Platform risk killed my SaaS, here's my learning
Hi Members,
So a few weeks back I had got an awesome business idea. The idea was to provide custom domains and analytics for Substack publications. The great thing was that there were a ton of users of Substack who were ready to pay for it.
This was a great option for me to work on, why?
- Literally no competitors.
- Lot's of people willing to pay.
Now it was lucrative so I started working on it. I was able to build the first version in a few weeks. Now I was quite happy and got great feedback from the community.
Quickly I started getting traction too, some people started tweeting and my SaaS was also mentioned in a popular newsletter(TrendsVC by Dru). I was amazed at the growth as it was only 2 days since launch.
My revenue was near $200 in just 2 days, though it might sound low to some of you, for me it was really huge.
Then on the 3rd morning, I woke up with a shock. Substack started providing custom domains (the same service which my SaaS provided). Substack too started charging for it and as they owned the platform they could easily reach all target audience at once.
I was broken down and understood how dangerous platform risk is.
Want to know how the platform might hurt you?
- They might change access to their data.
- They might come up with similar service.
- They might add/increase data access or license fees.
- They might shut down.
Even after these serious risks, I don't discourage these kinds of businesses until they do it in a proper way. Like look at Buffer, it is dependent on multiple social media networks and not just on one. Similarly, Baremetrics is a platform-dependent business but it depends on multiple payment providers for data collection. Distributing your product/service with multiple platform help to dilute the platform risk.
Diluted Platform Risk is OK. Concentrated Platform Risk is Alarming.
If you are curious to know my SaaS name it's HieFyi. I also write about organic growth and business-related stuff on my Substack publication, you can check that too.
Currently, I'm working to build micro tools for marketers so that I can build a growth marketers community around my content and tools.
Keep Hustling,
Ankit : )
Do comment your thoughts, I'll love to read them.
Platform risk is real and sucks. I've been bitten by it as well.
Some other things I noticed with this kind of risk:
The bright side is that you didn't spend too many months on this. Imagine if you had a 10k MRR going here, and then they do this.
Everyone's biggest nightmare.
That would have been really bad.
Well, looking on the bright side, you hadn't spent too much time on it. 🤷🏽♀️
Also, I guess, Substack is relatively new and still figuring out lots of stuff, which makes it riskier to build upon.
I completely agree plus I got to learn something.
I thought of sharing it here so makers understand that when building a platform-dependent SaaS then they better support multiple ones. Eg: Buffer.
Own the land you build your house on.
Today Shopify announced one click upsell, there's 40 startups that offer that as a core offer...
Yup imagine if those plugins provider worked with WooCommerce and even standalone tool too then it would have hurt lot less.
Having diversification is necessary.
Yeah I thought of you when I saw Substacks news. What are you going to do with it now?
Frankly speaking, no idea. Though the script with minor modifications have potential to offer custom domain for multiple other services like Notion, Click Up and Roam Research. I might or might not do it.
Currently working on something else. Any suggestions that come onto your mind?
That would be a great idea! Basically diffuses platform risk. That's a big problem with platform risk. They could implement your feature in any moment.
Yup that's indeed a great idea but for some reason I don't get excited about it anymore.
Maybe I'll write the additional scripts and sell it. That would be a better idea.
Every platform has their own best feature. Some are famous for their design, and some are famous for SEO, read this article to know more about Ecommerce platforms https://conversionskitchen.com/what-is-best-ecommerce-platform/
A couple of questions to assess your platform risk levels:
Honestly not many startups these days can completely insulate themselves from platform risk.
You can do what you can to mitigate it, but to completely avoid it, it's quite impractical.
Consider that:
99% of indie hacker SaaS startups' are built on Stripe. If they disable your account, game over. No revenue. You're lucky if you get to port over your customer data to your new payments processor, which again is another platform risk.
A substantial number of startups also rely on third-party APIs, like Shopify, Twitter, Facebook, Google Maps, Slack, etc., among others (including Zlappo, my startup), thus multiplying their platform risk (that already exists by using Stripe). Again, if they turn off the tap, it's game over.
99% of video content creators are hosted on YouTube. If they demonetize your channel, game over. No revenue. YouTubers are particularly vulnerable, because they're literally walking on eggshells each time they open their mouths. They don't know if they'll say something wrong that will offend the powers that be. Yes, yes, you can create a Patreon, but they suspend people too for having the wrong opinions.
If you have a startup that doesn't have platform risk, I'd be very interested to hear about it.
Even public companies (like Zynga) make the error of relying on one single platform.
I understand what you say but one needs to do what's possible.
Maybe maintaining multiple payment options? I use a CDN solution(they are a small business) but they maintain 2 different payment services.
Similarly, if you are using DigitalOcean to host something and there are chances that they might block you. Having a backup on somewhere else will surely save it.
What I want to say that never let 1 platform have the power to destroy 100% of the business. Like if Twitter banned Buffer, they'll surely lose on revenue but not 100%.