Advice about how to start a small business and why you should never start with SaaS, especially if you are bootstrapped.
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Amanda: Hi Nathan.
Nathan: Hi Amanda.
Amanda: How’s it going?
Nathan: It’s another great day. How about you?
Amanda: It’s good. So, what’s new with you?
Nathan: My daughter starts transitional kindergarten tomorrow.
Amanda: What are you most looking forward to?
Nathan: I guess she’ll just become so bright in those 40 minutes of instruction out of the three hours that they have PE and music and recess snack. There should be about 40 minutes of solid instruction there.
Amanda: Does she know her ABCs yet?
Nathan: Most of them.
Amanda: I love kids. I was a babysitter growing up all throughout high school, and then I was a full time nanny for a little while. Did I ever tell you this in Saudi Arabia?
Nathan: Yeah.
Amanda: My favorite was the second oldest. He was three and a half, like three and a half, four. And that was, I just, I think that age is just so cute.
Nathan: They have so many questions and Many of them are things that you’ve never thought about and then you have to come up with. Sometimes it’s quite challenging.
Amanda: What was, what’s the most challenging question that your daughter has asked you recently?
Nathan: They’re so off the wall, I can’t even remember them later.
Amanda: My favorite response to little kid questions is, well, why do you think it’s like that, or, well, what do you think? Because. Either they think they know and they’re asking to make sure, or they really have no idea, but if you turn it back around on them, then all of a sudden they’re on the spot and then you don’t have to be on the spot. Is that mean to do to a child?
Nathan: It doesn’t work for me. She just gets angry. She’s like, I’m asking you, you know, tell me.
Amanda: I’m like, let’s talk about kids. I don’t know kids that well. Also, I love to see how their tiny little brains work. Kids say a lot of crazy things,
Nathan: Yeah, you’re not alone.
Amanda: I like to have some conversational content, so it’s not all business all the time. Last week we talked about how SaaS came to be in a very non technical roundabout way and this week I want to get into working in SaaS.
I’ll always interject my own experience and opinions, whether or not they’re asked for,
Nathan: Yeah. Sounds good.
Amanda: When people ask you what you do for work, what do you say?
Nathan: I really have to take the audience into account. You know, if, if my parents and their peers are around, you know, “computers” suffices and then everybody moves on.
Amanda: Is there any situation where your answer, at least your first initial answer to that question is, Oh, I work in SaaS.
Nathan: No, I almost never, because I think people outside of the industry don’t know what SaaS is. And then if you’re in the industry, it’s just like, but what, product is it? What industry do you serve? What does it do?
Amanda: Yeah. Okay. So then I guess my whole topic for this, this episode is way too broad. So we can dig in a little bit. You’ve always been into computers, right? You worked in a computer store in high school.
I know that because that’s your most previous work experience on LinkedIn. When did you realize that you were really into technology?
Nathan: I got my first computer in kindergarten and I had the internet in like kindergarten or first grade, like very, very early dial up internet. and I always was. Playing around on the computer but also trying to like things.
Like there was some very early, it’s like PowerPoint, called super card. It was basically PowerPoint with, um, scripting language built into it. So you could put buttons on the screen and you could click on them and then they could do things. Um, they could switch between a stack of cards.
They could do animations. My mom was a teacher. I built like a little application for her to use for math problem sets or like a word search thing. Through middle school and high school, I was building websites and like very basic HTML pages for a couple of local businesses and then in high school I started working at a computer store. It was an Apple focused computer store Apple didn’t use to have their own stores. They only have resellers and an Apple store had just opened down the street. Everybody’s been to an Apple store. They’re beautiful. Like, and they’re basically an Apple advertisement. Um, the computer store I worked at was just a local reseller, mom and pop.
Very no frills. And so what happened was over those years that I was working there, and more of the consumer people who just wanted to buy an iPod or something would just go to the Apple store for that experience. And most of the people I was interacting with were business. Owners like small businesses in the local area used max, you know, themselves, or they had a small team. And so then I, a lot of what we were doing was kind of like business consulting, helping them set up, helping them install software, helping them choose software solutions. So that was like client services, but I was always in this kind of building, creating phase.
And I always kind of enjoyed that.
