# Ask Yourself This BEFORE You Start Building SaaS Products... Channel: Rob Walling Video: https://www.youtube.com/watch?v=G7xvXuECH78 Duration: 10 min Language: English Words: 2130 Transcript page: https://viewrankai.com/tools/youtube-transcript/G7xvXuECH78 --- [0:00] some people become entrepreneurs because they want to get rich or it's because it's what their parent did or they saw someone doing it and thought it looked like fun they heard about Mark Zuckerberg or Bill Gates and they were influenced and inspired but there's an important question that every individual should ask themselves before they start a company before they become an entrepreneur and this question is especially relevant if you're going to start a technology company because there are so many options and so many different paths available to you so in this video I'm going to dive into the question of what type of business do you [0:32] actually want to build it's a question I wish I'd ask myself more when I first started out I'm Rob Walling a Serial entrepreneur with multiple exits I've written four books on entrepreneurship and invested in more than 150 companies today I have my trusty rec room mug as we ask ourselves this one question super important question before building your SAS product and if you stick around till the end I'm going to let you in on how you can change your answer to this question in One Direction but not the other so the question that we're asking today is what type of business do you actually want to build and I categorize [1:06] Tech startups and SAS companies into three buckets the first are those businesses built for a lifestyle bootstrapper these are the folks that want to make five thousand ten thousand twenty thousand dollars a month work as little as possible effectively trying to live out the four hour work week and I've I've done this it's amazing I'm gonna talk about the pros and cons of each of these types A little later but lifestyle bootstrappers certainly have it good up to a certain point the second bucket are the ambitious bootstrappers and these are folks that may want to raise a small amount of money because this is where I use the term [1:38] bootstrapping to mean bootstrapped and mostly bootstraps so if you raise 100 200 300 000 you're still effectively bootstrapped the difference between that and raising Venture where you're raising millions of dollars is huge and the goals and the gambles are all different so when I say an ambitious bootstrapper they want to be ambitious about it and they're willing to put in the hours they're willing to work full time maybe more than full-time to build a team and they want want to get into the millions or tens of millions in Revenue as a mostly bootstrap SAS founder and the third bucket of course is Raising Venture Capital it's what everyone [2:08] thinks of when we say raising funding but as it turns out there are actually a lot of funding options that are not Venture Capital but once you raise institutional money from a Silicon Valley VC or a New York venture capitalist or a London venture capitalist you need to become a unicorn for it to be worth their while and so you're putting all the chips on the table and you're making a huge bet you're betting your company that it will get huge or it will go to zero there really isn't any in between once you phrase Venture so now I'm going to run through each of these and talk about the [2:38] pros and cons of them because I've done all three of these believe it or not most people haven't but I had this amazing lifestyle SAS business called hip tail that did about thirty thousand dollars a month and before that I had a handful of you can call them lifestyle businesses doing between one and about ten thousand dollars a month lifestyle businesses are fun they're super calm you're in control they can be boring ring that's probably the biggest drawback when I was doing them I got bored because I stopped learning things while these were incredibly profitable businesses with a high likelihood of succeeding because the aspirations are [3:11] lower right getting to 10 or 20 000 a month is much easier than getting into the millions so while they're profitable while you keep control while they're fun they can be pretty boring and so I see lifestyle businesses as having a particular place in the entrepreneurial ecosystem where perhaps you just want to travel perhaps you want to own all your time and spend it the way you want to or perhaps it's a stepping stone on the stair step method of bootstrapping to get you from step one to step two to step three which is what I did where step three is where I transitioned from being a lifestyle entrepreneur to being [3:43] an ambitious bootstrapper so now let's talk about building that ambitious company wanting to get to millions or tens of millions in Revenue if you're mostly bootstrapping you still retain control I will say that bootstrapping a SAS to 10 million 20 million it's hard mode it's hard mode without funding it's unfortunate fortunately I've started five bootstrap companies and I know that while I retained control and it was incredibly rewarding not having the funds up front to hire made my life a lot easier if you want to find ambitious bootstrappers I certainly was one when I started drip any Tiny Seed Company you can go to tinyc.com portfolio and that's [4:19] who we invest in it doesn't make sense for us to run a startup accelerator for lifestyle bootstrappers because there just aren't enough returns for it to make sense for an LP or an investor to give us money to invest in a startup unless they want to get into millions or tens of millions in revenue and so one really good example of this who's been public and is a Tiny Seed company is scraping B and you can find them at scrapingbee on Twitter and they are doing Millions a year it's the two Founders and a couple of employees but they're a great example of folks who kind of started off as lifestyle [4:48] bootstrappers and became more and