hot day - company bank account and domains were already burning a lot of money. At the end of the year we need to make tax return - to save money for a tax consultant, we bought software and I sweated many nights to fill out and file the tax return.

At some point (I think one and a half years later) we went out of money, so we took loans from ourselves and the wheel was spinning again.

Still no advertisement because of the big company, still no customers, still a lot of expenses. In 2019 after 3 years, BizSpark had come to an end for us and I entered my credit card in Azure in order to pay the bills. I reduced some resources and managed to cut the monthly expenses into half, but still I was giving away €80 per month for a SaaS that I used only once in a while.

I was not giving hope and was searching for ways to find customers without shouting so loud. It didn't worked at all.

I read recently about someone spending more money on his product, than the product brings and the essence of the story was to let go if it's not profitable and not working for any reasons.

So I finally gave up and I will pursue my dream of becoming an entrepreneur in a different way.

Five years later (and a few thousand €) I stopped the azure services and deleted them!
I was sad to give up on "my first baby", but on the other side releaved.

I am happy, that I tried what I thought at the time was correct and learned so much on the way. I will not do it again - I will do it differently without a company, without loosing time and money and being more open and loud about my product.

I guess I can confirm a lot from what I read and see about product delevepment, money, building in public and working with other people:

  • the product should be profitable from the beginning - it does not need to be millions from day one, but €1 is already an indicator that there is interest.
  • audience is very important - it will boost your visibility, so be open and talk about your product whatever it is; build an audience on at least one channel; write and talk; give discounts
  • ask for reviews, create and share products metrics with the world
  • you don't need a company to start and try something out or to validate an idea - at the end of the day, the overhead of managing a company is overwhelming compared to the benefits if there is no profit. You can accept money for a product also as a private person
  • it is invaluable to have a partner and discuss with someone ideas and exchange thoughts, but choose careful and be honest to each other

I am still convinced of my idea and maybe I will try to build it with new technologies for fewer money. This time I will be building in public.

Let's see how my next try goes. AMA

  1. 9

    I'd add one thing to your learnings: If nobody else is doing it, this usually means it's a bad idea, not a novel idea.

    Competition is evidence of a real problem to be solved. I'm not saying copy your competition, just execute on it better for certain niches.

    Edit: I didn't mean to suggest your idea is necessarily a bad idea, just a general thought!

    1. 1

      Thanks for your reply.

      Overall you are correct about the competition and I agree on "execute on it better".

      In my oppinion a really novel/inovative idea could be good, but it is/could be very hard to find (and sometimes create).

      A prove could be if the competitors have similiar products or at least some features of your product or the other way around.
      I found a product in 2018 that is almost identical, so I still believe the idea is (or at least was in 2016) good.

    2. 1

      True dat.

      I think it's a balancing act to balance this with a space that has too many people doing the same thing.

      Competing in a "hot" area with a lot of well funded startups is def not an easy task either, even if you nail some sort of niche.

  2. 4

    I kinda feel for you. I put out similar post a while ago, concerning my product, with a single subscriber, >70 free users and no moves for over 2 months since launch.

    Sure this doesn't sound that bad, and I was recommended to keep going, but after doing some research and noticing that out of my >70 users, only about 5 were active. Others just kept the browser extension installed after the fact for whatever reason, without even using it.

    Carrying on your idea can often lead to great things, but can also turn out otherwise and become a big loss of time and resources. I think that's especially important in the indie space, more often than not with devs like me, working alone and with their own resources. And without a co-worker, things can also get dangerous for your psyche.

    Right now I'm preparing an exit plan. Maybe I'll open-source my project to at least get some potential recognition for it, or put it to the side for a while of relief, I don't know.

    What I know is that I've learned a lot after my first launch, and I'm planning to apply all this knowledge to my next product.

    1. 2

      Hey Arek, about "preparing an exit plan": so this idea to adjust privacy arrangement and get in touch with free users appeared to be not viable? I see several folks suggested you to do so in the comments. Sounds totally reasonable to me, having insights from these users can help to tune your value proposition. Or you are too burned by all the mistakes and failures to continue with this specific product? Sorry if so.

      1. 2

        Yeah, I’m a bit burned. The idea of having >70 free users kept me afloat. However after doing some digging, it turns out they’re not active. My product is a browser extension and so users were installing it, looking at it a bit and leaving it there. They don’t uninstall it, just bury it in their probably large set of extensions.
        It does present a closer potential audience, but I bet the moment I add account system, if they even notice it in the first place, they’ll just uninstall it.
        And so, it turns out that I’ve got 5 or less actually active users.
        I’m also considering splitting the product into two, but that requires further consideration. For now I guess I’m taking a break.

