It’s early evening, and I am sitting in my home office thinking about building software businesses while upstairs, in the kitchen, gingerbread cookies are baked and decorated.
The holidays are a season where our priorities clash particularly often. And, for me, Christmas is also a time for re-evaluating choices, making long-term plans, and preparing for another year of building a legacy. I want to prepare for another year of building businesses, and for that, I need to know what might happen, what I want to happen, what I want to avoid, and what is ENOUGH for me.
So, today, I will look into my business-building plans and share with you how I approach it by going through the exercise myself.
And before I lose myself in the dream of a million-dollar exit, let’s take a step back and look at how we can best put all the options on the table. Because the exit is only one end of the spectrum. The good kind. And we need to look at its opposite, too.
Tim Ferriss often talks about “fear-setting,” the act of imagining the worst and understanding that even then, there’s a path forward. Let’s start with that.
Experience this article as a podcast or as a newsletter:
I’m building a software business —again— and I want to consider the risks involved as early as I can. It’s important to know where problems may come up and how to handle them. Let’s think about the worst-case scenarios first, and what we’d do to either deal with them or, better yet, prevent them.
In a software business, there are quite a few things that can go wrong. The most obvious one is that nobody wants to be a customer. For example, with Podline, it would be pretty bad if no one cared about the product or if they only used the free version and never paid. This could make the business too expensive to run.
As a software developer and founder, one of my biggest fears is that nobody will want what I offer. I think this is as intense a fear as a comedian would have about no one laughing at their jokes. But, this isn’t such a big problem when you look at it as just one small bet. And that’s what Podline is for me. I have other skills like coding and writing, and I can always work on other projects and explore new markets. The current running cost of Podline is two figures. Less than $100 per month. This bet can last a long while, and I can create a few more just like it.
I was talking about this with my partner Danielle recently: even if this product never makes money, it’s a great investment: I get to build in public, I get to work and partner with people in podcasting, an industry that is seeing massive growth, and at the moment, in my financial situation, it’s a low-cost gamble with massive upside — if it works.
Even if no one wants to use my product, I can still make money from my podcast and info products. So, while it’s not ideal, it’s not the end of the world either. If nothing came out of this, I would still have learned how to code with AI assistants, how powerful the Laravel framework is, and how to write solid prompts for OpenAI’s API.
I might be overestimating my ability to make money from this product. The fear here is that I am talking to the wrong people or to those with no budget. I think I understand the challenges of podcasters well enough, but I may need to change direction and explore other tools or mediums. That’s okay with me, as I’ll figure it out, and I don’t have a short runway. But it should still be profitable very early.
So, what if it takes too long to generate enough revenue for this project to be sustainable? I think I can handle low expenses for a while, but I see another risk: I could become bored along the way if there isn’t enough engagement by real people. After all, this is supposed to help people, right? What if it doesn’t?
Stopping to care makes projects fail. If I didn’t WANT to work on Podline, that self-imposed limitation might prevent me from giving it my all. How will I handle this?
Well, I better prevent it. I’ll follow my own entrepreneurial advice and keep building this in public. I’ll keep communication lines open, engage with the community (both as a founder and a podcaster), and actively market the product within it.
I know myself. I tend to focus too much on the fun stuff. So I need to keep an eye on WHAT I do. If I fall into complacency, I’ll code away in my software developer basement dungeon and isolate myself. That’s dangerous. Instead, I will always approach this business as an involved podcaster in the middle of my community. To succeed, I need to stay connected with people.
There’s one more fear I have. And it’s an all-too-likely one. Pieter Levels just posted about this earlier this week: his usage of Mapbox for his map-based Hoodmaps has become extremely exensive because he can’t control how many people use it. That’s my biggest financial fear, worse even than not making any money: everything becomes extremely expensive due to a mistake I might make. At Podline, I’m working with external dependencies like OpenAI and file hosting, which charge per API call or per file hosted. There is a risk that someone could abuse the platform and cause financial damage by creating a lot of data or using the AI excessively.
To prepare for this, I need alerts in place for each platform to ensure I don’t spend more than I want in a month. I also need to protect my credentials, making sure they don’t leak from my server or appear in my code. Having a quick way of invalidating these credentials is crucial for maintaining operational security. Since I already have alerts set up, all I need to do now is to make sure I read the alert emails and have a plan in place to cycle credentials in a crunch.
So, those are my fears. It could become too expensive, it might not generate revenue, or it could get boring. I have mitigation plans and avoidance strategies for each of these.
Next, let’s explore positive outcomes — while considering their costs. This is important because most people want to be entrepreneurs for freedom – financial security and the ability to do what they want. Achieving this requires lots of time and effort to create extraordinary value that others will pay millions for.
This is where selling your business comes in – through platforms like Acquire, business brokers, or private equity companies. To create that value, you need to spend a lot of time working hard and engaging with others in your community.
And that’s time NOT spent on anything or anyone else.
Let’s imagine an amazingly positive scenario where Podline gains customers, and within a few months, we have thousands of dollars in monthly recurring revenue. It’s likely a high-retention product since it becomes part of a podcast routine, so it just keeps growing and growing.
How much time should I spend on this? What about customer service or adding new features? Is there a limit to the scope of this business? Will it always be a side project or could it become a full-time job? And how will it affect my time for other things like my podcast, newsletter, or building my online brand?
I said that Christmas is a time for reflection. Well, reflect I did.
Right now, I don’t want Podline to be a full-time project. For at least another year, I’d like for it to be part-time. Half-time, really. I want to spend no more than 20 hours a week on Podline, including customer service and marketing. Although I’ve automated many tasks, I still want time for my media business and, most importantly, my family.
I became an entrepreneur so I could have flexibility in my schedule and spend time with loved ones. In the past, I spent too much time building software businesses, which hurt my health and relationships. I don’t want to repeat that, because I don’t have to. Podline is a simple software-as-a-service project, and it shouldn’t get in the way of being with my family.
Even if the business does well, spending time with family is more important than making Podline a full-time business. At least not a solopreneurial one.
If I can have a business that doesn’t need me to work all the time and still brings in good income, that’s perfect. I’d consider hiring a CEO to handle the daily operations while I stay involved as the founder and board member. But full-time SaaS plus a media business? Not happening.
So, what’s the best possible long-term outcome here? There are two options for me. One is to keep owning the business and have it generate steady income without much effort on my part. Ideally, it would bring in a mid-five-figure monthly recurring revenue, just like Feedback Panda, my previous business, did when we sold it at around $50.000 MRR. If it reaches that level, I’d likely keep it running for as long as I can.
However, if Podline grows into a six-figure monthly recurring revenue business, I might think about selling it. My magic number for selling would be in the mid-seven figures. With Podline helping thousands of podcasts connect with millions of viewers, that’s quite possible to reach. I’d consider selling once this business reaches 80k-100k MRR.
Until then, it’ll be a great source of income for me. I can reinvest some of that money into the business, hire people to work for me, and turn it into a full-time project for someone else. This way, I can spend more time with the people I care about.
As I approach 40 years old, I don’t want to waste time on tasks that others can do or on things that don’t add value over time. I want everything I do to have a cumulative effect and help me create the lifestyle I desire.
Running a profitable lifestyle business that allows me to live life on my terms is enough for me. Owning and operating such a business would be the ideal outcome.
So, as the year nears its end, these are my thoughts on running a software business. I hope this exercise allowed you to glimpse into the mind of someone who’s been there and STILL chooses to do it once again.
