The SaaS Playbook - Rob Walling

Partial Excerpts (antilibrary)

2023

Who Shouldn’t Read This Book

If you’re looking to build a business on your own that pays your bills but doesn’t grow beyond that, this book will have mixed value for you.

If you want to build a business that allows you to stay small and live the four-hour workweek, I suggest checking out my first book, Start Small, Stay Small: A Developer’s Guide to Launching a Startup (

That book focuses on starting small software companies for lifestyle purposes like quitting your day job or minimizing the hours you need to work. You might think of the book you’re currently reading as a sort of spiritual sequel to Start Small, Stay Small

You Know What’s Cool? A Million Dollars.

My first book, Start Small, Stay Small, focused on tiny niche products that generate thousands or low tens of thousands in revenue each month.

That’s not the focus of this book

This one is another step or two along the journey (in my Stair Step Method of Entrepreneurship, this book is focused on step 3).

Step 1: Your First Product You’ve got a simple product with a simple marketing plan, usually with a single traffic channel, like a WordPress plugin or Shopify add-on.

Step 2: Rinse and Repeat Step 2 involves doubling down on the model that worked in Step 1 and repeating it until you own your time. Take a look at what made that product a success and repeat it with another product. Continue getting good at the free or low-cost traffic channels that are working for you

Step 3: Standalone SaaS Product SaaS is complex to build and market, and there’s a long on-ramp to any kind of substantial revenue. The point of the Stair Step Method is to allow you to gain experience, skills, confidence, time, and revenue before starting the difficult challenge of building a standalone SaaS product.

but of course, it’s possible to skip the stairs and still achieve success with your product.

What Is Bootstrapping, Really?

Self-funded: Some use this interchangeably with bootstrapping. I define it as being able to fund your next startup with your current resources.

stair-stepped my way up from consulting during the day and building products at night to having a few small software products making $500 to $5,000 per month to a SaaS application that earned $25,000 to $30,000 per month and allowed me to enter the extremely competitive and lucrative market of email service providers.

Mostly bootstrapped: Some founders want to build a bootstrapped company but know that a bit of funding will help them get there faster. These funding rounds are usually in the $100,000 to $500,000 range, and they are raised from friends and family

Customer.io

Castos

In this book, “bootstrapped” includes self-funded, bootstrapped, and mostly bootstrapped startups

Do you aim to build a real product that sells to real customers who pay you real money? This book calls you “bootstrapped,” even if you raise a bit of money.

Do you aim to run your company near break-even, be capital efficient with your decisions, and potentially pull profits out over the long term (or sell if it makes sense)? This book calls you “bootstrapped,” even if you raise a bit of money.

Why Focus on SaaS?

Focusing on SaaS allows me to give extremely specific advice that doesn’t apply to other types of companies. For example, I could spend pages discussing churn, onboarding, and lifetime value (LTV), topics that don’t apply to some companies.

A Repeatable Playbook

Several years ago, I began to pull out success patterns, turning them into SaaS-specific rules of thumb, best practices, and frameworks.

Why Is SaaS the Best Business Model?

Recurring Revenue

Recession-Resistant

Not Dependent on Luck

Not Fighting a Battle on Two Fronts

One of the most challenging problems to solve when building a startup is kickstarting a two-sided marketplace, where you need to bring both supply and demand to the table simultaneously (think eBay or Uber).

You Don’t Need Funding

High Profit Margins

High Exit Multiples

Achieving Escape Velocity

I decided to focus this book on topics that will help a business with some semblance of product-market fit take its company to the next level.

My mental shorthand for product-market fit is: you’ve built something businesses want and are willing to pay for. With SaaS, product-market fit starts very weak and often begins to strengthen when you’re around $10,000 or $20,000 MRR. It then transitions to the next level, what I call escape velocity, once you’ve built one or more repeatable growth channels.

building your product for your ideal customer, finding one or more marketing channels that work, building moats, reevaluating pricing, building your team, unlocking SaaS Cheat Codes, and finding and fixing bottlenecks in your funnel.

Strengthening Product-Market Fit

So much of your company’s success will depend on developing a deep understanding of your market and ideal customer

Often, this understanding becomes a moat of sorts

Although there are many ways to develop this understanding, one of the most reliable is having conversations.

Most entrepreneurs don’t have enough conversations with potential, current, and past customers

There’s another reason entrepreneurs don’t talk to customers: fear—fear that they’re bothering them, fear the customer will say something they don’t want to hear, fear that it’s a waste of time.

These conversations will inform your product road map and how you build features as well as your positioning, marketing copy, and pricing. You’ll build a better product for your ideal customer faster than if you try to guess what people need.

Asking the Right Questions

depends on whether you’re doing early customer discovery or researching how (and whether) to build a new feature

For a great resource on doing customer interviews as a founder, check out the book Deploy Empathy: A Practical Guide to Interviewing Customers by Michele Hansen