    2. 2

      Thank you very much for your reply and also for sharing your story - I just read it.

      I totally agree with you, about the idea. What you (and I also) learned the hard way is described in the "Lean Startup" book (author Eric Ries) as "pivot or persevere" - you need to measure and decide either to stay or to move and the sooner the better, because the longer you wait the worse it gets if it's not going in the right direction.

      I am sure, that you learned a lot as I also did and you will be able to use this knowledge and apply it on your next launch!
      I wish you all the best for the future and a lot of success! I'm sure you will handle your exit plan well. I decided to exit hard, altough maybe I could try to sell the code/product, who knows.

      Cheers.

  3. 3

    It seems to me like your biggest barrier to entry was your choice in co-founder who limited how much you could promote your product, not necessarily that the product didn't work.

    It would be a shame to waste all of that hard work, if you still believe in it. Why not start up a simple landing page and start promoting it with the intention of gathering a waiting list of interested prospects?

    1. 1

      Thanks for your reply and the suggestion.

      As I already wrote in another comment - maybe I didn't put it very well, or I didn't write all the details - I'm not blaming my friend that we didn't succeed.
      There is always a solution and I think we could have found a suitable one if we had a little more experience and talked about it more. We both were "learning by doing" entrepreneurs.
      A side project, part-time and a family, is a challenge. (at least for me).

      My plan is to reuse the old code, change it to a newer tech-stack (so it costs less per month - my goal is €0 if no one is using it) and try again, this time with a different approach - the same as you are suggesting.

      1. 2

        Sounds like a good plan. Good luck!

  4. 2

    Thanks for sharing your experience. We created a WordPress plugin 3 years ago and it's performing well. We intend to turn it into a SaaS product. I think I can learn a lot from you and make decisions more wisely.

    1. 1

      Thank you! I'm glad, that my experience can be useful for others too!
      I wish you a lot of luck and success for your SaaS jorney.

  5. 2

    Talking about building in public... what what this product? I kind of understand when people don't provide details but it would be nice to know.

    It's a shame you couldn't publicize it, first because well you can't sell it, but also it could give you a false sense of "Had I been able to use publicity it would've worked" which you don't really know.

    It's really inspiring to see people like you willing to learn. Best of luck! and if possible post more details about your product.

    1. 1

      Thank you and I appreciate your kind words.

      Yes, I still don't know if the product is interesting or not.

      I purposely didn't explain or mention the product myself - I thought it wouldn't be interesting to do that.

      The product is/was about "anonymous secure end-to-end (encrypted) message exchange".

      The API enables seamless exchange between different devices and operating systems. It allows you to compose (encrypt locally) and send a message using a browser running on Windows, and read (decrypt locally) a message on a mobile device or a Linux command line application, and vice versa.
      It supports text and files as input and uses standard cryptography - thus available for every browser, every operating system and every programming language.
      There is a gamification that the encrypted message stored in the cloud is automatically and irreversibly deleted from the database after x days. Features like tags for history and longer storage periods can be bought.

      The unique part of this service is the "anonymous" part and the automatic deletion - it's like a countless shelf of vaults. If you want to use a vault you label the door and create a key. The key used to encrypt the content never leaves the local device - only the label and the encrypted content are send and stored to the cloud and can be retrieved later.

      There are (I think) many use cases - for example one way secure messages from a doctor, hospital or financial institution to a person (a reminder containing sensitive data) - the key is generated, used to encrypt the data and send using a separate channel (mobile phone) the data can be retrieved and decrypted in the browser from the person.
      Or a secure chat, where the key for the room messages is set at the beginning and known only to the parties involved,
      or the key is a geo-location, so you need to go to a place in order to decode the message, and so on.

      If you find it interesting and want more details, let me know! :)

  6. 2

    Thanks for sharing. This is hard to write. Hopefully you learned valuable lessons about product development and co-owner partnership and next time everything will be smooth sailing!

    1. 1

      Thank you for your kind words.
      Indeed it was hard, but surprisingly it helped to let go (all the positive feedback for sure).
      I really hope, that I will be able to use and apply all the valuable knowlege I gained through this journey and master the next one. :-)

  7. 2

    Really nice post, I think the best way to learn is from the mistakes.

    1. 1

      Thank you. Yes, indeed the best is to learn from mistakes and not repeat them.

      The latin proverb for this is "errare humanum est sed in errare perseverare diabolicum" - "To err is human, (but) to persist is diabolical."

