Trying to Quit Your Job? Don’t Start This⏐Ep. #221

Don't go build a SaaS. Build something simple. First you want to build something that buys out your time from your day job. And all you're trying to do is get to, I usually say 10k a month. Then once you do that, you have infinite time all of a sudden and that's when you can attack something. The way I did that was freelancing nights and weekends. I was a construction worker, did a bunch of stuff I didn't want to do. But you know what I needed to pay the bills. How can you charge $799? What would you need to have to charge that much? Not $79 a month. Don't go cheap. Shopify apps can be vibe coded, right? We actually have a list of 75 app marketplaces like that. They're not that complicated. The marketing you do is learning how to optimize your listing in the app store because almost all your customers will come from that app store. As opposed to if you're going to build a full blown SaaS. Do you know how to market? Do you know how to support like it's a lot, man.

Most people think you need money, connections or Silicon Valley venture capitalists to start a software business. Also, most people think you need to be a software engineer. My guest today proved that none of that is true. How do you know what to vibe code, what to build with no code, and what to actually hire a software engineer for. Rob Walling has built and sold multiple big companies without any outside funding. And he created what he calls a stair step method, which is a framework that shows everyday people how they can go from freelancing to big business one step at a time. Rob's invested in over 220 small startup software businesses, so he knows exactly what works and what doesn't. We also talked about 75 different app marketplaces that you can vibe code or actually code apps for where you will have more demand than supply. Did you know that Zoom has an app store? Exactly. So if you ever want to launch a productized service, an agency, or a software as a service business, you're going to learn a ton from this episode. Please enjoy.

Vibe coding is fun for I use this analogy of like if I invited you over to my house and said let's build, let's you and I build an outhouse. Just a tiny little shack. We could go to Home Depot, we could buy some two by fours and some plywood and we'd figure it out and it'd probably be mostly right angle.

It's a hole in the ground.

It's a hole in the ground and then you put a thing around it. Right. And if I said hey now come help me build a tool shed in the back, you and I could probably still figure that out with basically no experience. Right. This is, this is us vibe coding things. The moment I said hey, can you help me build a two car garage? Or you just, you and I, let's build a house. Like a two bedroom house. It would not go well because it's big, it's more complicated. It's same thing with vibe coding.

So what types of startup ideas or SaaS ideas are vibe codable versus not vibe codable in your opinion?

Yeah, yeah. I mean it comes back to that analogy earlier of like the simpler, the simpler ones. Often the simpler ones that you know, usually don't have to, you don't need that many lines of code. They don't have to be super maintainable because they are a feature or two and scalability probably is an issue. Like do they have to, can they work with you know, 50 users or 100 users versus like 50,000. Right. Or a lot of, a lot of, of throughput. Like the. My last SaaS app I built with a co founder was called Drip and you know, by the time we sold it in 2016 it was doing a. We were sending 150 million emails a month. And so we had the scale and that's not. And that's a drop in the bucket compared to like mailchimp. Mailchimp was sending like half a billion emails a day at that time. But still 150 million emails has to scale. You could not vibe code that it would not work, you would lose job. Right. It's high throughput. Same thing with no code. No code is awesome. And we have internal line of business apps, I believe three of them that are full blown SaaS apps that my non technical staff have built using Airtable and it's. And make, you know, and it's amazing. But I would never put those into production with real customers using them. They won't scale, they're brittle. The UX is not great. To me this kind of the simpler the better. Or if it's a small use case, it's like, well, I only have three users, I could vibe code. This because it breaks or if the UX isn't that great, you know, doesn't, doesn't really need to. It's not like it has hundred, you know, tens of thousands of people using it.

If you were forced to build a simple app. Right. Something that could be Vibe coded and you had to choose either like the airtable make slash zapier stack or the like replit Claude code stack. You couldn't use both in tandem. Which would you go with if you're non technical?

Yeah. Ooh, that's a really good question actually. What I like about airtable, it can get complicated, but it's pretty simple and it does seem pretty maintainable if you get the, if you do it right and you get the blocks and you don't have too many automations. Like we have full podcast production system that is a, you know, it's our source of truth. Of every podcast episode, I put out 104 episodes per year across two podcasts. Now that's, we put out more than that, but whatever. And then we have an entire similar app that's for YouTube stuff. And so it's just like crud, right? It's create, read, update, delete, putting stuff in and out of the database. And it's been really, really solid. And so I would lean towards that stack if I'm honest. The thing is, but here's what I don't like about it. The platform risk. What if they 10x our price tomorrow? You have to go rebuild that somewhere versus Claude. You know, writing AI code, you have so much more flexibility but man, it really is the difference between. It'd be like if you said, all right, so now you're going to come over to my house and we're going to build a tool shed. Now do we want to make our own nails and make our own hammer and make our own two by fours from these blocks of wood, you know, really bare metal, there's tons of control. Or do we want kind of a prefab thing where it's like, oh, this whole we just stand the walls up and you just hammer them in. That's more of no code is how I think about it. And so you get the analogy. But then the no code is. The only part of that analogy that breaks down is I don't have platform risk with it with a tool shed. You know, the platform risk of airtable, like going out of business, getting, you know, 10x price, having a week long outage, just whatever. You have a lot of reliance on a no code provider. And then you do outgrow it if you're going to have end customers, you will eventually outgrow it if you scale. And I don't know of a single SaaS app doing millions a year that is written in no code. There's people that claim they are and Then when you dig in, it's not really a SaaS, it's like an agency, you know, like hey, we're going to help you with your legal stuff for example. But really the service you're paying for is the legal and the app they built in. No code is just a. It's almost like Google sheets doing stuff, you know, it's just, it's just project management basically.

