I'm Jason Cohen, founder of WP Engine. #AMA!

I'd use the technique I used for customer discovery at WP Engine: I went to LinkedIn, used its search to find people with the right title/company that "should have" wanted the product, then reached out offering them to pay them whatever hourly rate they felt was appropriate for a one-hour conversation, to get their feedback. No one actually charged me, but the fact that I showed up-front that I valued their time got me the conversations.

The other thing is to follow something I'm deeply interested in. I don't mean "follow your passion," although that can be good (it can also lead to things which are worthy projects but not companies, monetarily). I mean interest. So if you like programming language X, use X. Regardless of whether X is popular or on the up-swing. If you love solving specific kinds of problems (I like optimization and at-scale coordination so hosting made sense), find a way to have to solve them. This keeps burn-out away and energy high, which is important early on.

First, question why you want to sell. You just said it's doing fine and you like its progress, so why change? Because you want cash? To reduce risk of future failure, i.e. take some money off the table now before more risk appears?

Getting to the root of what's driving that, is the key, because it allows you to brainstorm other ways of getting what you really want. "Selling the company" isn't really the goal, it's a means to an end. It might very well be the correct means, but it might not be. By ID'ing the end, you can think of other ways to achieve it.

For example, there are other investors who might trade some cash for an equity position. Something like Indie.vc or Tinyseed or Earnest might be interested if you're still involved or if you're not.

Sometimes customers would like to invest. Often employees do, but don't have the capital, or are not in a total financial position to do so, but business customers sometimes are.

Or don't. See it as an annuity, enjoy that, and optimize for profit rather than growth.

I would be happy to speak to you about buying your share of the business, Rosie.

Not to steal Jason's thunder, but cc'ing @ThomasSmale @KevinSureSwift who might have thoughts on this!

Would you consider selling your share to the workers in your company? You might be able to get some advice from The Hive (https://www.uk.coop/the-hive/) on how to do that.

1. Yes. https://blog.asmartbear.com/sacrifice-your-health-for-your-startup.html

2. Nothing. That doesn't mean I haven't made mistakes, or taken the long way, or could have been ahead somewhere. But that's life. If you admit a few things, you probably have to admit 100 things -- hires you wouldn't have made, features you wouldn't have built, features you would have built, market positioning you would have made, really everything.

There's no "best way." If there were, everyone would have 1000 customers.

It's not about bootstrapping versus funding. Nowadays you don't get funding until you've bootstrapped something that works and people are starting to use (in small numbers that pay or large numbers that aren't). There is however a strong component of access, i.e. most people aren't in a financial or physical position to do something that large on the side.

The answers are already there -- build something people need, that is self-explanatory, that people want to talk about either because that is part of how it is used (i.e. "viral") or (100x more common) because they just love it, whether they love the product or the company.

Generally if you can't find early customers through the obvious channels -- picking up the phone, linkedin, Google ads, publishing the existing common spaces, door-to-door, existing network -- then maybe it's either not such a good idea (since people aren't responding) or you're not the right team for that idea (since you don't have a way to sell it). In that case, maybe it's a different idea that is needed.

10x your strengths. Work around weaknesses. Only one or two key things will make or break the company in hindsight, so your strengths are where that will happen, not in weakness.

How do you work around weakness? One way is delegation as you said. Another is ignore it -- sometimes the fire can just burn and it's OK. Another is to design workplace, work style, features, market, customers, product, UX, etc around the weakness. For example, I suck at design, so my stuff was always ugly, but also I sold things to audiences that don't care (hosting is always ugly, ITWatchDogs was sold to IT people who don't care).

Here's how to hire around strength/weakness: https://blog.asmartbear.com/next-hire.html And when you hire others, hire to their strengths as well: https://blog.asmartbear.com/complex-decisions.html

Of course there's such a thing as a weakness yoiu need to shore up. Not be amazing at, but shore up. If you just can't work with others, and you need to hire people (maybe work around that instead?) then you have to become better at hiring and managing, and just saying "I'm a bad manager" is shitty for everyone -- the employee, yourself, and the needs of the company.

I think it's all still correct. I don't think the economics of bootstrapping have changed. Sure some things are cheaper/easier (e.g. cloud, tools) but also customer expectations have increased (e.g. 100% uptime, scale, service). Everything is still fundamentally hard. You still need to charge $50-$150/mo, you need 150 customers, pre-pay is smart, picking a market that matches things like "not 24/7" and "having recurring value" is still right.

