Discover the lucrative SAAS Business Module and how you can produce and launch your own software as a service product. In this episode Derek interviews Gabe Alves about his SAAS business and what it really took to get it up and running.
Transcription Episode 99: How To Develop And Launch Your Own Software-As-A-Service (SAAS) Business – With Gabe Alves
This is your host Derek Gehl and today we’re gonna dive into, well, what it takes to really bootstrap and launch your very own piece of software. Actually more specifically a SAAS solution and for those of you unfamiliar with the term that stands for, “software as a service.” Which, if you’ve used the internet these days and you’ve subscribed to any kind of piece of software, well, that’s what that is. That’s a SAAS solution.
This episode excites me because SAAS businesses are probably one of the most valuable businesses you can start these days.They definitely take a little bit of run-up and time to get them going. But once they’re running they can be really, really profitable.
One of the reasons I love these business models is because they’re one of the most valuable business models from an exit standpoint. Whenever you’re selling a business it’s value based on a multiple. SAAS businesses get one of the highest multiples so you hear 5, 10, 15 times revenue type thing for these types of businesses.
The second reason this episode excites me is because the person that we’re going to be learning from today is someone who’s spent really the last few years building and launching their very first SAAS product. He’s done it on his own, no outside investment, no big marketing budgets. His business is now well over his first year into it.
It’s growing like crazy. It’s a very cool tool. I love interviewing entrepreneurs that have done it on their own. Have bootstrapped this, have built it, have overcome the odds and we can learn so much from them. So without further ado I’d like to welcome the founder of a cool SAAS solution called TrackMySubs. All the way from Perth, Australia, which is the most isolated city in the world, I’d like to welcome Gabe Alves.
I guess where this came about was my wife runs a graphic dot dot design business. She’d been running it from home for say the last 10 years and we had this crazy idea that we wanted to automate some of her stuff with all these new cool tools and apps that come up. So we’re going back two and a half years now.
We had this idea of, what if we could get her clients to just fill an online form that then we could just automatically create a work order from that form, put it into our project management tool, and we’re using Redbooth. And then assign it to one of our graphic designers that contracts to us and if we could do this automatically.
There was so much time and effort involved in just getting the scope together and getting all the images and all these sorts of things. We thought, “Maybe we could automate this.” So we started it and through this process we started signing up to all these apps and all these tools and form builders and WordPress this and WordPress that. You can see where this is going, right?
There was a particular subscription to Dropbox that was the trigger for all of this. We had signed up into December of 2015 with this. We needed it to attach the files, to hook it into Redbooth and it was the enterprise plan or business plan and it was the only one that had the features that we needed. So we thought, “Yep, no worries.” And then we got distracted. But in January of 2016 $850 came off the credit card and we were signed up for a year. I was just like, excuse my French, but, “Shit. There’s 850 bucks I really didn’t need to spend right there.” It sucks that you need a trigger. I’ve often wondered, why does shit have to go bad for you actually to sort stuff out?
Sure enough there were a few apps out there that did the job. There was probably four that I picked up. There was one called Trim, another one called Truebill. These were apps that you would connect to your bank account and it would trawl through every transactions and it would say, “Here’s your subscriptions and things that you’re paying for.” My first reaction to that was, “Well I actually know what I’m subscribed to.
“I don’t need to give you all my access to my bank details and all my transactions so you can data mine it for whatever purposes.” I actually just need a tool that’s better than a spreadsheet for sticking all this stuff in to and set myself some reminders.
Then there were a couple of other apps that were IOS or Android-based. One was called “SubscriptMe”, there’s another one called I think BillyApp. Billy or Bobby or something like that. They were just on your phone. Really good for putting in your Netflix account or something like that.
One of these apps had a feature around where it’ll go through your phone and pick up any apps you had installed and then load them up as subscriptions and then it would pull some data in and off it goes. I thought, “Well that’s pretty cool.” So I tried that. But the problem is that it loaded in information that was incorrect.