Yeah. So if someone is listening and they're non technical and they want to build something maybe with replit or maybe with an automation or maybe a service, maybe an agency. In your opinion, like what are the. Maybe not a specific idea but types of business ideas more broadly speaking that are the quickest to like 10k mrr. Would it be like a tool, like a SaaS tool that you vibe code or like an agency where you charge $2,000 a month and you need five custom agency. What do you like?

Oh no, I mean I. So I'm a SaaS. I love SAS because of the recurring nature of it because the exit multiples are insane. They're the best in the world for any business. You can create vast amounts of wealth very quick, not very quickly. Is, is a, is a relative.

I know what you're saying.

Yeah. But if, you know, if, if you catch it, it becomes very valuable. But no freelancing and agencies and dollars for hours or dollars for services is going to grow so, so so much faster. It's just that becomes a pain because you have clients, right?

Yeah. Revision requests, back and forth, a lot of communication.

Totally. But that's the way to get, I mean I know of a number of SaaS founders. I have this concept called the, or the, this framework called the Stair Step method of entrepreneurship. And I talk about look, don't go build a SaaS. That's like step three that is really hard. It's complicated especially if you're non technical. Like just don't jump into that. Build something simple first. And really what you want to do is you want to build something that buys out your time from your day job. I'm assuming everyone has to work a day job because I, you know most of this too. I had to when I was younger the way I did that was freelancing nights and weekends until I saved up enough money that I went then went and acquired. I didn't have the time to build a SaaS, but I went and acquired. It was software product but it was pre SaaS because it was only one time download. But I bought that then I built that business on the side and then I built a couple and that got up to like $4,000 a month, which was not enough to live in Los Angeles.

And it wasn't even a SaaS. You're just a one time purchase.

A one time thing. Yeah, this is 2005. Okay, it was 2005 to 2008 or 9. I don't remember when I gave it to my business partner. But the idea is you pick something that's a little simple and it's a tight niche and may never get to more than five or ten grand a month. You're not.

That's okay.

It's okay because you're off the radar of big competitors. You're less reliant on these heavy, heavily competitive traffic channels or your job over your job. And all you're trying to do is get to, I usually say 10k a month because that's when most people can quit their job, their day job. Then once you do that, you have infinite time all of a sudden. And that's when you can attack something. You have some experience for having these little products. Oftentimes these are little add ons, right? It's like a Shopify app. So Shopify apps can be vibe coded, right? Heroku add ons. We actually have a list of 75 app marketplaces like that, the HubSpot app marketplace, that Spotify or Shopify. You can search just microconf app marketplaces. And we have a list of them. And it's for example purpose.

Yeah, it's for exactly the same Chrome Extension store, right?

Totally. Exactly. It's all of those things that are add ons. The nice part about those is those are usually kind of one feature. They're usually, you know, hundreds of lines of code. Some of them become thousands. But they're not that complicated. And you don't really. The marketing you do is learning how to optimize your listing in the app store because almost all your customers will come from that app store. As opposed to if you're going to build a full blown SaaS, you need 50,000 lines of code. You're going to build it yourself or hire a developer. Now you have to learn. You register a domain name. Great. How do you get people to that? Do you know how to market? Do you know how to copyright, do you know how to support? Do you know how to host? Like it's a lot, man. It's like 10, 15 really complicated things. You eliminate, you know, several of those by going with this stair step approach. Now it doesn't just have to be software Though, like the original stair step method I talked about. Step one. Maybe you could. Maybe it's an ebook or a course or maybe it is freelancing. I don't actually include that, but you know, it could be a productized service, an agency. One of our founders, founder of Kastos, which is podcast hosting, he built a product I service called. It's called Castos Productions now, but it used to be called Podcast Motor and it is podcast editing and production. And it was as a service, as a service, 500 and 1500amonth, depending on how long your podcast is, how many episodes. If it's video, it's audio, you know, you get it all. So it's not consulting because it's, it's, it's not custom. You know, it's tiers of price.

Yeah.

And it's, it's basically based on your needs. And so he was working a day job as a pharmaceutical. No, not pharmaceutical. It's like med. Med Tech sales. And he built this to like $30,000 a month over the course of a couple of years. And it was himself. No, he hired people. He found editors on upwork. He found. Yep. He had project managers and editors. And he did the sales. That was his big thing. He did the selling. And then once you have a podcast, if you keep going you them every month. He then parlayed that, bought a little WordPress plugin. Someone let him, I think, I don't even remember if he paid for it, but you know, WordPress plugin that was like, oh, podcast hosting. Because you're in the same space or. And then he turned that into a SaaS app called Kastos. Now it's a seven figure app. And that's how he stairstepped his way out. The people who either quit their day.

Beautiful example. Yeah, totally.