I could add to the end, where I briefly mentioned the important thing is "know thyself" and stay true. That's a whole topic in itself, and people don't do it. They still chase whatever they think other people think they should do. Even when they run away from the "Techcrunch expectation" (which is great!) they're running toward "whatever DHH would think is good." It's hard to really figure out what's correct for you.

Also hard is knowing when you're wrong. e.g. "I'm going to run an organization this way, with no meetings or managers because those are dumb and I'm going to hire well instead." That always fails around the 10-20 person mark. Sometimes people figure that out, but not always. So "doing it your way" might be missing things that really do matter. It's hard to tell which is which; adding some stuff about that could be useful.

You can't know. You can read The Dip by Seth Godin, and what you'll learn is "sometimes you should push through the pain, but sometimes you shouldn't." Others here can probably comment on whether there's something more to it.

What I know about Mittelstand, however, it that it's likely to work exactly like you describe. Slow but steady. Long cycles but once a customer, a customer for a long time. Valuing quality over flashy features. Valuing relationships over speed.

That's not the "SaaS American" way of course, but I think it's a great way, and one to cherish and embrace. Of course I don't have to live it, so it's easy for me to say. But I wish we had that sort of pride in America. I think it's a better mental model especially for bootstrappers, but you need cooperation from the customers as well.

Yup luck is there for sure, and could even explain 100%: https://blog.asmartbear.com/business-advice-plagued-by-survivor-bias.html

Some is being there. That is, it's luck, but are you out there in the market, trying to do something, so that when good luck strikes, you're there to take it? Are you picking up the phone trying to talk to customers, so when good luck strikes, you're on the phone with it? More on that point: https://blog.asmartbear.com/how-much-of-success-is-luck.html

Some is being honest with yourself. I had other ideas for companies before WP Engine, which I vetted in the same way as WP Engine (described in another answer on this page), but I decided against doing it. Was I right to discard? We'll never know, but I discarded things that weren't crystal-clear, even though I had a personal attachment to my ideas. I could have pushed through that, but I waited for yet another idea that was even better. That part was judgement and introspection and honesty rather than luck. Here's how I did that: https://blog.asmartbear.com/good-startup-ideas.html

Apologies for all the blog links, but that's how I think about it!

I do not think that's crazy. However, I would encourage you to charge for the software. People value things they pay for, and don't value things that are free, whether or not that is rational.

You can still have the same net effect on price. That is, you could say, "look the software is usually $X/mo for what you want, and also you want to spend $Y/mo on services. We have a special arrangemnet with customers who want both, in which we discount you a flat $Z/mo [or whatever] if you're a client both of our services and software."

Here you fit into the same budget, but the customer feels she is getting "a deal," which is a good feeling, and also values both software and services, which is good for you.

Who knows how this will evolve in future. By establishing real value for all things you provide, you could change or pivot without a problem like "oh, now we want to partner for services and only have software in-house, except we haven't been charging for it, so we can't."

Smart Bear I would demo; WP Engine I did not. Smart Bear was money up front and not SaaS, so there was more of a "sniffing" process before the purchase. Then again, after the purchase they didn't have to keep paying, so the decision wasn't as difficult.

WP Engine has precedent in hosting, in which people expect to pay monthly but cancel any time and not get a demo. I had a free trial at first which surely helped, although 2 years in I killed the "14-day free trial" and replaced with "no free trial, but 60-day money-back guarantee." This actually increased sales; when asked, people said they felt like 60 days was enough time to try it, whereas 14 wasn't. I made the decision initially because trial conversion rates were 85%, so it seemed like all I was doing was giving away 2 weeks of revenue and making it easier for spam/fraud.

It just goes to show, there's no one answer to how to do that. Better is to figure out how customers think about evaluating products, and match that, and maybe try a variety of things.

Once you see slowdown in revenue growth it's too late, unless you're talking at-scale when revenue growth is supposed to be slowing (but not too quickly), e.g. $50M-$100M/year in revenue. Then you'll get a small revenue multiple. You might have gotten more by selling sooner with high growth on a lower revenue base. Of course it's too late by then, but I'm just stating how it works.

Increase in competition generally means you're in a good market, and should stay. If you sell to a competitor, then "increase in competition" is a great time. If you sell outside of that, it might or might not depending on the perspective of the buyer. For example, if the buyer has been wanting to enter this market anyway, and now competition is hot, acquisition is likely the only way in quick enough, and selling can be done at a premium. But for example if the potential buyer already isn't that interested in the market, and now it's even more difficult to compete, that makes the prospect less interesting. Overall, however, more competition means better market, which makes the company more valuable.

