I was browsing X today and stumbled on this site that claims to have launched the first "physical store selling survival gadgets" for customer support professionals. As a SaaS founder this site really hit home and got me.
You can buy items like patience pills or the german invoice template (which is actually hilarious AF). After you checkout you are presented with a little April Fools screen aka a marketing text about the customer support SaaS behind the idea.
I saw quite a few April Fools jokes yesterday but most were pretty boring. This seemed like they actually put in some thoughts. I feel like everyone, even companies are super lazy in 2024 so it's refreshing to see some creative stuff once in a while.
Hey @all since I have seen this kind of comment a couple of times I would like to address it in more detail:
"If you take extra funding and hire people just to meet their needs, you no longer have a SaaS. You are writing a custom product for this large customer, with explicit permission to try to sell it to other people too. But this big player will be driving everything, as if you do not do what they say, they can walk and your business collapses.
That does not necessarily mean it is the wrong choice - if you are not growing otherwise, and this is a path to keep it alive, it makes a ton of sense. But if you are growing and these guys are just a jumpstart to bigger ARR, it might be a mistake."
=> I realized that I can easily build the features myself and don't need to hire extra staff. I might need one contractor that could do some last-step safety checks but that's it. In terms of building extra features just for them: Besides the enterprise standards such as SSO and the apparent need for data isolation all the other requested features are on the roadmap.
My business right now is not really growing anywhere and this customer could essentially spark the engine. The reason for this is that there's actually another almost equally as large company that wanted to use my app but had to decline for the exact same lack of enterprise features (mainly the security part)
What I am concerned about is that they want some sort of support plan and an SLA which all seem intimidating at first glance as I have no idea how to properly price it so that I am not a slave just to their needs, you know?
Unless this is at a high hourly rate, with a cap on number of hours, I'd be worried.
> ... and an SLA
A Service Level Agreement -- with penalties for non-performance? Sounds like a path for demanding whatever they want from you, under threat of litigation.
From your earlier comment: "there's actually another almost equally as large company". Consider approaching again that company, see if they're still interested. If so, work up a plan to sell to both. Tell both you have another (large, unnamed) potential customer, and ask for advice.
Then, both will want to make sure that the other cannot get into a position to "own" you, because it would damage your ability to respond to their own needs.
I would also evaluate both companies for risk of replacing your product with some "clean-room" re-implementation of their own.
Bona fides of my own: None, except that I'm building a SaaS with a similar business profile.
Thanks for the advice! The problem is that they told me that they can‘t sign up yet because their security compliance team declined it. They need their data isolated and SSO.
OK, but then the problem is on their security team, not your product development. They need to decide internally if the importance of your tool supercedes those security policies.
You can do two things from here:
1) Accept those features as valid needs for potential future customers. Prioritize them in your roadmap however you see fit.
2) Have a dialogue with their security team, asking why those policies are in place, and showing them alternative ways you solve their concerns.
I will put out a word of warning - if you let your product decisions be driven by whatever cost you a sale, or what the sales team believe will make a future sale, you are now being driven by short-term sales goals, not by a long-term view of what your customer base needs. Going to massive efforts to make one sale is almost never the right answer.
Thank you so much Joshua for taking the time to write this! This is amazing advice! I will take some time to digest it and get back with questions once they come up.
Not sure if it's the language barrier but could explain again what you mean with "I would set your pricing around a proposed move to the US so you can ask for money at US labor prices" ?
It might not work but.. I was suggesting that you try to do the reverse of what they are doing.
Large US companies look to other parts of the world to reduce their labor costs. If you try to justify the cost of the contract with them on your costs, then it would benefit you to use the higher US developer costs rather than the lower rest-of-the-world costs.
But, to have that work, you have to have come up with a reason that you need to be in the US.
It is probably easier to just sell them on hiring extra people in the place you are but you might get them to pay for you to move your business to the US.