And it's. And I have 20 more like it, you know, and if you go, go Google stairstep method of entrepreneurship. And I have probably like five examples similar to that in that article. It's an old blog, blog essay of mine. The nice part is you do it longer. It's what I did. I mean, my whole story is just stair stepping one thing to the next. It's like, oh, it's making five grand a month. And then I bought a Sass app and made it get it to 30 grand a month. And then I build Drip, which went to millions a year. And you know, it's like. But I didn't just jump into Drip. I didn't have the money. I spent $200,000 having drip built like 200 grand of my own money. Well, how did I get that money from the previous business I started? Well, how did I get the previous business from the previous one I started? Well, how did they get the compound from freelancing nights and weekends? Yeah. I never raised funding because I couldn't, because I'm an outsider and I don't know anyone who has money. I don't know any venture capitalists.

Same.

But stairs stepping up, whether you're doing it in software or anything, I think is if you're a baseball player, you don't go play in the majors tomorrow. You play little league, then you play high school, and then you play college, and then if you qualify, you go to single A, double A, triple A. Right. And that's how I view entrepreneurship. Don't look at what Jason Cohen, Dharmesh Shah, Heaton Shah, you know, founder of Dropbox, whatever. Just name any big entrepreneur. But Elon Musk and whoever do this, Jeff Bezos is like, yeah, are you them? Are you a billionaire? So don't. Don't model yourself after them. Like, I know I get you want to get there, but, like, they all traveled a journey and you have to think about what they did 30 years ago, you know?

Yeah.

Rather than what they're doing now.

Oh, man, you just, like, open the floodgates of the questions I want to ask you. Now, what's funny about, like, that podcast agency example is I think people have this bias for thinking, oh, well, that worked four years ago, but that got, like. In my experience, like, most ideas work for a while, Right. Like, they don't get tired for a while. I bet someone could go start, like, podcast editing agency today and find success as long as their outreach was dialed in and all that, Right?

Yep. And they'd have to figure out how they're different because there's like 20 of them. So it's like, how are you different? Are you, you know, the value play? Are you the AI play? Whatever. But, yeah, no, this stuff. Productized services are really interesting. They're really interesting. You know, I ran a micro agency, and agencies are kind of. Because you have. Everything's custom and it's. But like, product services are like SaaS. You just don't have the software product. You have humans doing the work.

Yeah. What other product services are you liking right now?

Yeah, I mean, you know, there's a lot of product services that are leveraging well, like the design ones, like Design Pickle and all those. Right. Where it's like you pay 1500 bucks a month. And you get designers and you just need a good stable of designers. There are many that create content for you, like SEO content. And I like them. It's just very crowded. I like the ones that are doing it well and using humans, even if they're AI augmented. Because then there are some that are trying to do it purely AI. And I, some guy was trying to charge 79 bucks a month. Yeah, 79 bucks a month for eight blog articles a month. And I'm like, no, don't do that. Like how can you charge. He asked my advice and I said, how can you charge $799? What would you need to have to charge that much or a thousand or two thousand? That's how you're going to build a good productized service. Not 79amonth. Don't, don't go cheap. There's so much stuff that is like kind of custom. It feels custom, like, oh, it needs to be consulting or needs to be an agency that if you strip it down and you say no enough, it can be productized. That's how I think about it is like what are people hiring freelancers and agencies to do today? And how can I possibly turn that into an assembly line?

What other examples of like people that have done these stair steps do you have?

A good friend of mine, a guy named Dave Rodenbaugh, he stair stepped up with a. Did he buy. He either started or bought a WordPress plugin. So WordPress, same thing. That's a step one. I call them step one businesses when they're probably not going to become million dollar. You know, they're very simple and they're kind of hundreds of lines of code, maybe a few thousand. But he bought a WordPress plugin and revamped it from doing 500amonth to 3 or 4000, then bought another WordPress plugin, did the same thing, then bought a third and did the same thing. And he just learned WordPress. And they were like random. One of them was like class, like if you wanted to run a classified ad site, kind of like a Craigslist type thing. It's a WordPress plugin, allows you to do that. AWPCP is how it was called. And then the other ones were again like job board plugin maybe for WordPress. And he built up three of them to 20 grand a month in revenue combined. And now. And it was like, cool, quit. And he was a consultant, he was a developer during the day. And that changed his life. Quit the day job and you know, and then that gave him. So then now he has these WordPress plugins generating 20 grand a month and he has hired enough. He's hired the support out, he's hired developers, he's hired stuff. So he almost then had 35, 40 hours a week to now just build a SaaS and he had infinite Runway, you know, and to me that's the luxury then. Now this takes longer than the. The problem is, is the good stories. The, the Cinderella stories are great for podcasts and I'm a podcast host, so I'm guilty.

Those are the ones you hear about, but that's like survivorship bias 101.

