How to bootstrap your API-first SaaS?
We started building our first SaaS product in-house 5 years ago. Since then, our annual revenue grew from 0 to 1.5 M EUR. We have decided to share our story and a couple of tips on how to get started with your own SaaS product as our experience is quite unique – it’s almost impossible to find valuable content on building a startup in Poland or Central/Eastern Europe. The specificity of our location is key as Western European or American startup scene is completely different when it comes to the possibilities, funding and other factors.
Table of Contents
- How does the Polish SaaS market differ from the Western European one?
- What will be useful at the start of building your SaaS product?
- Where to get ideas for B2B SaaS products?
- Where can I look for problems to solve?
- Who on the team do I need to start?
- What do you need to know about selling SaaS to B2B audiences?
- How to manage the product roadmap and infrastructure?
- How to code and stay sane?
- How to approach marketing?
- What works and doesn’t in marketing for SaaS products?
- How much does it cost to build an enterprise SaaS?
- Do you even need to search for VCs and when?
- Can you count on state support?
- What legal and financial issues do you need to sort out beforehand?
- Why should you consider a product-based business?
How does the Polish SaaS market differ from the Western European one?
The Polish SaaS market looks pretty bad in comparison to the Western scene, despite the fact that we can find over 800 software houses and about 250,000 developers in Poland. The authors of the Polish B2B Software Landscape 2021 report counted 240 Polish SaaS brands, of which only about 45 exceeded the limit of one million dollars in annual revenue – in total generating $240 million in 2020.
Although these numbers are understated in my eyes (even the well-known RTB House is not on the list), it's hard to disagree with this comment:
“It (the Polish SaaS market) does not look great, Salesforce plugins make more money than our whole (Polish) market.” Patryk Sobczak, Co-Founder of Tonik.
I won’t go deeper into the reasons behind this sorry state, but I can write about the consequences of the small number of SaaS products on the Polish market:
- A limited number of specialists with practical knowledge in the area of building products, ranging from programmers through product managers to product marketing and sales specialists.
- Not enough companies supporting SaaS in the area of finance/law/insurance/ certifications.
- Lack of case studies dealing with how to develop a self-financed business.
- Even less VCs with funds, knowledge, and a network helpful in the SaaS area.
It is a bit like the chicken & egg situation – because we have few product companies in Poland, it is difficult to start one (but it’s still possible).
What will be useful at the start of building your SaaS product?
There are a few things that are useful for starting a SaaS business, but my private ranking starts with luck and timing. In my opinion, luck makes up 90% of success. I looked at projects that were set up for success – a great team, funding, founders' experience and they still ended up selling their remnants to the competitors for pennies. On the other hand, the more attempts, the bigger the chances for success.
As per my private ranking, the next points on the agenda are:
- A team you can trust – start with your partners. Preferably you should start your business with a group of people who you know pretty well. You should also like and trust each other. Our original crew met partly in a dormitory and partly in a company that sourced promising students from the Silesian University of Technology. We spent a few years together before starting a software company, then a couple more years before we decided to launch our own SaaS product.
- A financial cushion – business equals risk. It's hard to take the risk if you have a mortgage and/or other serious financial obligations.
- A trusted person – taking risks leads to stress which leads to even worse ailments. Building a SaaS product is like riding a rollercoaster, without the seatbelts fastened. That is why it’s important to have someone who will listen and support you in the bad times (big thanks to my wife here).
- Knowledge about creating software – well ... it’s needed. Although the software development lifecycle in your own SaaS looks different than in a well-organized project with several dozen people involved, the basics are the same everywhere. When we started in 2016, the first developers on the team had this background.
- Desire and motivation – according to Kurt Vonnegut, “every character should want something, even if it is only a glass of water.” It’s no different in the product team. The overused phrase about “company values, mission and vision” didn't appear out of nowhere. As a founder, you have to come up with a goal, and you have to make the team believe in it. In our case, the goal was and still is simple – to become a product company.
- Idea – more about it below.
Where to get ideas for B2B SaaS products?
You can look for ideas in the projects you have participated in. Focus on those which were more problematic or took more time. Also select those where you had a good understanding of the problem your client was facing.