  8. 2

    The lessons you learned are very important, especially the one about the audience. You are developing a product for them, you will need feedback and reviews from them and when adding a feature or any kind of change, they have to know. You cannot just build your product in the dark and expect for customers to find out by themselves without any sort of promotion.

    One thing I agree a bit less is about profitability. It's okay if your product isn't profitable from day 1, as long as you see people are interested and keep coming. You can then do what's needed to invert the balance revenues / costs.

    1. 1

      Thank you for your reply and I totally agree with you about the audience.

      Regarding the profitability - Maybe I exaggerated a bit, but I really meant it like you - audience and subscribers can be used to measure whether there is interest in the beginning, which is a potential gain later. So yeah, you don't have to make a dollar from day one, but at least you have to have users, right?

  9. 2

    Nice post, thank you for sharing ☺

    1. 1

      Thank you! Glad that you like it.

  10. 2

    Thanks for sharing, a lot to learn from your story! One Q which may sound rude: why do you keep your last name hidden? Are you working at some company which has strict NO to side projects of the employees? I used fake last name on the web untill Dec'19, this podcast ep of Tropical MBA changed my approach. So far no regrets )) https://www.tropicalmba.com/pseudonyms/

    1. 2

      Thank you Pavel! 😃

      Not a rude question at all. Until recently, I tought that it is not important to give openly my complete name. My first name is not fake! :)

      My complete name was on the company and the product page and the company address too because of (IMO not so modern) legal regulations in Germany. ​

      I changed two jobs in the last five years and I always have talked openly about my side project and my company and was able to arrange everything legaly - there is no need to hide and I am allowed to work for my company too - it's in my contract. Fun fact - I got a plus point at the interview because I had a company and a side project! There were a couple of wins through the company after all.

      I'll listen the podcast now. Glad that it worked well for you!

  11. 2

    Hey @keenthinker, thanks for sharing your story. I wanted to ask you about your customer outreach. What channels did you use for reaching out to your initial potential customers? I'd love to learn more. Thank you,

    1. 1

      Thank you!

      We had initially Twitter and Facebook, but at some point removed Facebook. I posted regularly announcements on twitter.
      At the time we never invested in making our audience at least on twitter bigger.

      We applied a couple of times to some TechCrunch events/competitions. Created/added a profile in CrunchBase.

      We indicated in BizSpark that we are open for investors/cooperation.

      Applied once to a national innovation competition organized by a large bank (the SaaS product was about secure end to end message exchange).

      Added the company to a national (almost local) Startup register page and described the product (the register is created by the local stock exchange company).

      I never wrote any cold emails or made any cold phone calls, altough there were B2B and B2C use cases.

      1. 2

        Hey @keenthinker, thanks for the detailed response. I'm working on a project to connect founders with advisors for their startup challenges like Product Management, Growth, etc. and will soon start reaching out to founders. Really grateful for your response man! :) Do keep us posted.

  12. 2

    Sorry things didn't work out for you. Hope you find the notes below helpful!

    Why couldn't you just launch the product and not mention your friend?

    Also, in the US forming a limited liability corporation is still valuable even if you aren't making money. It gives you and your assets a shield in the event you get sued. LLCs are also pass-through entities, so managing them isn't as difficult as C-corps (which are helpful if you plan to issue shares).

    If you plan to give this another go, I'd suggest setting up a basic landing page to collect emails and run some ads. If you don't get any sign-ups - don't build it. Will save you time and money in the long run.

    1. 1

      Thank you very much for the kind reply and the hints.

      We launched the product, but did not advertised and did not speaked about it at all.

      Maybe I didn't put it very well, or I didn't write all the details - I'm not blaming my friend that we didn't succeed.

      Actually back then one reason to start a company (GmbH in Germany or Ltd. in UK or Inc. in USA) was exactly what you are writing - not to be personally liable.

      I agree completely about the landing page and the emails!

  13. 1

    I don't think you need ad. If you can't find paid customers manually, your ad can't help you to help them. Ad just speeds up the process. Imo, it's only useful for scaling after pmf.

    Let say you have a working mvp / demo, you can just reach out via email, linkedin, twitter, phone, whatever works. For early stage startups, it's good enough getting first 10 customers. If no one is paying, why bother with the code. No one is going to get a bug anyway.

    Also, I don't know what marketing activities you tried. From your acticle, you didn't mention at all. What marketing work did you try that couldn't get you a single customer? If no one is paying, how many users did you get?

    Your article gives me a feeling that you are equating ads with marketing.

    1. 1

      Thanks for your feedback.
      It is possible that I am equating ads with marketing. :)
      Someone aksed what channels were used to promote / showcase the product - in the answer is a list of the different channels that were tested / used.

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