I discuss this pretty deeply in my indie founder bootcamp but the main point is, if your revenue goals are something like $20k/month (and not to build a unicorn) then one of the lowest risk decisions is to try to get a very tiny percentage of a “proven” very large market.
The reason is that getting a few hundred or a few thousand customers in a proven market with millions of customers is a very achievable goal over a few years.
No need to compete on price, just compete on great customer service and support. Be someone that your customers know and like and love dealing with.
And of course you do need to make a great product and find a marketing channel(s) to reach that small segment of customers.
Interestingly I changed my pricing quite a lot, because many people were complaining that competitors are cheaper and it's kind of hard to hide this fact.
But still I got some ideas which I'm going to implement, and hopefully increase my value.
For me, $20k/month is surreal. But for someone it's nothing.
That probably means that you need to rethink the top of the funnel.
If your main marketing efforts have been to scrappy student startups etc then price will be a big deal for them, but if you can shift to marketing to small business that do have an income and present Yourself as very easy to deal with and talk to then you might be able to shift the dynamic.
Again, in the bootcamp, but there are many different types of buyers and you just have to work out how to reach the ones that align with your goals.
Trying to take 0.01% of a market from existing businesses who'll fight hard to retain their customers is immeasurably harder than trying to grow the market by 0.01% by looking for businesses who aren't yet buying a product in that market. Unless you're launching something in a completely saturated marketed it's always better (cheaper, faster, easier) to find new customers than trying to take existing one from other business.
Bonus: Growing the market by 0.01% gets you more customers than taking 0.01% of the existing market.
The main reason why it isn't immeasurably harder for an indie founder is they can target market segments that are just not interesting to market leaders who already have a tight/clear idea of who their target customer is.
Additionally, as an indie founder you essentially have an invisibility cloak because you won't even be on the radar of the market leaders.
These two reasons are why someone like Less Annoying CRM can build a $1m/year business and Intuit couldn't even give a tiny care about it.
You can even study the market leaders and tackle things they are not interested in fixing - but that some customers have asked for on forums and such.
Of course, the indie founder invisibility cloak effect diminishes the smaller the market is, or the larger market share you take.
It's pretty hard to go un-noticed when you enter a market that just has 1,000 customers.
Likewise, it's pretty hard to go un-noticed when you start getting 1%+ of a larger market. But that's ok, because if you do get that big, you most likely know what you're doing.
> Bonus: Growing the market by 0.01% gets you more customers than taking 0.01% of the existing market.
I see what you were getting at, but you erred in this case: the two are identical.
If the market is a million people, growing the market by 0.01% causes you to have 100 of the 1,000,100 people in the market, while claiming 0.01% of the existing market causes you to have 100 of the 1,000,000 people in the market. So the absolute figure is the same, and the fraction you have is smaller.
$20k/month is really a paltry amount of revenue for a business.
If your expenses are like $5k a month and your getting maybe $180k a year in profit before taxes this is really more like a job than a business.
A business making revenue of $20k a month must be a very small idea, for example a service that pings some servers and alerts customers of downtime or maybe some kind of file storage. Conceivably that means you can quickly pump out a lot of similar sized ideas and perhaps get multiple revenue streams going, each averaging $20k a month or so. Now you can afford to hire talent.
It seems from reading this a few times that you think that a business requires paying other people to work for you. You contrast that with a "job".
For many people, the ideal situation is one where they are self-employed, not responsible for payroll, and making $20k/month (or whatever). They are not going to become part of the 1% doing that, but they will be able to lead a very comfortable, self-directed life.
I "run" a FLOSS project that grosses about US$20k/month. Actual expenses are less than US$150/month, which leaves the vast majority available to enter the pockets of the people (currently generally just two) who get paid. This year, we've also chosen to accumulate almost US$40k for future project "purposes".
As a resident of New Mexico, I put aside 23% of my gross income for federal and state tax, and that is normally within a few hundred dollars of the correct amount.
Also the better talent you get.. the more complex they make your coding. Eventually you don't understand it any longer and the talent leaves and now you have to find someone of equal or greater talent to figure it out or you are going to go out of business because you can't don't the coding on your own system.