And those are the. I won't say don't model yourself after it, but I see, I believe success is, is three components. You have hard work, you have luck, and you have skill. Different varying degrees. Some people have no luck and they just work there off for years and they build skills and it takes them a long time. I've had a friend who got really, really lucky and he always tells me I didn't really work that hard, I just got lucky. You know, business for like $21 million. That's the one that I know that did that. Almost no one else does. So don't, don't believe you cannot control your own luck. Right. But you can control hard work and skill. And that's what I try to impress upon folks is like I would prefer to have a system that's more. Not even a system, but a framework that is more repeatable rather than one that relies on luck. And stair step method will take you longer than if you go try to build assess today. But it's much higher chance of success if you start small and you build those skills over years. You learn how to do copywriting, you build the experience, you build confidence and you, you build a little money and you get better at it each time. Right. Versus the person who tries to build the big thing and launch it. It's like your odds of you just tanking are pretty high.

I think it's so important that people go into it, eyes wide open and saying, all right, this is not going to make me my first million dollars. And I know that and that's okay. This is step one. I'm going to learn WordPress, I'm going to learn how to vibe code, I'm going to learn marketing, copywriting, whatever with this, and I'm going to get paid to learn this stuff. It's like going to a college that pays you except you enjoy every single subject. Right?

Right.

And then the Other thing you're, you're self aware about is this is going to take longer than I think, it's going to be harder than I think. And it's going to take longer than I think because it always does.

Yeah, it does. And here's the thing it saves you from is specifically the software. But I think with a lot of businesses, people want to kind of play business. They want to act like they're in business and they think o, you know, either going on to Twitter and talking there or like just sitting in my basement writing code for six months is like, that means I'm in business. It's like, no, you're not doing anything. And the stair step method, or at least just launching something small and trying to get it to work gets you out of that mindset. It gets you doing something in public. Because until you've done something in public, until someone's paid you, you have, you don't have a business, you know, and so this, this helps with that mindset as well. Of like get out, launch quickly and see if it sticks versus, you know.

Being in the basement of the 75 or so marketplaces. I mean you've got the Zoom app marketplace, you know, chrome, extensions, whatever, WordPress. Which ones in your experience have the greatest like supply and demand imbalance? Right, like the most users, but the.

Fewest number of apps that changes over time. It changes quarter to quarter, you know, year to year. Because like Shopify used to have that where it's like, oh, there's a bunch of opportunity here. And then everyone realized it and built a bunch of Shopify apps. So there is, I think it's more crowded. I won't say there's less opportunity. I think there's always opportunity. I've entered every space I've ever launched a business into has been crowded. Everyone, you know, except for the very early ones that were super niche. But like I, I bought an SEO keyword tool in 2011. SEO was competitive and there were a lot of SaaS doing it and yet I grew it from 1500amonth to 30 grand a month. And it was just me. It was life changing business for me.

Wow.

And Drip was email service provider and then a marketing automation. Talk about 498 competitors or something, you know, insane. And yet somehow how did I figure it out? I don't know. I did because I executed, because I put in the hard work and I built the skills. Right now I run a startup accelerator that invests in SaaS companies. Do you know how many of those there are? There's a lot. And yet somehow we are one of the gold standards. Right? So I'm not saying you. You want to seek competition out, but it certainly, you know, is a signal. And so that's where. If I were to go to Shopify or to Heroku or whatever, you know, what I would look at is how easy is it to rank number one or rank high for the terms that I want? I would look at the App Store optimization and go to Reddit, go to Chat, GPT, go to whatever. Because I don't know the. And I don't. There's 75 of them. I've. The last time I did App store optimization was 2015. It was 10 years ago, you know, and it was for the WordPress plugin thing. And I learned that if you get the slug that you rank for the block, you know, my advice on that is outdated, but somewhere someone's talking about this or trial and error. Figure it out. Yeah, that's a lot of the big breaks I made in, in my career have not been that I read on the Internet. It was stuff that I tried talking about hard work, something that if someone had just told me, it would have taken an hour. Took me 40 hours because I just tried all the things. But at the end of that 40 hours, I knew something that no one else knew, or at least no one else was talking about. And that was my edge 100%.

Like, my first, my first real business was a physical retail iPhone repair store. And then I sold that. In two years I had four locations and I launched a company that sold iPhone parts wholesale to repair stores like that. And day one, I spent. I used this random software to scrape Google maps. This was 2012. And I got this CSV of every single iPhone repair store in the country. And it was so tedious. I had multiple monitors. It was like it was not automated. And I would just. I have to remove all these duplicates. And then at the end of it, I just remember looking and I'm like, I know something that no one else in the world knows. This database only exists on my computer. That is every potential customer. I know these customers are spending about $2,000 on parts. If I multiply that by 21,000 repair stores in the US my total addressable market is X big. If I call them and my, you know, only 30% pick up and only 5%. Like, I just knew I was able to reverse engineer what I needed to do to build 1 million or $10 million business. And we did 30 grand the first month. 150 grand the third month. And it was very not sexy. It wasn't SaaS. We were just cold calling, hey, Want to buy iPhone parts? Want to buy iPhone parts? But I had all these numbers that no one else had. And it's because I put in like three days worth of grinding, you know, like, it wasn't like in the grand scheme of things, three days worth of data aggregation to build an eight figure business is not bad. But most people, they don't think to do that.