This was our story. In 2015, still as a software house (rspective), we worked for a client from Berlin. When they entered the rapid growth phase, our client asked us to find a solution to generate and validate one-off coupons. They also wanted to protect their budget from abuse. As their entire infrastructure was made of API-first SaaS tools, we started looking in that direction when searching for a solution. Unfortunately, the market was empty and we started to code it from scratch.
Then Matias, CTO at the client's company, suggested: "You want to build a product, you have an overview of the API-first market, you see a gap in it, and you know what developers care about – so why not create your "Voucherify?" A few shots later, we knew that Voucherify would become a thing.
As of today – September 2021, before the fourth wave of COVID-19 – I suggest you try your luck at the developer-friendly/API-first tools as well. Why is that?
- First of all, if you are a developer, you know what other developers or CTOs pay attention to when choosing software.
- Secondly, having a cloud-based business eliminates the problem with infrastructure funding.
- Thirdly, labor costs in Poland (or Central/Eastern Europe) are lower than in the Silicon Valley or even Berlin, and thanks to this, you can offer competitive prices.
Where can I look for problems to solve?
The easiest way to find an idea for your product is by working in product companies and businesses that rent developers to outsourced projects (although, here it’s a bit more complicated).
From my experience, this is the hierarchy of where to find an idea for your product:
- A small but stable product company from Poland – you work closely with business and struggle with real problems, which require better software to manage. You also keep in touch with the management and non-technical departments, such as sales, marketing, support, or logistics.
- A small but stable product company from abroad – almost the same scenario as above, but you can’t joke in your native language.
- A large product company – it's harder to find a problem that can be solved by a small team. However, if you climb high enough on the corporate ladder, you can see problems that are inaccessible to the little ones.
- A software house working for small but stable product companies – there is a good chance that you will work in business-critical projects but you won’t have contact with other business departments.
- A software house working for a big enterprise – this is the end of the IT food chain, you get a small chance of finding a niche, but at the same time you can meet your future product team there, as most of us, developers, work there.
Who on the team do I need to start?
There are no rules here. However, I will tell you what it looked like for us, because if I were to launch another API-first product today, I would approach it in the exact same way.
- PM – someone who will listen to the customers and be able to translate their problems into requirements for developers. They will also have to choose which client to listen to and in what order to fulfill these requirements.
- Developer – preferably this type of developer.
- Marketer – someone who understands what the PM and the developer are working on and can describe it in the language (of benefits) that speaks to the client.
The internet shows that you can launch SaaS as a one-person team (where one person takes care of everything) but this is very rare. It is much easier to work with a team, especially if you plan to sell the product to larger companies.
Regardless of the initial team, it’s important to make everyone jump on the support roles from the very beginning.
What do you need to know about selling SaaS to B2B audiences?
Here are a couple of myths that, sometimes to our surprise, we have managed to debunk:
- To sell a product to a Fortune 500 company, you need a handful of salespeople who talk about their favorite golf clubs in perfect English – that's a myth. You need a good product, patience, empathy and willingness to help. Although, if you want to sell business critical software, other strategies will perform better.
- To close large deals, you have to visit the client in the office – another myth. At Voucherify, even six-digit contracts were processed 100% by Google Hangouts before the pandemic. We closed 99% of all subscriptions, even the Enterprise ones, completely remotely.
- To sell a product that you think is still far from perfect, you need to drastically lower your pricing – what is still an MVP for you, can be a legitimate solution for the customer that cuts costs significantly or even generates money. When setting your pricing, think how many man-hours a client would need to solve the same problem from scratch.
- To sell SaaS, all you need is self-service mode – it's not enough if your product requires integration with other tools and/or is used by a larger team (or even several teams). Larger companies need to be led by hand during the implementation and onboarding. They expect answers to questions coming from various departments, very often including filling in questionnaires from security and legal departments. In addition, there is the price and payment method negotiations – larger companies don’t want to pay by card, so you have to handle the order forms and bank transfers separately.
- To convince the customer to buy, 30 days of free subscription is enough – the larger the company, the longer the sales process. Our record is 2 years since the first contact to subscription, while the average for enterprise plans is between 3 to 6 months. During this time, you need to build a relationship by being useful and patient.