I don't know why there should be three key drivers!

Mainly I see "wanting to sell" as almost completely an emotional personal decision on the part of the founder. Founders who love what they're doing, don't sell, and don't ask when to sell. They have a defiant attitude towards everyone else. I don't mean the VC people -- they often don't sell because VCs don't want to. I mean bootstrappers. I've seen passionate bootstrappers go up and down with the market, to the point of zero employees, just to stay with it, because it's meaningful to them. DHH won't sell for anything, regardless of "three key drives."

OTOH, a founder who is ready to quit, needs to either sell or get recharged through some other change. If the market is bad, the founder will say she's selling because the market is bad so it's better to get some cash out and stop. If the market is good, the founder will say she's selling because the market is good, so it's a great time to get extra cash out before it turns. Either way it's not about the market.

I think you're asking because you're not that interested in continuing non-stop for another 1-10 years. For your own reasons. Which, of course, is perfectly natural and normal!

Often it's burn-out. Sometimes that's avoidable, sometimes not. That's an entire other topic. Here's a talk I gave about that at SaaStr: https://www.youtube.com/watch?v=Kn5MbZoSRNM

Sometimes you can reverse that. Firing someone that shouldn't be there, getting reenergized about a product or customer, deciding to pivot and hiring a CEO or raising money, going away for three weeks, etc.. But sometimes not -- it's personal.

Who else sells to those companies, and how do they get leads? Are there competitors, alternatives, or adjacent markets where the answers could be?

One thing to not do is continue to advertise wherever you're doing it now.

Presuming your price point is high, a physical sales force might be in order.

Depends what you're selling, but one possible solution is to price so that it's a great deal for $5M+ companies and unaffordable for < $1M companies.

Focus on getting 100 customers at $100/mo and do nothing that doesn't directly help that along. Which probably isn't more features.

I think you can have any price point, but that the product and market and business model needs to match. Specifically: https://blog.asmartbear.com/pricing-business-model.html

In general I don't like low-priced things because in general it's hard to get 1000 customers at any price point. Obviously there are lots of exceptions, so it's a rule of thumb, not a rule.

But as a bootstrapper I would rather make 200 sales and run tech support for 200 customers to make $15k/mo, rather than 1000 of each.

Thanks so much! It's difficult (of course) so it's always lovely to hear encouraging words!

I'm not exploring niches at the moment, so I don't know.

You could look at what are the key features that larger companies are investing in. Large companies only attack large problems. But when those problems are adjacent to their main business, they generally don't do a great job at it. For example, Google+ was bad.

Speaking from the web hosting space (since I have more examples at tips of fingers), you can see Wix, SquareSpace, most of the WordPress hosts, all attacking eCommerce. Competing with Shopify sounds daunting, but it definitely is huge. So you might find a niche inside there.

I agree -- see other answers here for more on this question of "how long" and "what price."

But quickly again:

1. No, it's just hard to have ideas which are both good, and which there's a business to be had around them.
2. If it cannot support the founder, it is not cash-flow positive. That's a joke that founders tell themselves, so they don't have to admit the business has been in the red since day one. So the answer roughly is "until the founder runs out of patience or money." As in another answer, I think the answer is one year after launch, max of two years.
3. Stop struggling with your inner turmoil and just do it. :-)

"Unique" means "doing something differently from competition." It's in the solution, not in the problem.

If your customers can't understand the problem you're solving, or how your product actually solves it, that doesn't make you "unique," that makes you confusing, and probably wrong. Or maybe totally right on the product, but totally wrong on how to describe it. None of that has to do with being unique.

Describing how the solution is unique is a good form of education. For example, a company that is unique in that it gives back to charity is a good form of education.

But the quote you have, which is correct, is that you shouldn't have to spend 45 minutes for the customer to even realize you're relevant to them.

As for the process, I answer in detail in a different question above, so please see that.

As for MVP (but I prefer my own version, SLC: https://blog.asmartbear.com/slc.html), first I did validate with 30+ interviews, which took 4 months. Then I was able to make the first version in just three months. The trick was a few things which made a large difference, so people had a good experience, and doing everything by hand or scripts rather than "automating the world" from the start. It's tempting to do the latter, but it's better to really understand everything and be able to change quickly, and then automate when it's truly mundane.