Yeah, they, they either don't think because there's creativity involved there. You know, no one told you to do it. You just thought and you got to that, well, how would I, well, how would I reach them? Well, where would I find them? Well, how would I even do that? I'm not a developer. How would I scrape things? Right? Most people won't follow it. And then the next thing is they don't believe it's possible. Because if someone didn't tell them because you grew up, a lot of us especially, I'll speak for the US Education system, but I think a lot of education systems are like, all right, here you are, you're in kindergarten. We're going to tell you what to do, tell you what to do. And then you go to second grade, fifth grade, you know, on and on. Then you go to high school, then you go to college. And did you remember coming out of college? And you're like, all right, who's going to tell me what to do next? Like, that's what we're trying to do. And I've had entrepreneurs come and tell me they're trying to get a business off the ground and they're like, I just don't know what to do next. I really want someone to tell me what to do. And I'm like, oh, then don't be an entrepreneur.

You need a W2.

Yeah. No, you really do. And I don't. You know, I don't want to be pejorative about it, but like, you have to unlearn that mindset if you're going to be an entrepreneur. Because no one's going to tell you. The, the most of the job of being an entrepreneur is making hard decisions with incomplete information. That's it. I say this all the time. Then they don't believe it's possible. No one. Because no one told them to do it, or they haven't seen someone else do it. And it's like, so be the first. There's a bunch of stuff I've done that was the first. Right and then they won't put in the hard work. You put in three days. If it was 24 hours, it was fun, 30 hours. Because you were like, oh, this is an edge. Yeah, I'm.

Yeah. Like, what is the potential of this? I'm just dreaming, you know? And I think a lot of people think that this grind has to be unfun, right? But, like, I'm only grinding because I genuinely. It doesn't feel like grinding, Right. And I think that's a very key thing that people should understand. Like, if it does, like, if you're hating, every moment of that might just be a signal that you're grinding on the wrong thing, you know, or you.

Are not finding joy. You were preemptively finding joy from the result that it was going to achieve. You're like, if this works, the upside is it's asymmetric upside. High likelihood that I make a lot of money. And that's going to be fun. It's going to be building great business is going to be fun. Get the joy out of that as you're doing it. Because grinding. I mean, I just recorded a podcast episode, went live a couple months ago, and it was like, it was the 12 biggest mistakes I think I made over my career that held me back. And then the 10 best decisions. And the reason that I was successful, it was a separate episode, 10 Reasons I Think I was successful in spite of all that I did. And one of the reasons I think I was successful is the grind that you just talked about is, I see folks especially, it's like indie hackers on Twitter today saying, oh, this is hard. I don't want to do this. I don't want to market. I don't like SEO. I don't like selling. And it's like, then, then don't. Don't be an entrepreneur. Like, you got to do stuff you don't want to do. And one of the reasons. So I was a. An athlete as a kid. You do a bunch of stuff you don't want to do because it's hard. I was a track athlete. I competed at the state level. It was very. It was hard work all the time. Then I was a construction worker out of college, did a bunch of stuff I didn't want to do. But you know what? I needed to pay the bills. So when I became an entrepreneur, I was always like, I'm just going to have to do stuff I don't want to do. But as you said, I found joy in knowing that if it worked, oh, it was going to Be fun. Right? I was enjoying a little bit of the process, but more of like, the goal. It was. Let the goal motivate you along the way.

Yeah. And I think it's. There's, like, a fine balance there. I'll continue with your sports analogy. I, like, I used to run ultramarathons and I would do, like, long distance cycling. And, like, it objectively was not fun. It's very difficult. Right. I love the feeling of when I completed a race or did something hard and it felt good looking back on it. But, like, some people love running and they do it because they love it. I've never been that. Right. But lately I've just been working in the yard. Like, I live on a few acres and I just do, like, hard things in 100 degree Texas heat with my hands getting covered in sweat. And it's like, objectively not fun, but fun at the same time. Because I'm comparing it to cycling where it's like, I might get hit by a car, I'm risking my life, it's hard, and, like, there's nothing to show for it. Whereas when I go work in the yard, I'm at home, I'm working with my kids, there's something to show for it. I can look back on my progress. I'm burning calories. And so with the contrast of knowing the types of fun that you don't also enjoy at the same time or the types of hard work that you don't also enjoy, like, I'm able to just genuinely look forward to that grind, you know, because of the perspective. Because I've tried so many other different ways of burning calories or trying to stay healthy. Right. So on one hand it's like, you should enjoy it. On the other hand, it's like, you got to be willing to eat crap for a while. But like, the holy grail is kind of both at the same time, you know?

Yeah, I like that. I think you're right.

Okay, so I just had the idea, like, imagine how much one could learn just like burying themselves in a basement on a MacBook, looking at these 75 different app marketplaces, and just like, learning, like, spending eight hours in the zoom app store looking for keyword optimization, looking for asymmetric bets. Oh, like 8,000 people are looking for this type of a zoom app, but there's only three apps. But 8,000 people are looking for that type of a zoom app, and they have 30 apps. Interesting, right? Like, you could build a whole community Twitter account, newsletter. You could. You could build something as you Learn this stuff, right. And then you could build a tool to sell it to all those things that have been following your progress as you learn to find these asymmetric bets on these app stores. What do we think of that?