Although there is a trend of "product-led growth" on the market, which focuses on sales through a self-service channel thanks to the use of good onboarding and usability fine-tuning, it is impossible to avoid guiding customers step-by-step in the initial phases of product development.
How to manage the product roadmap and infrastructure?
Here is a couple of quick tips from our CEO on the roadmap and infrastructure management:
- Release the features frequently and simplify the functionalities you launch. Not every task has to be automated with code – many tasks can and should be done manually.
- The speed at which the code is released to production is more important than anything else.
- Outsource everything to agencies or SaaS tools if it isn’t your core business.
- Understand that a developer's goal is not to write code.
How to code and stay sane?
Here is a couple of quick tips straight from our developers:
- Deliver working code in small increments and never overengineer.
- Test your own code.
- Choose the renowned technology you already know instead of novelties.
How to approach marketing?
Experimenting will definitely work. In fact, you may have no other choice, because each product works in a slightly different context and each needs its own, unique go-to-market strategy. Here is my advice:
- Choose marketing channels you can optimize – when choosing marketing channels to experiment with, it's worth using campaigns that you can repeat and improve. For example, if you decide to put up a stand at a conference, you need to have a budget and team capacity to participate in at least a few conferences to optimize that strategy to start bringing in leads. Otherwise, you will end up wasting money.
- Introduce one channel at a time – if, through experimentation, one channel begins to bring significantly higher results than the others, focus only on that one.
- It is better to invest in marketing than spend on marketing – it is wiser to spend the initial budget on channels that bring long-term returns than on advertising (for example, on your own channels, like SEO or organic content on your social media channels). A good measure of product-market fit in SaaS is whether we can convince the first customers to buy without the use of paid advertising. On the other hand, if you have a budget, advertising will help you see which marketing messages work better, which is much quicker than doing SEO.
- Product positioning on the market is a process – it is not enough to fill in the persona template once and prepare a product description based on it. The so-called product messaging should soak up the language of customers, new functionalities or conclusions from the SEO analysis. For example, the main category under which we position Voucherify is “promotion management.” Some time ago we discovered that some customers categorize our software differently, as “offer management.” We created a subpage for this keyword which quickly entered the first page of Google results and thus opened the gate for a completely new segment of customers who use different words to describe the same product.
What works and doesn’t in marketing for SaaS products?
For us, the most important channel turned out to be (and still is) content marketing. If you don't know how to go about it, I recommend this guide. HeavyBit, the American startup accelerator from the developer-first family, provides very pragmatic instructions on how to start experimenting with content creation.
We have 99% of our customers thanks to good SEO positioning in Google. It required writing a lot of blog content and landing pages optimized for specific keywords. If you need inspiration, Stripe wrote a great article on how to create landing pages.
In addition, we generate a significant part of our traffic thanks to freeware (I also count this as content marketing). On one of our hackathons, we created a free code generator, which is very popular with marketers from all over the world. We assumed that some of the generator users may need a more advanced platform for managing promotions and we have placed the Voucherify ad on the generator page. Time has shown that this was a great business move.
Another channel that worked for us are technological partnerships. Great partnerships are those that result organically from conversations with customers. This was the case with our integration with Braze. Our client, Soul Cycle, asked us to integrate with a tool we had no idea about. After the technical analysis, it turned out that the integration takes just a moment, and after business analysis (Braze has over $100M of annual revenue), it turned out that we absolutely must appear on their marketplace.
Technical specification is another important communication channel. Although it is not associated with marketing, it is worth looking at it from this angle. A comprehensive specification (and one that is easily understandable) plays an increasingly important role when choosing a platform, especially solutions aimed at developers. At Voucherify, we spent a lot of time polishing docs.voucherify.io and trying to please the developers.
You need to put an SEO layer on top of each of your marketing efforts. Your marketing texts must be understandable for both humans and machines. For a human, because we want to convince them to buy, and for a machine, because we want the customer to find us. SEO is a science on its own, but you can start with baby steps.
