I recently wondered: Shopify does all the heavy lifting and lets me open an e-commerce store in minutes. Gumroad does the same for digital products. What's the equivalent for SaaS products?
To me that seems like an incredible opportunity.
After I tweeted the question, Twitter did its magic and Travis Fischer replied: "Happy to chat about my experience building Saasify (Shopify for SaaS)".
Some background on Travis:
- Before he started Saasify, he helped to developed WebTorrent, a highly successful open source streaming torrent client for the web (24k GitHub stars).
- He also launched Automagical (AI-based video creation tool) that was acquired by Verblio in Fall 2018.
- And before that, he founded Stamped, which was acquired by Yahoo! in Fall 2012.
- Right now he's building Senpai, an asynchronous video platform that allows creators to monetize their expertise.
Saasify never really took off, but this isn't necessarily bad news. It just means that the opportunity is still up for grabs and Travis is happy to share everything he learned along the way.
You can listen to our conversation here.
Below is a summary of the main takeaways.
Shopify for SaaS
When you want to sell a digital product, say, an ebook, you can focus solely on the product and marketing since platforms like Gumroad handle all the rest. You don't have to worry about payments infrastructure, taxes, or how you can reach your customers if you want to send them updates. It all works right out of the box and takes less than 5 minutes to set up.
The same is true for physical products. Of course you have to find a way to source the products and market them, but Shopify handles everything else.
But when you're trying to sell a SaaS product, the situation is still very different. You can't just focus on the functionality and marketing. Nope. You have to go through the painful process of setting up a payments and authentication infrastructure, find a way to handle taxes properly and to connect with some email service so that you can send your customers messages.
There are of course great services that deal with individual components. Stripe, Quaderno, Paddle, Auth0, Magic Links, Mailgun, Firebase. But everyone still spends a lot of time duct-taping them together and in a sense reinventing the wheel. All of this is a complete distraction from your unique value proposition. At an early stage, you should be focused one-hundred percent on your unique value proposition, your core features and your customers. Everything else is a distraction
Another popular solution are boilerplates like Bullettrain, Jumpstart for Rails, and Laravel Spark. While these certainly help, they still require manual work to set up and maintain. Another downside is that they usually require a hefty upfront investment. As a result, they're not viable for people just starting out (who coincidentally would need it the most) and anyone running lots of small experiments.
Given that Shopify is a billion-dollar company and software is eating the world, a service like Shopify for SaaS seems like a billion-dollar opportunity. At the same time, it also would do a lot of good. Productivity from indie developers would skyrocket and it would become much easier for open source creators to finally capture some of the value they create.
Just as Shopify is arming the e-commerce rebels, a similar service for SaaS would be a weapon for software developers against increasingly monopolistic structures.
Now what are the lessons Travis learned by building Saasify?
Lessons from building Saasify
- People get very confused if you try to mix SaaS and open source projects (even if the model makes perfect sense). In people's mind, these two terms live at the opposite ends of the software spectrum. So Travis pivoted early away from his initial focus on helping open source creators monetize their projects.
- Developers want flexibility. Travis' first idea was a service that would turn any NPM module or encapsulated piece of functionality into a SaaS business. Turns out that this approach wasn't particularly attractive to most developers. Travis' idea that they could just use serverless functions for everything was too restrictive. If developers have to rewrite their whole project to make it work with Saasify it probably would be easier to just figure out all the infrastructure stuff yourself. So the next pivot was from serverless functions to "we help you monetize your API".
I want to pause here for a second because to me this sounds like the perfect way to think about the problem. The core functionality of almost any SaaS product can be wrapped in an API. (Here's an excellent primer on the API-first ecosystem. Also, there are of course SaaS products where a lot of the unique value actually comes from the UX, e.g. Superhuman.)
There is already RapidAPI (which recently raised $60M) - a marketplace that makes it easy to monetize an API. However, you can only sell direct access to your API endpoints. Since only developers know how to use APIs, this is the only customer group you can reach on RapidAPI. So a service that makes it easy to sell your API to regular users would be a huge upgrade.
So why then didn't Saasify become this platform?
- Firstly, Saasify is still around. It's still running, there are happy customers.
- But a key problem Travis encountered is that most customers were indie hackers, open-source developers, folks who are really good at creating that unique value, but who are not well-suited for marketing and growth and sales and support. These are all things you need to build a successful SaaS business.
Most developers just wanted to say, here's my unique functionality, I want to press a button and I want to make money. That's not how SaaS works.
This is especially problematic since Saasify didn't charge a flat fee, only a 20% revenue cut. So unless a project made money, Saasify didn't earn a cent.
And once a project really starts to take off, they'll leave the platform to save the 20% cut. This is the exact problem that currently, for example, Substack is encountering.
I'm seeing two solutions to this problem. You could charge a flat fee like Shopify does. Their entry plan starts at $29/month, so they make money regardless of the store's revenue.
Alternatively, you can choose a marketplace model like RapidAPI which helps SaaS products get discovered by customers. There are many APIs that earn good money just from the customers RapidAPI sends their way.
However, Travis eventually ran out of steam. He had been bootstrapping the whole time and was running out of money. Also the feedback he got from VCs was not particularly encouraging.
So he took a break. After some time off, he decided that it's time to try something new. Even though Saasify didn't become what Travis imagined it to be, he's still bullish on the opportunity:
"There is an enormous opportunity to do what Shopify has done. Create a business in a box, specifically for API-based SaaS. [...] It is a huge opportunity beyond a doubt."