Yeah, I, I like the idea because one of the more common questions I get is stuff you've asked me, which is like, okay, so you talk about these app stores as being a nice step one and it doesn't have to be app store. My early stuff, I had an ebook, I had a course. You know, you can do non software, but if we do stick to the app store thing, it's like cool. What tool? You know, we have Ahrefs for like Google SEO. But what's the tool for these app stores? And there isn't one. And I don't know if it'd be. The market probably isn't big enough to build a tool for each of them. But what you're saying is doing more of the knowledge sharing and the kind of guiding people through. Because that's the extent of, you know, I'm not going to launch a course on this. I, I've written five books and I do have a course out on early stage software entrepreneurship called SAS Launchpad. But I don't go to that level of detail because this stuff changes too fast and I do more evergreen and so do I think there's opportunity for folks who actually figure this out. Yeah, I mean that's, that's the kind of stuff content I was putting out 15 years ago and it was very popular with people because it was pretty much how to, of tactical how to, you know, how to do this kind of stuff.

So what tools or frameworks do you like to look at when validating these SaaS ideas? How do you look at that?

That's a good question. So I think of it, there's two answers to it. But the historically my answer has been I have a framework called the 220200 framework. So it's the number 2/2/2200. The idea is I think there are kind of three steps to validation or three stages. I might come up with 10 ideas, whether I'm on Reddit looking at vertical, you know, like for gyms, are having this problem and no one's solving it, you know, or construction work or whatever, or I'm coming up with my own or whatever and I'm jotting them in a notebook. The two is, these are, these are hours. Two hours, 20 hours, 200 hours for three states validation. The two hours is pretty much Doing what you and I have talked about, which is going to SEO keyword tools, it's potentially going to Reddit. It used to be Quora, although I think Quora is mostly a lot of spam now. But it's basically online research of is, is anyone looking for this? Is there any need for this? Is there any demand for this? And you can do two hour validation on five or ten ideas. You know, it honestly can take you a lot less than two hours to do it. I could probably do it in 20 or 30 minutes.

Running a deep research prompt.

Totally. Now that's where these things change. Totally. But yeah, so two hours, 20 hours is when I take. Maybe it's my best or maybe it's the one I like the most or maybe it's my top three. And I do 20 hour validation. So that consists of two different things. One is I always put a landing page up for everything. I drive traffic to it somehow. I talk about it on podcasts, I talk about it on Twitter. I have run ads to landing pages. I've done landing and landing page with an email capture is usually what it is.

Or maybe they should go to landing page tool.

Is card C A R R D is super simple. But I mean, yeah, unbounce lead pages. I mean there's, there's all these old.

Tools that do cards like 50 bucks a year for 25 sites.

So like exactly, that's. And we have some landing pages there. Okay, so landing pages, dude, I have validated. And you're doing this for validation is like does anyone care about this thing? You try to write the best headline you have. I have done landing page validation for three different books for a conference. Now it's 15 years in, but when we launched it, it was a landing page. That's all it was with a couple of headshots on it. I've done it for a startup accelerator called Tiny Seed that's invested in 204 companies. That was just a landing page. Like everything I do is a landing page. First the problem is landing pages are a little. It's like, well, no one signed up so I don't know what happened. I don't know. Is it not a good idea? Do they just not care? So this the second phase of the. The 2:20 or I'm sorry, of the 20 hour is conversations. And you either want to be doing some cold outreach to get into conversations with people on LinkedIn, for example, hey, I. I will pay your consulting rate if you will have a one hour conversation with me or if you are Getting people opting into your landing page, then you reach out to them because you have their email. Right.

Can we chat real quick?

Yeah, totally. Hey, I see you're interested in this book that I was going to launch or this service. I'm going to launch a product I service that does X. I want to learn about what you're looking for and what your budget is or whatever. Right. You just have conversation. You can and you can even say, hey, I have nothing to sell you right now. I'm just a founder and it would be a big help. Yeah, so that's the 20 hour. It's kind of that next step, Right? And that again Is it exactly 20 hours? No, it's directionally, you know, and maybe it's 20 hours over the course of a month. It's five hours a week for four weeks. Do this and you know, and then 200 is building an MVP. And the reason the numbers may not work out the way they used to is AI. Now can I build an MVP in like a lot less than 200 hours? Possibly, yeah. So then the second, you know, when I, when I started talking about 2 20, 200 framework, the first question I ask is, can I just build the MVP of this in like a few days and just get it live and not do anything? I just said now I'd probably still do the two. For me, the two hour of the research is just a no brainer. But if I could get something into the Shopify app store in like three days, I don't know that I would do the other stuff. So that is where there's a bit of a, you know, a crossroads that didn't used to exist. It used to always be like, now you'll have to spend 200 hours to kind of build anything. But with AI and no code and just software tools getting better, it's kind of like I think there's a decision point.

You know, I think what you said about AI in that 200 hours is such a key because people think that replit or any vibe coding tool is going to solve all their problems. What they need to realize is like that 200 hours of like building a minimum viable product just went to five hours. So why don't I test 20 different concepts instead of one? Right? Like, I like looking at AI in that way. Like how can I, with my limited resources and time and money do 10x more with AI as opposed to how can I just go to sleep and let AI agents do all the work for me? Because that's not realistic yet, right? And I think that's how like the best companies that are embracing AI are using it. Instead of hiring the 100 people over the next year that they had planned, they're hiring 30 people that are all AI enabled and they're doing net more than they would have otherwise.