You can sell your business. You can't sell your job. Plus 180k a year, especially if location independent, is still a lot. Median income in the USA is 40k.
> A business making revenue of $20k a month must be a very small idea, for example a service that pings some servers and alerts customers of downtime or maybe some kind of file storage.
I don't think this paints a correct picture. For example, there are many developers out there who'd love to work on FOSS 24/7 while having some income from a simple side-project like you mention. But many of these developers still struggle, which says that it just isn't that simple.
You cannot be working on FOSS 24/7 and also be working on a side project to make money. If it were that easy, many people would do the simple side project and then skip the FOSS part altogether and go do something fun.
FOSS is what you can do when you're no longer tied up in the mundane day to day tasks of running a business; when you have employees who keep the business processes you put in place running while you simply make high level decisions and provide capital.
And of course these small kind of businesses rarely last forever. Instead of thinking long term, think of this small business as a temporary opportunity to extra value from a market while it is still there. Eventually the opportunity is exhausted the way a mineral field gets harvested and you must find a new opportunity to mine. There's not much time to do both things well.
My advice to developers who want to build FOSS for a living is to make money from the software itself by providing implementation and consulting services around it. This way your interests align well with the things that pay your bills, and you can excel at both simultaneously.
I think you might be amazed at how many businesses are quite successful at levels well below that. Perhaps for a technology business it's a small amount, but it can sustain one family quite comfortably in most parts of the US.
That quibble aside, I agree that if you can multiply that kind of success 3 or 5x and automate the living hell out of everything, you could be doing pretty well.
Even the most obscure ideas have plenty of competitors (I know I write table planning software for events). If you come up with something that has no competitors, either:
-you didn't look hard enough
-you are a genius who spotted an untapped demand (very unlikely)
-no-one wants it (very likely)
Also, remember that the main competitor to a lot of software is Excel and post-it notes.
That said, the more competitors the harder it is to get noticed. Ideally pick something where you have got a reasonable chance of getting on page 1 or 2 of Google.
...but definitely think about why you are better than excel and email, because they are a solution to almost every data & workflow problem. You need to move them from "good enough" to "painful compared to" your solution.
Isn't also possibled that although the idea in itself might be desirable every potential competitor who attempted to build something similar encountered a technological or administrative problem that stopped them in their tracks?
Sure, that's conceivable, though there are three very limited ways that it can happen:
1. It's always been technically and administratively possible, you're just the first genius to overcome those hurdles. All the combined efforts of thousand developers at a FAANG found it impossible, but against all odds, you succeeded where they failed. Congratulations if that's you, but don't bet the farm on that being the result before you start.
2. Technological developments have only just now made it possible. Maybe your idea requires resource-heavy neural networks on the users' mobile phone, and current high-end models have just become capable of that. If tech has only now made it possible, you also have to be the first of millions of developers to realize that and get to market. Good luck, this is how most of the startup ecosystem has worked for a long time.
3. It's currently illegal, and you're just going to hope no one stops you. This is a big administrative problem, and maybe all the efforts of a big company couldn't change the law and make their idea work when fighting eg. the hotel or taxi lobbies, but if you side-step all that and just do it anyway, well, you might see all your hard work disappear in a courtroom, or you might succeed.
BTW Don't clone a successful product. Have some respect for yourself and for others. It rarely works anyway (struggling to think of a single case where it has).
I am using a service called Invoicely for recurring invoices in my small business. One day I randomly googled for some of its features and found a post of a guy who claimed (and I believe him) that Invoicely is a blatant screen-by-screen clone of their own SaaS.
I felt really bad for that guy, and after some time I thought that it's a good idea to switch to them. The problem: their website name is so difficult to remember, I never got around to actually opening an account there.
Some shifty guys literally copied an existing service up to their Javascript and CSS, and improved it dramatically just by giving it a name I can remember.
Coming up with a different way to solve the same problem or using ideas from other products is cool. Nothing is truly original. We are all standing on the shoulders of giants, after all.
I'm talking about people who just rip-off someone else's design with adding anything original.