So for example it pulled in LinkedIn and said, “You subscribed at $70 per month.” As I was going through it I’m like, “Well no, this is wrong.” So I had to fix that. I went to another one, “This is wrong.” It just pissed me off. I was like, “I didn’t sign up to this app to get it going to then have to spend half my time correcting it.” I thought, “Well, I just want something I’m going to put in myself.”
We came to the point where, I’m not a software developer, I’ve never been a software developer. I have zero experience in that. So there was a young guy who’s a consultant that worked for me in my day job. His son was at uni and he was into his third year in software development. I was chatting to him about it and he said, “My son might be interested in doing some work for you or helping you out.” So we had a chat and yeah, we decided to give it a go.
He would do all the development and I’d give him the direction and I’d fund it and we’d just give this a crack. That was in February of 2016 we started and three months later we hired another student because we just had more work and we just didn’t have the time. The guys were at uni and in August of 2016 we had an app that we put online and yeah, it turned on. It was great.
I mean I can get on a whiteboard and thrash it out, I can understand how it flows and how it all goes together. But I am 100% dependent on my developers which is a really interesting place to be.
He was fantastic, an absolute superstar. Unfortunately he’s not with me anymore, he’s moved on to other things. But he was the key to this thing getting off the ground.
We’ve got so much talent out there that you can do that. And I love the fact that you were able to launch this company effectively starting with a university student. That’s huge.
Now you have the advantage of having a spouse that’s also a graphics designer, which is great. But if you can at least give them … Draw it on a piece of paper. You’re going to get so much closer to that result that you were looking for. You’ve been through this, you’ve hired these guys, you’ve never done software development. Looking back on this now that you’re this far into it what would you have done differently?
One of the issues I had was, the first design I came up with, I’ll be honest right? It was crap. It looked horrible. Because it was my baby though and it was something that had come out of my head I’m thinking, “This is amazing, it’s fine. I don’t see what the big deal is.” It’s just knowing that when you do hear some stuff over again you’ve got to take it on board. That’s one thing I wish I’d done earlier. It took me five months to get someone to redo my UI. I don’t know where I’d gone through but certainly when I look back on it now I kind of cringe.
In fact I’ve done a few presentations lately for the startup community here in Perth and I showed my first theme for a segway. You can see the audience just go, “Oh my God, it’s horrible.” Like, “You put that up?” I guess the second thing that I’ll do differently is I wouldn’t try to make it so perfect. I’d just get it up.
This is hard for me coming from a technical background and wanting things to always be working precisely and 100% and all the bugs fixed and all that sort of stuff. No matter what I do, and it just actually doesn’t matter. Getting it up there and getting feedback and to be able to make those changes is so much better. If you wait to be perfect well you’ll never get any product up. That’s one thing I realize now, that we do a new feature, we get it 90% of the way there so the common stuff that I know is going to be sorted. And I let my customers find out and tell us about it. It’s so much quicker
I see too often that people get into the, in the software world and any product world. Trying to develop the product that’s going to be the ultimate perfect product and it never gets launched. You put all this time and effort into where you think the value is only to find out that’s not really what the people are even focused on.
If you know who they were, even if you don’t know who they were you can look at the people who do stick around and find out that they’re your customer. So it’s all good information
Let’s shift gears now, let’s talk a little bit about marketing. You got the software off the ground, you’ve developed your minimum viable product if you will. Now, in the world of software I’ve seen so many good programs that are developed but they never fly because let’s face it, the majority of programmers are not marketers. They just never get it off the ground.
You’ve gotten it off the ground though. So let’s talk a little bit about that. Walk us through your journey of marketing. How did you get the first customer and then the first hundred customers and then the first thousand customers?
I tried different things, I signed up to different products and landing page products and looked at paid ads and Google ads and Facebook and stuff like that. I really was just floundering in the dark and going, “You know what? I’m spending some money here and I’m getting absolutely nothing. I don’t really know what I’m doing.” I just did not have a clue.