Amanda: I always learned something new, you’ve been working with small businesses for so long. I’m seeing this common thread that you’ve just throughout time from the time you were building websites for free in high school to working at a computer store and helping small businesses choose their software. Your life mission maybe is helping small businesses from a technology standpoint. Is that fair to say
Nathan: A lot of small businesses struggle so much, like there’s always too many things to do. And so if they believe that you can make things run smoother, they’ll just give you the authority to do it. As long as you’re willing to put in the work and you can see in a small business, you can make a tremendous impact on. That person’s life and their like efficiency and the ability to run their business. Like everybody who’s running a business, it’s not very easy. There’s generally much easier paths that are more financially stable or simpler, and there’s time for other things. So, you know, most business owners that I’ve ever interacted with are very passionate. Like there’s a reason they’re doing what they’re doing. They really enjoy the work itself, or they really like the outcome that they’re able to or both. Um, so they’re fun people to interact with and it’s rewarding to empower them to actually, you know, focus on what they want to focus on. My angle has always been technology and you can make a few changes that save them hours a day or hours a week that really add up.
Amanda: Can we talk about bootstrapping a business? Is that something you’re willing to talk about on the podcast?
Nathan: My first thought was, what specific part about bootstrapping a business, because you end up having to do all of it, right? So end up doing a little bit of everything and you end up filling in all the gaps that you can’t afford to hire for yet.
Amanda: Yeah. I mean, can we, can we talk about that a little bit? What it’s been like bootstrapping all, all of your businesses, it’s a different approach and it comes with its own inherent set of challenges, but also wins that you can’t get when you’re funded. You don’t have all of the resources that funded companies have. So I guess what are some of the biggest challenges you’ve run into not having external funding?
Nathan: You never have. enough time to do things at a world class level. You can’t afford to do everything really well. So I think it really forces you to figure out what your competitive strengths are so you can focus on them. For us, we focus on product and customer experience.
You do need to have a product that works. You need to have a team that can support it. You need to have finances that are in order that you can file your taxes. You have to, you know, be doing marketing and sales. You can’t neglect any one area, really hard to afford to hire in all the areas you need.
Amanda: So often when people want to start a business, they’ll say, you know, I’m a, I’m looking for a co-founder. I’m a technical person. I’m looking for someone who’s really strong in marketing. And I see that all the time, people asking for co-founders who kind of have complimentary talents and skills and networks and you and your NSquared co-founder, Natalie are both. technical people and both developers. Although I will say you each have skills when it comes to sales and marketing. But at your core, I think you both identify as more technical co-founders of NSquared.
Nathan: I think we’ve said to each other that it would have been really convenient if we did pick one of those perfect complimentary, uh, co founders where one of us was like pure marketing and sales. And. other was all technical. You see that pairing a lot. but I think the person in your relationship is much more important than your specific skills.
So I think when you find that person that there is a lot of trust and you’re on the same page, like philosophically about a lot of things, you have the same goals in terms of what your, what kind of business you’re trying to build, how many employees you have, whether your goal is to sell the business and flip it, or whether your goal is to run and operate it. Those things end up being much more important over many years.
Amanda: I’m assuming if anyone needed support, you and Natalie Mac are like the easiest people to talk to. So I’m sure, I’m sure support was good, even though it was just the two of you. If you even, if anyone even needed support for the first products.
Nathan: Oh, everybody always needs support. That was also part of when I was working at the computer store. And I mean, that was, it was sales, but it was a lot of support. You’ve got to sell a computer and sell the software, but a lot of it was helping them set it up. And I saw how much support people needed, like being a technical person.
I was like, okay, I just carry the box up to the cash register, take the credit card, and then we’re done. Non technical people who also have busy lives and kids and everything else and a job, right, didn’t have time. And even if they’re very intelligent, capable people, didn’t have time, didn’t have the right questions to ask, didn’t know what they didn’t know.
All right. And so being able to really understand that, I think with technical people, we’re so focused on the technical challenges and like, we think what we’re building is perfectly obvious and like, maybe it is, if somebody had 20 hours to sit down and fully explore your creation to all of its fullest, but nobody has that time.
Right. They’ve got maybe 20 minutes between now and the next call they have, it needs to be so obvious and intuitive, or they need to have hands on support to have somebody show them, that it does make a huge difference. And. So I think I kind of saw that firsthand over and over. And so I was always, um, very hands on in support and saw the value of it
Amanda: Do you think it’s changed significantly with the. Availability of problem solving videos. Let’s say YouTube, for example, where you have people who don’t work for the company, but they know the product and they’ll put out an informational video.
And so people can, rather than reading through hefty developer documentation, they can watch a video and kind of watch someone else go through it. Do you think that’s helped or has the amount of software. And the technology has gotten so advanced and complicated might not be the right word, but more complex that it’s like the problems are growing at the same rate as the solutions are advancing.
Nathan: Yeah, it’s very helpful to have YouTube, um, and tutorials. And power users that are viewing it from the outside, not official representatives of the company, especially if they’re trying to hook two things together. Maybe the individual companies, that’s not their priority. Um, so if you can find somebody doing that, like that content is tremendously helpful. Um, Sometimes there aren’t people who posted the specific video you’re looking for, or you don’t know what keywords to search to find that video that would save you because you don’t know what the feature is called that you need to implement or something. Um, and then, of course, a lot of those things like the videos might get dated or out of date with what the software actually does now. I think they’re both growing at a similar pace. It is helpful. And at the same time. It’s just as complicated and messy as it ever was.