more ambitious as their company grew and of course we have our third bucket which is Venture Capital it's raising millions and millions of dollars these days a series a is six million dollars or more it's a lot of money and once you take that much money at the valuation that requires imagine raising at a 30 or 40 million dollar valuation you can't then sell for 30 or 40 million you have to go for a hundred million a billion plus and so Venture is more risky it's a lot more intense you have a lot more people involved you have a lot less control you [5:18] have a lot more pressure on yourself but the rewards if they work out can be big it's just the chance of them happening or a lot less than with the other two options I outlined and so the question to ask yourself is which type of business Do you want to build it's especially bad when two co-founders start a business and one wants to be a lifestyle bootstrapper and one either wants to raise venture or be an ambitious bootstrapper this is where expectations misalign and co-founders can split up I'll be honest that this bucket this lifestyle versus ambitious versus Venture Capital it's not as black and white as a lot of people make it [5:51] sound like you've probably heard that if you raise Venture you work 90 hour weeks you have no control and the Venture capitalists take control of your company away and hire a CR go and kick you out by the time you hit 20 million I've known Venture back Founders who make great salaries who work 40 hours a week and actually have great work-life balance and I've known bootstrappers who are stressed beyond belief and in essence making minimum wage it can happen in all directions the tropes or the stereotypes are mostly accurate but they don't have to be that way and so don't necessarily Buy in to something [6:23] that you've seen on the TV show Silicon Valley or things that you read on TechCrunch and another thing to keep in mind is to be realistic about your situation so 15 years ago I was living in New Haven Connecticut I had a young child my wife was in grad school at Yale and I didn't have the ability to move away because she had to be at Yale and we had this kid that I was taking care of a good chunk during the day amidst my work and yet I applied to Y combinator which was in Boston it was completely unrealistic even if I had gotten in it [6:51] would have been unrealistic and I should have lifestyle bootstrapped which in essence is what I wound up doing with.net invoice over the course of the next year or two it's an important thing to think about this question that comes from Lee lefever's book big enough the question is what if it works it's a simple question that can help you anticipate the long-term effects of a decision so if the lifestyle business works and I get to 10 or 20K and I'm able to quit my day job and work 10 hours a week what then will I get bored can I then do something more ambitious yes you can that's exactly what I did I [7:21] think that's a pretty good way to go to be honest or if I start the ambitious effort today do I have the time do I have the energy if I raise venture today am I in a situation where that's realistic and what if that works and I'm running a team of 100 or 200 or 300 people for the next 10 years do I want that when you're just starting out stair stepping works really well I mentioned that a little earlier but it tends towards having the lifestyle elements early because the opportunities are smaller so you start a step one and step two businesses and once you own your [7:49] time you have that lifestyle business and whether you have the income or a small exit it's much easier to then focus on taking that bigger swing with step three but I'll admit maybe I'm biased because it's the path I travel and it's the path I see a lot of other SAS Founders traveling as well in a minute I'm going to tell you how you can change your answer to this question in One Direction but not the other but before I do that I want to let you know you're watching the microconf YouTube channel all about building launching and growing SAS products some Founders are completely bootstrapped and some are [8:16] mostly bootstrapped there are lifestyle folks and there are ambitious bootstrappers amid us but we also run events in-person events and online events called microconf remotes so to see that list of events head to microconf.com upcoming Dash events you'll see the link in the description of this video but we have new events all over America's and Europe and we might have one in a city near you head to microconf.com to find out more about all the things we offer including these events our microcomp connect online community our Mastermind matching that we do a few times a year and so many other things for Founders just like you [8:52] okay so the interesting thing about this question of what type of business you want to build is that you can change your answer in One Direction but not the other so you can move from starting a lifestyle business to then transitioning that to an ambitious startup I did that myself with drip the initial ambition was to do 10 or 20 000 a month and then it started growing really quickly into the millions and I decided I'm going all in I'm going to be an ambitious bootstrapper and you could then raise funding you could raise Venture but once you've raised funding you can't really go back while it's not technically [9:21] impossible it's really difficult to do and it it just it's not a good look so realistically once you move to the ambitious or the venture-backed stage this is not something you want to undo so be sure that that's what you want before you make that decision if you liked this video hit the Subscribe button and if you're looking for your next steps check out how you can start your SAS with no money see you in the next video --- About this transcript Read from YouTube's own caption track and laid out by ViewRank AI (https://viewrankai.com). 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