That's what we, you know, I run these two companies that are really kind of one big team, A big team. I say it's 11 people. We are a multimillion dollar community, online community with tens of thousands of, of not paying members, but tens of thousands of people in the audience and you know, who come to the events and such. And then we are a venture fund that has deployed 45, that's $45 million invested in 204 companies. We're 11 people. And one of the reasons is that we're not 20 people, which we probably should be given how much we do. We run in person events, we do a lot of boots on the ground stuff, is because AI has, has allowed us to hire slower. And, and not only. It's not just fewer people though. Like smaller teams are more efficient. There's just no way with 20 people you're as efficient per person as you are with 11. And so we are also embracing that.

Are there any like trends that you're seeing in this space that you really like? Like types of SaaS products, types of pricing offerings, like industries that are less obvious than AI, you know, like.

Yeah.

What are you liking right now?

I tell you, if I was with step one businesses or even just if I was going to launch a, a small SaaS and I was doing it on my own, I would pick a lane where I'm either I'm gonna just have higher churn and I'm okay with that. And I'm lower priced, let's say in the 20 to 100amonth range as a starting price I could probably get there relatively quickly. Depends on what I'm building. But I don't need to build something that's so advanced and complicated that it needs to, I need to charge a thousand dollars a month for it. Right. This is going to be a lifestyle business. It's not something that's going to be a million dollar business, but that's okay. Or I would pick the lane of which a lot of tiny C companies do is what can I build that is worth at least a thousand dollars a month, 750amonth. The magic part of charging that much is it allows you to spend money to acquire customers. The biggest downside to having a business where you're charging $20 a month is you can't do, you can't do any marketing, you can't afford to do anything. So I have 20 B2B SaaS marketing purchases. There's only 20 that I know of that exist in the world and they're in my last book, SaaS Playbook. If you were charging like $20 a month, if that's your average revenue per account, there are like four of those 20 that you can afford to do. And it's stuff like viral building virality into your product. It's content and SEO. If you, the founder are building that yourself. So it's your time, it's. I forget what the others are, but. And if you charge a thousand dollars a month, you can do like 14 of them out of the 20, you know. And if you're charging 2,500amonth, you can do all 20 of you can afford because you know, some of them are like in person events, you go to the trade show, you can't. If you're selling 20 bucks a month, you can't afford to do.

Yeah.

And even like ads like Google AdWords is really expensive now. So anyways, those are the price point things. The other trends that I'm seeing are horizontal plays. So horizontal SaaS app is one that any business can use. Right. Whether you're a construction firm, think of like Notion or Google Docs.

QuickBooks.

Right, QuickBooks, right. Any vertical can use it versus a vertical SaaS which is I designed everything for gyms, you know, for gyms and martial arts dojos. Right. Or everything for podcast hosts. You know, I guess podcast hosting would be a horizontal. What we're seeing is that if you get traction in a vertical, usually A there's less competition but B we see a lot of low churn and net negative churn businesses and verticals. And the third thing is I invented this term called orthogonal. So there's horizontal sass, there's vertical sass and there's orthogonal sas. It's just a made up word. What it really is is it's role based SaaS. So let's say you have horizontal tool but the person that buys is your director of hr. That is a. I call that orthogonal. It's that, you know the title of the person that makes the purchase decision versus notion. Like notion is not orthogonal notion airtable. It's like, I don't know, is that, is it a ctl, is it a procurement Augusta would be gusto is orthogonal. And we have a tool called code submit that is Tests for developers to qualify whether they're good or not. As during your hiring process. Right. Any company in the world, Target could use that. Best Buy could use that. You know, whatever. Whoever could use Code Submit. But who buys Code Submit? It's usually either like the head of recruiting or it's like your director of engineering. So you know the two titles that are going to. And I think it's one of those. I don't know the actual title, but you get the idea if you're selling to a particular title. Orthogonal is also a really good way to go because you know your end customers. Horizontal SaaS. If you're mostly bootstrapping, Bootstrapping or mostly. It's just really hard, there's a lot of headwinds and they tend to, they tend to plateau. And you're just like, well, how do I grow from here? Now that the big players are in.

It, you know, what do you think about building like, like something generic, something horizontal, like a CRM for home service businesses. You market it through whatever means necessary to any home service business. And then you learn over time. Wow. For whatever reason, my foundation repair customers have like no churn. Like they're just loving this. Or for whatever reason, you know, I'm marketing this to a hundred different verticals and 20% of them are foundation repair companies. Like, they just might not have a lot of options. And then using that data after the first one to three months, rebranding. Maybe your name is generic enough to not change the name because I don't endorse that. But just changing the branding on your website to say CRM for foundation repair companies, you know what I'm saying? So you start horizontal, go all in and like accidentally finding the vertical that has the most supply, demand imbalance.

