🪄 From Zero to $10k MRR: A Proven Micro-SaaS Idea Framework

Hey,

The Spells Master is back!

Welcome to the 152nd issue.

Today's topics:

1. From Zero to $10k MRR: A Proven Micro-SaaS Idea Framework

2. A tool to Find Startups Similar to YC-Funded Companies

3. One recommended video on Using AI for OSINT

From Zero to $10k MRR: A Proven Micro-SaaS Idea Framework

1. What is a Micro-SaaS?

Micro-SaaS is software built by 1-2 people to solve a specific problem for a niche group of users. These users pay monthly subscription fee usually $10-$250 per month.

Building a Micro-SaaS is a great way to have sustainable income as it generates Monthly Recurring Revenue, also known as MRR.

It is easily the best business model as you get to have 95%+ margins.

There are 3 simple steps to find your Micro-SaaS Idea:

1. Identify a market that already pays for basic software solving their problem.

2. Join forums/groups where potential customers hang out and build relationships with them.

3. Identify a problem and build a basic solution.

2. Choosing the Right Market

You want to avoid these markets:

• Friends/family

• Early-stage startups/solo entrepreneurs

• Tech-savvy individuals (mostly developers)

These markets often provide false positives, lack funds, or prefer DIY solutions.

The best markets for Micro-SaaS are:

1. Small and Medium Businesses (SMBs) across various niches (restaurants, real estate, education, etc..)

2. Marketplaces where users already pay for software (e.g., Product Hunt, Salesforce, Chrome Extensions, Shopify App Store, Adobe Ecosystem, Unity, Hubspot, Zoom Marketplace)

3. Communities of high net-worth individuals

SMBs are ideal because they accept basic software, have shorter approval cycles, and represent a vast market.

On the other hand, enterprises need longer approval and require bigger sales cycles while having data/privacy concerns.

SMB market in itself is huge so this shouldn't be a problem. You can build a $10k MRR or even a $100k-$1m MRR business in just the SMB market.

Micro-SaaS doesn't mean it is capped at $10k MRR. There are simple social media post schedulers making $100k+ MRR:

1. Twitter has Typefully, Buffer, Hypefury, and Tweethunter.

2. Instagram has Later, Agorapulse, and Hootsuite.

3. Reddit has Postpone, SocialRise, and FanGrowth.

4. LinkedIn has Taplio, Publer, and Pally.

3. Finding and Solving Problems

You should be able to:

1. Locate where your target users congregate online (e.g., Subreddits, Facebook/LinkedIn/Discord groups).

2. Engage with the community and build trust.

3. Observe and discuss their problems.

4. Develop a solution and present it to them.

4. Convenience SaaS vs Utility SaaS

Don't build a convenience SaaS like Notion. Build a utility SaaS like Kaps.

Utility SaaS provides 10x value, saves time/money, provides a significant value proposition, and are easy to justify as a purchase due to the visible ROI.

It's hard to replicate Notion's success as 100s of Notion-alternatives are struggling while its much easier to market many different AI Short-Video SaaS.

As AI Short-Video SaaS save time and money making them a utility SaaS.

Baremetrics entire schtick was showing how much MRR you have, how many users churned, and how many subscribers you have. You can see the full product demo at live with ConvertKit's $3.5 million MRR.

Profitwell gave it all away for free. Profitwell made money on upselling other products.

This is why Profitwell sold for $200m+ vs Baremetrics selling for a mere ~$4m.

Both SaaS were in the same market but Baremetrics only sold convenient features while Profitwell sold utility features.

4. Creating Your MVP (Minimum Viable Product)

You should be able to build the MVP within 2 weeks and the full product within a month.

You can combine existing software or code a basic version.

And try asking users to pay a premium for the solution. If they pay, continue development. If not, pivot to a different problem or solution.

Don't get too attached to your idea. Some ideas require far more effort like running uphill while others are smooth sailing like running downhill.

5. Alternative Approach: Cloning Existing Software

Replicate expensive software and offer it at a discounted price.

For example, Canva now costs $500 per year for 5 users instead of $120 per year. Make a Canva clone (hey Playground and offer it for $15 per month per user. For $500 per year, you can accommodate 33 users.

Don't forget to provide excellent customer service to differentiate your product.

6. Validating Your Idea

Your idea is likely to succeed if:

1. You've cloned an existing product at a lower price point.

2. Users can convince their managers to pay for it (quantifiable USP).

3. It saves significant time or generates revenue for users.

Try to focus on customer acquisition for 6 months. You should expect slow initial growth followed by exponential growth.

And finally, remember that it's okay to be one of many solutions in a large SaaS market.

7. Examples of Micro-SaaS

3 Examples of Micro-SaaS Ideas:

1. Create a simplified, cheaper alternative to DocuSign. Eg: BoloForms Signature - The eSignature Platform for Small Businesses.

2. Develop Zoom apps for specific use cases. Eg: Notta AI - AI Note Taker for Zoom.

3. Build and sell Superhuman's top features at a lower price point. Eg: AI Mail Assistant - ChatGPT for Gmail

Credits to Paresh Deshmukh for the insights. They've built BoloForms Signature as an alternative to Docusign, serving 5000+ customers.

At a modest $10 per month price, its easily $50k MRR Micro-SaaS but they even have an enterprise plan so it wouldn't be a surprise if they make much more than this.

A tool to Find Startups Similar to YC-Funded Companies

YComparator uses AI to match startup descriptions with the 50 most similar YC companies.

This tool can help Entrepreneurs with bad ideas:

1. Find inspiration for potentially profitable startup ideas

2. Compare their concepts to successful YC-funded companies

3. Identify opportunities for $1m+ MRR businesses, even if they're not unicorn material

Try searching for broad terms like "ai" or "ai video" or specific concepts like "a dev tool that uses ai" to explore various possibilities.

It has great potential to be a productized info-product called "YC-as-a-database".

One recommended video on Using AI for OSINT

This video gives details on how to use AI for OSINT.

One of the most useful examples in the video was cross-referencing an influencer's social media profiles to identify true fans or friends who follow them across all platforms.

You can use this info for outreach strategies or even social engineering.

Top Tweets of the day

1/

TIL HeyGen isn't fully automated AI Video Generator. This should be fixed within a year.

2/

Apple is a money-printer because they sell high-quality products for everything from mobiles, laptops, earphones, and watches at exceptional prices.

3/

Such a nice hack. Set clear expectations the first time.

Rabbit Holes

1. High Costs in Influencer Marketing - Influencer marketing market may shrink as AI influencers gain traction.. Most influencers charge a ton and hardly get an ROI.

2. Pricing Experiments - "~20% of the top 100 apps tested a price increase in the last 6 months. And the average price increase was ~27%." Even, Canva increased its pricing by 300% citing AI features. One of the easiest ways to make more money is to increase prices for already existing customers.

3. GPT-Next 100x more powerful than GPT-4 - GPT-5 is coming soon and its expected to be 100x better than GPT-4. Imagine getting your answer right the first time. It is going to open an entirely new class of applications that weren't possible before.

Until next time,

Your Spells Master!

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Read all the old case studies here.

More Startup Spells 🪄

1. OpenAI's Whisper Transcription SaaS for Adobe Premier Pro: $23,000 MRR in 4.5 months (LINK)

2. Figma's Programmatic SEO Strategy: 274,000 Visits in 3 months (LINK)

3. Labor Perception Bias (LINK)