The Myth of SaaS Ownership

Written by on Apr 7 2016

The myth

Saas businesses are the best! Here’s the recipe: You work really hard for a short time building it up. Get enough Monthly Recurring Revenue so that it’s paying for itself or more. Then you can kick back and watch that sweet, sweet passive income come in every month while you go do something else. Maybe you’ll have to work a few hours a week, but that’s it.

The facts

It may be true for a very small number of SaaS businesses, but I doubt it. Here is the truth: Your SaaS business will have “churn.”: The Myth of SaaS Ownership is that it means that to have flat revenue you still need new signups. Which means that you need keep traffic coming to your site. And no source of traffic is permanent. If you pay little to no attention to your business then your business will decline. Slowly perhaps, but it is a certainty. Not to mention support, bug fixing, and adding new features.

Here’s how it really works:

  1. You get a great idea.
  2. You hustle to build it.
  3. You launch it.
  4. Nothing happens.
  5. You start trying to figure out some marketing.
  6. What’s a funnel, how do I track, how do I attract, should I buy ads, why won’t my friends help me more, do I need more features, is my copy any good, should I be writing blog posts, who will read them anyways, is my design bad, everyone said this would work, what am I doing wrong, how does anyone do this???
  7. Finally get a few people to pay you.
  8. What is growth hacking and why does everyone else seem to be so good at it? Oh, I just need to “make a growth engine,” thanks douche bag.
  9. I need a support group
  10. Time passes (maybe years):
    • Work hard.
    • Keep “marketing.”
    • Get more customers.
    • Do support.
    • Add features.
    • Redesign.
    • If you’re successful, people will copy you. How do you deal with that?
    • Repeat.
  11. You can’t stop focusing on your business because then it will start declining, maybe slowly, but it will decline.
  12. You hire people.
  13. Now you need more customers because your payroll has gone up.
  14. Repeat 9-12 until you have enough customers and employees that you can step away.
    • But have you hired someone that can manage the business as well as you?

So why bother?

None of this is meant to dissuade you from starting a SaaS business. Just have reasonable expectations.


Hi I'm Steven,

I wrote the article you're reading... I lead the developers, write music, used to race motorcycles, and help clients find the right features to build on their product.

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