I guess that’s where towards the end of 2016, after doing this for four or five months I was chatting to my brother who had actually seen you Derek.
And said, “Gabe, you know you should really go and get some help for this. Maybe pay someone, get in a course or do something or other.” I guess that’s where I started learning about marketing because I signed up on your program Derek. And then I started going through your course and went, “Holy shit, that’s why nothing works. There’s just so much here I have no idea about and that … No wonder nothing worked.”
You can search all you like and try and put pieces together and eventually you’ll probably do it. Man, I think the advantage of having your course there Derek was just my learning curve went up huge. That was really the turning point for my marketing anyway.
It’s like this feedback where they both have to work very closely together to think that you’ve got a standalone product and the marketing just goes and sells it. It’s crap, it’s just not going to work.
One of the interesting things that I kind of remember a process of you going through was actually figuring out who your target market was. I mean your product basically came from you found a problem and it frustrated you and so you decided to create a solution to that. Let me ask you.
When you first decided to come up with this product who did you think your customer was going to be versus who is your customer now?
My first mistake was, “Hang on a minute, the world is filled with subscription. Everyone signs up to Netflix and Amazon and everything else. Everybody needs this product.” And my first mistake was to go, “This product is for everybody,” which, completely and utterly wrong because up until the point I had that particular problem, well I had subscriptions to Netflix and other things too and I never needed this product.
I think I’m still doing that to a certain extent. But I think my key niche now as we were talking about earlier Derek is really that web professional, the person who uses in the online space, they sign up to all sorts of different tools and plugins and hosting and just so many that add up that it’s a natural fit for them. Which was exactly where I was with my wife developing this platform that we were developing. What’s interesting is how it’s evolving.
Our problem that we were solving was for ourselves but I’m finding a lot of my customers now are coming on who they’re more the agencies or the web developers who are doing work for others. In that sense they’re building websites for other people and so they’re managing all the subscriptions for other people and they’re just on-billing. So the tool’s becoming I guess more of a business tool for managing so many subscriptions for people’s clients as well.
What I found fascinating as you’re saying, it’s now niched down even further and the real clients that are going to get the maximum value out of this aren’t just single-soul entrepreneurs. It’s the guys that are managing this for multiple people and multiple subscriptions. And so it’s a really interesting process as you begin to niche down. I think one of the things though that scares a lot of people starting out is the, “Well is that market going to be big enough?”
The reality is that now that you can sit in the most isolated city in the world and provide this service to people globally, that market is enormous. A perfect example is the gentlemen over at … I’m not sure if you’re familiar with Digitalmarketer.com. Digitalmarketer.com, huge company, they run Traffic and Conversion Summit. They launched their digital marketing training program, stuff like that. They used to focus on training programs for everybody doing business online but again, they’ve paired down and now they’re focused entirely on digital marketing agencies. And you think, “Well how many could there be?” But globally there’s hundreds of thousands of them now. When I look at that and then I hear about who your client is, I mean that’s who you’re going after as well.
It’s a massive market on its own. And here’s the beauty of it, I mean where I see you being able to take this platform from a value and pricing standpoint, when you can deliver a product to businesses you immediately shift what you can charge for that product as well. It’s no longer six or $7 a month.
When you are managing potentially hundreds of subscriptions, now it’s much more valuable. And the other side, and I’m kind of rattling on here, but the other thing that I love about the program that you’re creating here is once somebody has taken the time to onboard and actually integrate into their business. They’re now a customer for life because it’s so sticky. Moving away from that is painful and I guess one of the things for everybody listening, one of the real secret sauces in a business like this or in any business that’s subscription-based is you want to create a product like Gabe has that’s super-sticky.
What that means is that once somebody’s using it the pain of leaving it outweighs the cost so they will now become a customer for life. A lot of people think in terms of subscriptions like the Netflix of the world where they have to keep investing and building value so people want to keep coming back.