Here are a few marketing experiments that didn't work out for us:
- PR – working with a PR agency didn’t bring us any results. As long as you don't have a "story" like "we lived in a garage and now we provide software solutions to Burger King," the media will not be interested in either you or your product. To make matters worse, the agencies may not relieve you of writing the press releases. First, you need to explain your product to them. It is challenging if the agency doesn’t know the SaaS industry, let alone the API-first category. We ended up having to rewrite all the prepared texts.
- Large Polish developer conferences – Polish developers are mostly outsourced to work for companies from abroad and aren’t the decision-makers in the SaaS-buying process. In addition, at more generic conferences, there are fewer opportunities to find developers who work in your target industry, for example e-commerce.
- Outbound marketing, i.e. cold emails – if you are still looking for a product-market fit and you are not sure who your target is and what product messaging will convince them, then you will only waste your time and get frustrated by sending cold emails. Do not, under any circumstances, buy mailing lists and send mass messages at that stage.
- Partnerships with integrators – if you are a smaller player, integrators will not pay attention to you. At this stage, persuading well-known software houses to add your product to the Services/Partners tab on their website will most likely bring poor results.
- Google/Linkedin Ads – in the Enterprise SaaS category, you need from a few to several months and thousands of EUR to find out if the ads bring results. This is assuming that you know more or less what keywords you want to target and that Google will appreciate your efforts in the form of non-zero domain authority. Unfortunately, in the global market, you have to compete with companies from the West that are heavily funded by VCs and supported by performance marketing specialists. They are usually the winning bidders of every paid ad auction. The Linkedin Ads experiment will be even more expensive and difficult to get a ROI from as these are only outbound ads, not retargeting ads (they show up for people you filter according to given criteria, not those, who are potentially interested i.e. visited your website already).
- Hackathons and competitions for programmers – if it's going to be a one-time action, don't count on success. Around 15 people joined us, most of whom were our friends. The attendance in the competition was even lower, despite, in our opinion, attractive prizes.
How much does it cost to build an enterprise SaaS?
If you want to create a platform for big players, you need hundreds of thousands of EUR. For what? For the team that, in addition to the main platform functions, will provide the so-called enterprise-grade features. This means that you need a stable source of financing to make a business out of it.
Do you even need to search for VCs and when?
If you want to provide enterprise SaaS and don’t have a financial cushion, I would recommend looking for VC (seed) financing. On the other hand, VC is unlikely to give money for something that has not yet earned a cent. Unless you are a "Serial Entrepreneur" on Linkedin (just joking here).
For the first few years, we financed Voucherify thanks to the income from our software house services. Today Voucherify earns for itself, so we don't have an overview of the VC market and cannot advise on this matter.
However, we can see that today companies from the enterprise SaaS industry, API-first in particular, are getting plenty of financing. If your competition gets a couple of million of financing (and you don’t), you should consider whether you will not be left behind. In that case, you should consider changing the business model and positioning.
Can you count on state support?
Yes – solutions whose Intellectual Property stays in the country can count on support under NCBiR programs (e.g., "Szybka Ścieżka") and tax reliefs: "IP Box" and "R&D Relief".
While grant programs are a big thing and I wouldn’t apply for them while looking for a product-market fit, tax reliefs are not very complicated and offer a real benefit. But to get relief, first you must make some income.
What legal and financial issues do you need to sort out beforehand?
From the legal side, you need to prepare several documents:
- Subscription Agreement – a framework agreement for your service.
- Mutual non-disclosure agreement – a document about maintaining confidentiality between the parties involved in the relationship (every larger company will ask you to sign it).
At the beginning, you can copy these documents from another business or generate them from a template (this is not legal advice and it’s best to consult the lawyer beforehand).
At some stage of development, there will be customers who will start demanding financial security from your product in the form of liability insurance. You will also come to the conclusion that investing in insurance against cyber crimes is worth it.
Why should you consider a product-based business?
Having autonomy, ownership, and partner relations with clients from around the world and finally, more income with a smaller team are just some of the benefits of having a product-based business. We encourage you to consider taking this path and we hope that our local Polish B2B Software Landscape 2025 will show exponential growth.
If you have more questions, feel free to contact us.
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