WP Engine was 4 months of customer calls, but then 3 months after that to launch. How I got users I answered above. Thanks for the question!

No I didn't, and no I don't think that's a requirement. So which one to pick?

First, personality. I'm better alone at first. Some people would burn out or go crazy without a partner to lean on. Being introspective about this is vital.

Second, beta. Most successful startups have co-founders, which makes sense because there's twice as many people to do work, and possibly a wider skillset to apply to the problems. But also in several different studies the #1 cause of startup failure is "founder strife." Also for obvious reasons. This means it's "high beta" in financial terms. As a bootstrapper, you can decide whether you want it "more extreme on both ends" or not.

Great question. I don't know the ratio, because I have a lot of projects! It might depend what you call a "failure" rather than a "project that stopped."

In some sense they're all successes. But then if something lasted only 3 years was it really a success? (My first one.) If it was sold but ultimately I only made about as much post-tax money as I could have working a high-end software developer job, was that a failure because of the lack of upside relative to the risk, or was that a success because I got to run and do tech at a startup for years rather than working at IBM? Smart Bear and WP Engine are definitely successes, but how do you rate everything else?

Finally, I agree with your sentiment generally, and this is what I think about it: https://blog.asmartbear.com/business-advice-plagued-by-survivor-bias.html

Yes, it's huge. It's not great when people are using it for self-promotion, but it's fantastic for a few things at least:

1. "Am I crazy?" Sometimes yes, usually "no, but you need someone to talk to about it."
2. Things that have objective answers, like how to get different kinds of insurance, or accounting stuff, or standard tips on firing or handling a troublesome customer.

It's less good for specific advice that's right for you, because no one knows your business, or knows you, both of which are important (besides also experience) for that. But you might find some people who eventually develop that with you, and then that's back to being very valuable.

1. I think it works when 100% of the company is distributed, but very hard when <80% is distributed. Too much happens offline, exactly because online is (yes, still) difficult to communicate with the same fidelity and bandwidth as sitting next to people.

I also think you need something big to focus on, like obsession of culture, or the customer, or a larger problem in the world. Something people can latch onto even without physical contact.

I think it's a wash when it comes to communication. Some things are much better, some are much worse, tools help but do not solve.

2. Approach it like you're hiring a co-founder. In many ways, you are. How much would have to be right? On which dimensions? That's what you have to solve for.

It's hard to build a community on purpose. Generally communities appear and then nurtured. Sometimes it happens, like in open source; you might look at the history of some of those for examples, because all of the information is available.

Try to raise the $100k. Not because I think you necessarily should go that route, but rather because you will learn (a) whether you actually should, (b) what would that entail, (c) is anyone even interested and (c2) if yes, why, because you might hit that double-hard or (c3) if no, why, because that might be a flaw in the business, or a reason why the business is fine but fundraising is not an option.

Thanks for the kind words!

I would focus on it increasing your business rather than on whether it will help others. I find consulting tools are often like that, i.e. other consultants often do like tools you make for yourself, provided you've built the UX and the internals such that it's not ideosyncratic or difficult to parcel out.

If you really want to know the answer, find 10-20 other agencies who should be customers, and give it to them for free (for a long time like 1-2 years, or ideally forever), in exchange for giving feedback while you're working on it.

If you have to ask, the answer is "yes, but you won't get the money you want."

Great question; I answered elsewhere in this AMA!

No, it was 150 at $70/mo, so that it's $10k/mo. And that's for one founder; I think you need $10k/mo/founder to really be going, because everyone needs to be doing it full-time.

Of course you should adjust those numbers for cost of living in whatever country and whatever personal circumstance; that was just a rule of thumb to provide the ballpark figures.

I still stand by those numbers.

I wouldn't work on something longer than one year (after being in market, maybe two years if you had a protracted development period before v1). At Smart Bear it took me 1.5 years but that was 17 years ago when there was no SaaS, no international selling platforms, and 1/1000th of the people buying things online.

Also I would focus on those numbers. I think often when this doesn't happen, the founder is focused on building features instead of getting customers. Because features is fun and you know how to do it and people ask for them, and because sales and marketing is hard and isn't in your control and you're shitty at it and it doesn't match your personality to do it.

If you're not focused on it, you're not being a good founder. If you're focussed on it and can't get 100 customers in a year, maybe it's not working out.