Pascal Levy-Garboua’s Post

Thank you Andrew Gazdecki for having me for this interview to explain what we learned acquiring indie saas at Noosa Labs !

Merci de m'avoir reçu pour évoquer mon parcours et certaines leçons retenues de ces experiences! Matteo David et toute l'équipe de Zero to One

The indie SaaS makers of tomorrow will be like Chance the Rapper or Franck Ocean: eventually, they will sign to labels. Not music labels, but #SaaS labels. AI will increase strong indie SaaS makers 10 folds or more. Besides, the number of software these indie makers will create will increase further. Already, many indie makers have 2-10 projects they are running in parallel - this number will only go up. What will be hard in this new world will be distribution: - getting awareness - improving product positioning - creating collabs with influencers (yes!) - cross-selling and even sales possibly These skill sets will be sometimes owned by #SaaS labels who will be good at it and SaaS makers will distribute their products through these labels, the same way that artists mostly focus on their music while their label and tour managers are in charge of the distribution and monetization of their craft. Frankly, I did not think of this when I started Noosa Labs 2-3 years ago. Maybe this will be 50% of what we do in 2-3 years. What do you think?

Last week I was talking to the founder of a 25-person startup experiencing his first HR growing pains. It reminded me of my experience at Checkr in the first year - so I shared with him some advice gleaned from scaling the Company from 10 to 300+ employees. Company values are not bullshit terms you print on the wall - nor should company culture be “ping pong tables and happy hours”. When a startup hits 20-40 people, things start breaking:  - some early employees revolt against change - teams can be in disarray. If you raise funding, you also need to scale hiring. I experienced this situation at Checkr and have seen it at many companies I invested in. Three things work in this scenario: 1. Let go of early employees who don’t fit the next phase of growth (or bring too much negativity to the others). This is the hardest. They’ve been in the trenches with you when nobody believed in you. But you might have to do it. 2. Set the tone in all hands that you know what you are doing and where you want to go 3. Work with the team to define your Company values Defining Company values is a superpower: if you use these values to determine whom you hire, fire, promote, then communicate, and live your values, you can create a unique sense of trust in an organization that I had never experienced before. Want to set up your values? Follow me and Comment “Values” below. I will send you a guide that my colleague Khoi Ho and I have put together. Inside you’ll find: - a step-by-step guide on how to put together core values at your company  - how to institutionalize your core values and hire strong value-fit candidates - proven email templates and tips Share your feedback afterward!

I’ve reviewed tens of indie SaaS in the past 6 months.  They all follow the same growth pattern with possible shortcuts. Phase 1: 0 to $1000 of MRR The maker builds a product to solve her/his current needs or those of people she/he knows and gets her first customers that way. They try to get more people to try it, and a good tactic is to go on LinkedIn, send an inMail messages to potential customers, and create a conversation there. At that point, they have ~10 customers and move to the next phase: content. Phase 2: $1000 to $20,000 of MRR Aside from building the product, they want to grow the top of the funnel. They post content about what they are building on Twitter, LinkedIn, Reddit, YouTube, etc, ideally under their name. If it clicks, this scenario has a second advantage: as you post content on your blog and people find it useful and interesting, it will help you rank higher on Google which will drive an SEO growth loop. At this point, their MRR is between  $5k-$50k depending on their market size, competition, etc… Phase 3: $20,000 to $100,000 of MRR (Typically when we at Noosa Labs enter the picture) They have a channel that works - in my example it was SEO, but it could also be Google Ads / Facebook ads / YouTube / an app store. Here are 4 levers I see working at this stage: 💡 Double-down and scale channels that work by professionalizing them (using best practices, dedicating outside resources for it, etc….): this can either solidify what you have or extend further what you have by improving the surface area of the channel that is working 💡 Improve the product positioning. It is a good question to ask yourself - who is the ideal customer profile based on conversion data, churn data, etc…. Then talk to them to hone in on the real value proposition for your ideal customers. You should write in the hero image of your homepage: make sure that in a second they feel - this is for me. 💡 Improve the conversion funnel (and pricing). Analyze your site traffic and conversion from visits to sign-ups and from sign-ups to paid customers. At each step, some things can be improved: messaging, UI, and UX of the product (a classic), showcasing the key features that are worth paying for in the free version of your product too. 💡 Go upmarket. It is very rare that a SaaS only has SMB customers. But how do you make sure they can buy the product from you? I would point out two main points: procurement processes and security (SSO, SOC-2, etc…). As long as these customers pay the premium these features require (sometimes the premium is 10x+) it can be worth it. 💡 Try to find new channels. Outbound? Ads? Video? To get to $1M+ in ARR and beyond, you will probably need to find new channels. You now have a budget to try that. Phase 4: the scaling phase 💡 Expand what worked in Phase 3 💡 Launch more products for your customers. Any questions? #indiemakers #bootstrapped