Amanda: What’s one piece of advice for someone that is thinking about founding a small business or is, you know, kind of peering over the edge of that cliff and thinking, is this something that I really want to do?
Nathan: I would say maybe not to start with a SaaS. Like if it’s the first thing that you’re doing, like if you’re quitting a normal job and going to that, or even if you’re a small business, that’s been. Doing services work and you want to get into product SAS is the most extreme version of that because. By definition, there’s so much infrastructure. Like you have to be hosting a server. It needs to be on, you need to have some kind of DevOps experience or somebody to call if the server is off. You can’t be collecting money from a thousand people and then just have the server not work for, you know, a week or even a day, sometimes even an hour, depending on your product.
Um, I think that minimum bar of what you have to offer and just to operate is pretty high. Um, and there’s probably a lot of work up front to just build the product. And, uh, you can start with much smaller products. So if you’re like just transitioning from, um, if it’s a side project that you’re working on alongside your normal job, or if you have a services firm and you’re trying to make your first branch out into revenue, that’s not tied directly dollars to hours, I would start with something small.
And then we didn’t get into all the world of WordPress plugins and all that. That’s probably for another time. But, you know, WordPress plugins are like a step in between that because you are building real software. There is a lot of upfront work, but you don’t have a lot of the challenges that you have with SaaS because, you know, you’re giving a piece of code to run on their website. So that means if, if you have one super busy customer, they inherit all of those server resource challenges and it doesn’t affect your other customers because the other challenge with SaaS is you could have a thousand customers and all of a sudden, like one day, one of them could be using so much resources that impacts all your other customers.
So now you have 999 customers emailing you because you have some scaling issue in your servers that you haven’t addressed. And one customer is causing it. So with WordPress, like all those things are independent. Um, and there’s similar other marketplace apps. You can make an app for Shopify. Webflow. Chrome extension, any of those things, you know, you are building a product you have the support challenges and all that people might email you and ask for support, but you’re not gonna have like the server scaling challenges and those things, cause you’ve kind of that and you’re like an add on for an additional ecosystem and your marketing is simpler too.
You don’t have to do, you don’t have to do all of the marketing for your Shopify app, right? There’s a Shopify app marketplace that people search every day. So if you build a SaaS app, like Nobody in the world knows that you exist unless you get them to go to your website, which is a lot of work. You have to be writing blog posts or buying ads or going to trade shows or, you know, creating content.
Like you have to do a lot of work just to get people to know you exist versus if you go in an existing marketplace, like the Shopify app store, someone can. Just search for whatever your thing does every day, they’ll find it. like, there’s also the built in marketing channel. So if you think of your company as a collection of all these departments, like every department, it’s like more work, more, more departments and more work in each department, like for SAS, then some of those other alternatives. So I guess I would say start smaller, start more of your revenue is through products. Um, to the point where you can afford to kind of buy out more of your time to work on a bigger and bigger project.
Amanda: What if someone Here’s what you say. Which is don’t go into SaaS right away and they go, yeah, yeah, yeah. Okay. But I’m going to go into SaaS. What advice would you give to that person?
Nathan: This person sounds like Amanda. Yeah, yeah, yeah. I heard everything you said, but it doesn’t matter.
Amanda: Yeah, cool, cool, cool, cool, cool. So, um, what if I just go into SaaS though? What should I do?
Nathan: Don’t try to do something else at the same time. Like you can’t chip away at a SaaS product in an hour or two on the weekends, right? It’ll take you a decade. If you’re going to go in and, and do it despite all those other reasons, I think you need to be prepared to, and believe in it enough to quit your job and work on it full time and possibly hire a person or two to work on it full time with you. So you need to secure that funding from your own personal savings and risk, or you need to get an investor or somebody, um, to partner with you, who’s maybe in the target customer group that you want. Like if you want to target real estate people, you find somebody who’s really connected in the real estate world, here. We’ll kind of go in on it with you either financially or some kind of strong commitment that like, yeah, I’m going to sell this.
And there I’ve, there’s a hundred people waiting to buy this. If you can build it right, you need to have that kind of confidence. and you need to focus on it, I don’t think most SaaS businesses outside of extreme luck will make it, starting it as just like a side project.
Amanda: Okay. That makes sense. Thank you, Nathan.
Nathan: Thank you, Amanda.
Amanda: This was great. I say this every time I learned a lot.
Nathan: Thank you. It was a lot of fun.