I've seen that done a bunch. I think it's a great idea. It's called a zoom in pivot. There. I think there are 11 types of pivots. Yeah, there's a. One of the types of pivots zoom in, there's a zoom out pivot, which is the opposite of what you just said, where you start with the foundation and then you start realizing, oh, but also the masons and the bricklayers really like it. So you zoom out to the other adjacent verticals. Or you start with realtors and you go to mortgage brokers and lawyers because they're kind of similar. Yeah, I think that's a great idea. The only challenge is if you start horizontal, you'll have more competition, so it'll be harder to Find people. And oftentimes I say find people. It'd be harder to get new customers just because it's horizontal. Oftentimes the data is not very clear either. Usually it's pretty muddy and you're kind of like, kind of have a gut feel that the foundation people need it. But as long as you're okay with that uncertainty. I've seen that over and over and over in both directions, to be honest. I mean, we have tiny companies that add verticals, you know, over the years, and we have tiny companies that get rid of verticals and are like, ah, this is that our worst customer type are auto mechanics. So we just don't serve them anymore, you know, or until we turn them away. We're like, nah, it's not a fit for you. It's not. It's not going to be what you want. So we see that too.

My last question, you have this framework called Customer Pain versus competitor Pain. Can you describe like what that means and how startup founders can embrace that?

Yeah, yeah. It's just all of this stuff that I say is just from observing 225 companies as well as, you know, my audience and microconf and podcast questions over the years, I've answered a thousand podcast questions, I think literally in 15 years. And so this one is when I started observing, especially these days with SaaS. But I think most, a lot of spaces are like this is that you have to choose customer pain or competitor pain. Customer pain is when you are serving an audience that is maybe less technical. So maybe it is construction workers that are using your software or maybe it's Realtors or whatever. And the pain there is like, ooh, selling to them is kind of tough. And then getting them to use the software and then training them and you need to provide a lot of support. And it's just the customer is more of a pain than if you're selling to software engineers. Software engineers can be a pain in their own way, but at least they'll figure your software out, they'll know how to use it. Competitor pain is entering a space where there's just a lot of competitors. It's what I did with Drip, that email service provider marketing automation. We had competitor pain, not customer pain. Our customers generally figured out how to use it. We provided support and stuff, but it's not the level of support that the folks I know who are starting software for Realtors do. The worst businesses are when you have both. There are businesses with both where you have a bunch of competitors and your customers are non technical and you need all this support and it's hard to sell to and blah, blah, blah. That's. Those are the businesses I try to avoid. I wouldn't start one and I try to avoid investing in them unless they really have figured this out. I think these days you're probably going to have one or the other. That's the, that I don't know of a business that, you know, I can't think of a business off top of my head, especially sas. One like doesn't have one or the other because just the spaces are, are competitive these days.

Would you say if a business finds that, you know, beautiful spot and they have neither one, could that also equal like product, market fit, I just tap into something beautiful?

Yeah, I think when I came about there was not very much competitor pain early on. Now customer pain, I don't know applies really. I guess if you were to build AI for realtors or something. But yeah, I do think it's when new paradigms come out. Right. So it's like when the iPhone came out and it was suddenly a bunch of mobile apps. You know, you could poof. It's a green. What do they call it? A blue, Blue ocean. Yeah, yeah. You know, and you had mobile and then you had. There was kind of the crypto web3 thing was new for a while and then AI I think now opens that up. You could potentially find something.

But like don't expect that.

That's what I'm gonna say. Expect that I wouldn't seek. Yeah, it's like seek it. But I don't know of anyone that has found that. So don't, don't feel that that's gonna. Don't, don't not start a business because you can't find that perfect thing. That's the thing I often see, right. Is any criteria that I've given ever for like, hey, here's how I would evaluate business ideas. There's always someone looking for every one of them. So I have like the 18 things I would look for in a SaaS business. I want net negative churn, I want high price point, I want this and that. I say over and over, you're not going to get all 18 of these. I've never run a business with lightly. I don't know of a business that exists while 18. So the perfectionist or the need for certainty is a real. It's anti entrepreneurship, it's anti being a good founder. You just anti investor. It is, it is. So that's what. If you're listening to this and you're an aspiring entrepreneur. It's never going to be as clear as you want it to be. Never. No decision I ever make is as clear. And I'm used to it now. But like, 20 years ago I was like, but? Where's the but? I'm supposed to. It's supposed to be, you know, a plus B equals C and it's like, no, it's A plus B equals a big question mark. And it will be that forever. The earlier you figure that out, you know, and I'm talking to myself 20 years ago, so I don't think I'm, you know, the earlier you figure that out and become comfortable with that, like, the better off you're going to be.

Yeah, man. That was beautiful, Rob. Thank you. Where do you want us to find you?

Well, if folks are watching this on YouTube, I have my very own YouTube channel, YouTube.commicrocoffee. and if you're listening to listening to this as a podcast. I've been podcasting 52 weeks a year since 2010 on a podcast called Startups for the rest of us, about to hit episode 800, so that'd be the other place folks can keep up with me.

Congratulations. Well, thanks for coming.

Thanks, man.

Hey, guys, if you're still listening to this, it's probably because you haven't had a chance to take your AirPods out. You're still mowing the lawn, you're still driving, what have you. If you're still here with me, I would really, really love and appreciate a five star review on Spotify, Apple, or wherever you get your podcasts. It would mean a lot if you want to go the extra mile, share this episode with a friend that might have an interest in starting a business. It would mean a ton. Hope you have the best day of your life today.