Thank you all for the amazing advice so far!!! I love the fact that nowadays one can get this kind of valuable advice for free and it a matter of hours. I will take some time to digest everything you are saying here. Keep the advice comming! Hopefully this can also help other founders in my position as well in the future.
Thx for the advice! Yes the next question is how do I actually price them?! I have no experience in enterprise pricing/sales. Since they are a m-b$ company and even actively mentioned they have a large budget for this because they really want it... what can I expect? This all feels like starting over in elementary school for me, haha.
Thank you so much for the great insight! Good advice as well with the only hire on a contract basis. Thought of that as well. Yea it did sound like they would pay me upfront.
I just don't have any idea what the condition of the contract will be and where I have to be very cautious... The source code thing is great advice.
The charging on an hourly rate sounds interesting and new to me.
Also, this is not the first time I have read that multi-b companies screw over small rising startups. Sounds horrible but as you said – nothing to do about it.
I read their contract carefully but didn't have a lawyer review it. My experience with lawyers is that most are expensive but not that great. I've had one really good lawyer out of 5-6 that were pretty sloppy with details, like putting together corporate formation papers with some other customer's personal info.
You can negotiate terms that are important to you on a contract. Start with the most important changes you want to make, because at some point they may get impatient and just say "Okay, now we need you to sign this", because they will get sick of having to deal with their own legal department.
For example, there was a clause in my contract about indemnifying them. Guess what - I was not in a position to indemnify IBM if Ford decides to sue them because of my work. So yeah, stuff like that I had struck from the contract. If they had said I had to agree to it, I probably would have stuck to my guns and said no, because it was so absurd. Another option would be to get umbrella insurance, but I was too dumb to know that then (I was 29).
I think a key thing is that you understand the contract. If you don't understand something, ask them and/or do some research or hire some legal help until you are comfortable with it. At some point, you either trust them or don't, because in the end, they have all the money and power and you are at their mercy. Keep that in mind.
Great advice. The reason I have no LLC yet is that in my country (I am not from the US) setting up a limited would require around 25.000€ upfront locked investment. Given my low MRR until now there was no need to do it by any means. Most small SaaS companies run as a sole prop for the time being. (Germany/Austria area) Coming up with the 25.000€ also seems unreasonably high and would instantly require me to do proper accounting for which I would need to hire a dedicated accountant which adds to the cost again... Hope you can see that for my 500$ MRR it's simply not economically feasible.
That being said, I am seriously thinking about setting up my company in another country with a more appealing legal entity structure. Either the US or Estonia (EU E-Residency). Appreciate your advice here as well!
I had a look into this for Austria some time ago, for small companies there seem to be looser rules and it seems to be possible to start out with 5k deposit (or 10k, not sure). Then you would slowly add to the Stammkapital over time I think. More can be found here: https://www.wko.at/service/wirtschaftsrecht-gewerberecht/Ges...
Concerning LLC be careful that there are double taxation treaties and that you first find an accountant who specialises in running a LLC from Ger/Aut. Otherwise you’ll pay twice in tax + high fees for the extra paperwork the accountant needs to do locally.
I personally had a look at having a UK Ltd run from Austria, there are plenty of companies specialising in that (just google UK Ltd Österreich/Deutschland). Not sure to what extent that’s still possible post Brexit.
All in all, especially if the big company is willing to pay upfront, I would personally go for a GmbH, might be more expensive to set up but saves you troubles in the long term I think.
Having said that, I’m only a programmer myself, please don’t rely on my advice here, definitely talk to a local accountant about that, they usually have a free consultation to get started.
You can buy items like patience pills or the german invoice template (which is actually hilarious AF). After you checkout you are presented with a little April Fools screen aka a marketing text about the customer support SaaS behind the idea.
I saw quite a few April Fools jokes yesterday but most were pretty boring. This seemed like they actually put in some thoughts. I feel like everyone, even companies are super lazy in 2024 so it's refreshing to see some creative stuff once in a while.