As a synonym, every time I had an APP idea, I search the play store and App Store and there are at least 10 variants. Discarded. After this happened couple of times, I have had enough.
I decided to create an app to browse and search through videos on your computer. There are many out there, but none had the specific set of features (and visual appeal) that I wanted.
I now sell about 100 copies per month for about $500 income per month. I give $350 to charity for every 100 copies, but that's a personal decision.
Building it has been a great learning experience. Interacting with customers has been a very rewarding experience (so many people love it).
It has sorting, tagging, and advanced filtering options (fuzzy search, regex, etc) - you just have to enable them in the settings menu.
Building your own copy is also hassle-free, just npm install, npm run build. Version 3 (releasing this month) already on main branch, has more features than public version.
Kudos to you, that's awesome, especially giving most of it to charity. How did you reach your customers? At 5 dollars per sale, that's around 100 customers per month for something that seems relatively non-essential
Google analytics shows traffic as mostly direct and from Google; the next largest fraction coming from Reddit (I shared it a few times), and many from GitHub. I have never paid for advertisements.
The first time I shared it on HN it went to the front page :)
A possible better way than better, is being different :)
When you try to make a better product, you are automatically comparing yourself to other products. Instead, when you try to be different you are creating your own niche and your own rules. Yor product will not be compared against others. At least if you fail, you will be original and not another copy-cat.
I think a lot of times in maker communities building what already exists is not seen as good which I don't get.
Having a few competitors shows that there is market for what you are doing and you do not have to be same as others you just have to be better like better feature, UI, support maybe.
Oftentimes it makes more sense to think of the presence of competitors as just another means of validation -- confirming that someone needs this. If there's no need, there won't be anyone on the market
Another thing to consider is that there is always turnover in a market. Even if there are always 170 competitors you can be certain that each year some of them drop out and new ones appear. Guess what the new ones did. They made the effort.
You may fail if you try, but you will fail if you don't. Someone is going to replace one of the existing players, why not you?
You are right that not all successful business started with an original idea. You are right that not all of them required significant upfront investment, and you are right that there are great newcomers who find a niche in an established market.
There is only one thing you are missing. How many businesses like that have failed. Is it 1%, 10%, 50%, 90% or 99%? I would guess that it's somewhere upward of 90%. BTW. And you won't even hear about failed companies because these 170 competitors are survivors.
Having capital increases your chances of being able to experiment and find market fit.
Having limited competition increases your chances of being noticed.
Having a fresh (doesn't have original) idea helps you laser-focused on what you are trying to solve.
BTW. I am not trying to discourage you from trying. However, if you want to try, I recommend doing this with your eyes open.
Eventually it becomes an obstacle to the customer who has to pick between all of these competitors. But seriously, uptime / API monitoring with dashboards is a space I spent way too much time researching to find the thing that matches my requirements. If you can stand out via those features I absolutely needed I would have stopped my search almost instantly. pingr is an example of a tool which looks like the bare minimum (good if they can make it work), so I wouldn't have been able to even consider them.
I wouldn't agree that people choose products based on what their friends are using. At least for me it doesn't work.
While the second part is true, I agree.
It's really hard to overcome existing players, on the other hand there are some advantages: existing players are kind of slow in terms of changing (adding new features) and in terms of support.
Among these 170 alternatives, more than half of them were built in 2010 I guess, and they do not evolve.
Regarding paid ads. This year I was watching how other guys do with their side projects and I literally haven't seen anyone who tried paid ads. They did SEO though, but not google ads or something like that. Because they are good at reaching the right audience in the right place, I guess.
This pricing is actually not that far-fetched. Consider that the competitor UptimeRobot offer 50 monitors at 5 minutes interval for free.
You can lease servers very cheaply nowadays, uptime monitoring is not resource-intensive and is an easily distributed workload. The most expensive part of the operation is likely to store the monitor results in a database.
The reason is that getting a few hundred or a few thousand customers in a proven market with millions of customers is a very achievable goal over a few years.
No need to compete on price, just compete on great customer service and support. Be someone that your customers know and like and love dealing with.
And of course you do need to make a great product and find a marketing channel(s) to reach that small segment of customers.