The real hook and the real value in a subscription model like this is creating a product that giving it up is massive inconvenience, pain, loss or very hard to migrate somewhere else. That’s the real value behind this. I mean that’s what you’re building here Gabe, which is awesome.
So straight off the bat the process of them signing up and adding their subscriptions in, they almost always save money. And then they’ll send me a note and go, “Just the way of doing it, I’ve saved some money. Thanks so much.” It was like, “Well you did the work.” But there’s such a value point that-
I think there’s a tendency to try and layer on features and expand in functionality but at the same time sacrificing usability. The stuff that really was the secret to the success of growing it and onboarding people. I think that’s a big lesson for anybody that’s listening to this and thinking about developing in that direction.
Okay, so you’ve built it. What are your primary marketing strategies at this point in time?
So you can go, “Well hang on a minute, these are three questions here that are so relevant to what I’m marketing to and there’s hundreds if not thousands of people viewing the question and answer.” And then you can go, “Well they’re the ones I want to target because that’s 100% …” And there’s traffic going to it, looking at these questions. So yeah, very powerful.
All right, now as we start to wrap up here, and I mean I could talk all day about this stuff. I love this kind of stuff. As we start to wrap it up, I mean you’re still product is still in its infancy really. But you’ve made it over that initial hump right? You’re growing, you figured out your market, the software’s launched. What are your next steps, what are your plans for this? Where do you see it growing?
One of the things about being in this subscription economy is that it’s very leveraged to the company selling subscriptions. The amount of money being invested to reduce churn as we talked about; the stickiness and psychology and all this sort of stuff, it’s all geared to taking money from the customer. I feel personally that this whole economy’s a little bit unbalanced in that sense. That people who are the subscribers, they don’t really have the tools to take advantage as much as they can.
What I’m looking to do is to be able to use the data in our database to provide that information back to the customer so they can become almost a bit of a research tool. For example if you were looking to get another Autoresponder, Getresponse or campaign monitor or something like that.
If you’re thinking about buying one you could go into the TrackMySubs platform and look up Autoresponder and it will give you say the list of the top 20 auto responders in the database. It’ll tell you what the customers rank it, what do they pay on average, all the data that we’ve got to feed it back to you
It’s a very honest, truthful database. It’s not people paying for recommendations, all that type of stuff. This is based on real data and real people. I want to evolve that tool into almost being that support tool. So yes, it’s great, it looks after all your subscriptions. But it’s also a place that I can find out more information about my subscription and if I want to do it. That’s kind of the area I’m looking. That once we start looking into that data, that kind of explodes into a million different directions.
But I’m really looking to just try and provide that value back to the customer to give them that tool in this new subscription economy that we’re in.
All right, so final question for you. You said you started this in 2016, we’re now about what, two years in, just over two years in correct?
There’s this whole marketing world, this whole software development world, I knew nothing about it when I decided to give it a go. And there’s something nice about not knowing. If you kind of know how it’s all going to go you might not do it if you know all the pitfalls and how hard it’s going to be.
That’s something I always teach people. We want to test fast, we want to test small. That way if we fail we fail fast, we fail small, we learn from it, we move on. And when you adopt that mindset and that’s obviously the mindset you have, you’re going to get there eventually. It just takes some time.
I would totally suggest you go check that out and start setting your subscriptions up in there. Because I’ve done it, I know Gabe’s done it, that’s why he started this platform. The amount of money I probably lose in any given year because I forget to actually cancel subscriptions that I’m not using is … I don’t even really want to know what the number is because it’s probably terrible.
So now it’s time to take the tips, the tools, the strategies that you learned today and apply the ingredients that is actually going to make them work for you. And that ingredient is action. So go forth, take action, apply what you’ve learned and stay tuned for more info-packed episodes of the Project Ignite Podcast.