Your startup idea probably isn’t venture-scale. And you should think about bootstrapping... For the last 20 years, most content around Tech was written either by VCs to help founders and generate awareness (deal flow) for their firms or by a tech press highlighting fundraising rounds. VCs and the press were the priests anointing winners among all the noise of tech startups. As a consequence, tech founders internalized that if they wanted to build a tech product and be “serious” about it, they had to raise money and go through this VC factory line. 20 years have passed: - learnings have been made - indie was cold and becoming hot - AI is upending software creation And now we know, much of this was bullshit.   It was self-serving from VCs and it was lazy from the tech press all favoring the VC industrial complex. How will the situation change with AI upending software creation? It will get worse. Imagine in 2-3 years new AI tools will make it possible for two amazing developers to build a product in one month that took 4 to 5 developers one year to ship before. VCs need to fund: - Teams building a product with true network effects - Teams creating deep technical moats around a new technology solving a large problem (e.g. deeptech) - Teams innovating on the business model side in a major way (e.g. marketplaces) - Teams going after very large or fast-growing markets (Enterprise SaaS, prosumer/SMB SaaS) That’s it. If you are not building something that falls into these buckets, you should not raise from investors who expect you to become huge - or not raise at all. Bootstrapped founders that did not raise when going after these other opportunities: You were right! Because now you can sell your business when you want, whereas your colleagues who took the other route are mostly stuck. We need to change the narrative and re-set expectations, and the end of church battles between “lifestyle businesses” and “hyper scalers”.

5 Metrics I analyze when reviewing a #indieSaaS I am interested in acquiring at Noosa Labs. 1/ Profits I always look first at the MRR of the SaaS but also at what is left after paying for different software, hosting, advertising costs, and salaries/contractors (outside of the founder(s)).  Remember - bootstrapped SaaS are mostly acquired for a multiple of profits. 2/ Traffic conversion funnel We like businesses that use product-led growth (aka PLG like my initials!). So we review the traffic to their website, the number of monthly signups for the free version of their product… and the conversion to paid customers. 3/ Revenue Retention after 12 months We look at Revenue Retention after 12 months and benchmark it against our apps.  Above 80% is great, above 40% is good, and below 40% becomes a big question mark. 💡Churn is acceptable until the business stops attracting enough new customers to replace churning customers (assuming CAC is close to zero). 4/ Number of inbound leads from Enterprise customers Most indie SaaS founders don’t want to deal with Enterprise customers (they bring a lot of burden!). While we don’t love long sales processes, many Enterprise customers want to buy quickly (after a demo or two) - but require vendors to go through their process. So if you are getting one new interested lead a week that you can’t serve - we become very interested! 5/ Growth rate While we want to increase growth, it’s easier on a business that grows more than 10-20% per year (excluding price increase). An ideal SaaS target for us has an MRR growth between 10% and 50% per year. Above this range is better, but these businesses tend to be too expensive for us. Below this range is difficult because you might be buying at a peak… Any questions? PS: bonus in the comment

Yesterday, a famous SEO figure published a leaked document revealing key aspects of the Google algorithm. The SEO community is eating it up… But does it matter in the long run? In 2008, Windows was the undisputed leader in Operating Systems. In 2024, it’s Android. My hunch? In 15 years, the world of search will look like the world of Operating Systems today. Bootstrapped founders (and the overall Tech ecosystem) rely a lot on Google SEO to grow their businesses, and as a buyer of their business, I think about it a lot too. More recently, I have spent time thinking about the future of SEO in a post-ChatGPT world. On the one hand, I want Google to win - because my apps benefit from it, but I cannot put my head in the sand and think nothing will change. After talking to SEO and AI experts, and looking at recent announcements or rumors from Microsoft, Apple, OpenAI, Google, Meta, etc… I believe the world of search will look in 15 years like the world of Operating Systems today. ChatGPT created a new paradigm, and this new paradigm will allow new players to emerge outside of the “10 blue links” that Google has cornered. I anticipate that Google will not fumble the AI game like Microsoft did with Microsoft's mobile OS. But Meta is adding “search” (ask Meta) everywhere, and so is Microsoft or soon Apple with their upcoming OpenAI partnership for Siri (I guess). As large Companies build LLM with their proprietary data, new searches will be done on a corpus that Google (or Bing) never had access to… on top of the open web. In the end, Google and SEO will continue to chug along, but most “searches” might not be done using Google in 15 years. What does this mean for founders aiming to generate top-of-the-funnel traffic for their new app? It indicates numerous opportunities within Google's new search formats but also many new opportunities beyond Google. What do you think?