Back when our economy allowed most of us to eventually be able to afford a house, we developed the phrase “starter home.” It describes the first careful introduction to homeownership for young people. The first home — of many. The one to get started with. A home that will be owned temporarily before the growing family moves into a bigger home.
The idea was to incrementally move towards your dream home. We even call this the “forever home” in our family.
And yet, most entrepreneurs don’t set out to build a short-lived “starter business.” They are inspired by their entrepreneurial idols who have built companies that lasted for decades. That’s what they choose to imitate right from the start.
Many first-time founders want to build a “forever business” from day one — and that is a terrible mistake in the world of digital entrepreneurship.
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Stair-Stepping vs. Everesting
Rob Walling popularized the concept of stair-stepping —the idea of incrementally building bigger and more independent businesses by going from building on someone else’s platform to eventually running your own software business.
The idea is to build enough small products to own your time. Once you’re at that point, you shoot for the big goals. And even then, you might need to start and exit a few software businesses until you get to the big business you dream of building.
The important feature of the stair-stepping approach is that risk is managed effectively. It’s well-distributed: if one small business venture doesn’t work out, you can move on to the next without losing everything. If your plugin idea doesn’t work, you come up with something new. And if your first stand-alone SaaS business struggles, you can put your effort into your earlier small projects that are still generating revenue.
The name of this approach is aptly chosen: if you hit a challenge, you just have to take a single step back to be able to keep working.
Now, contrast that with the “go big or go home” version of building a business — trying to build a massive business from the get-go. I call this “everesting,” because it feels like trying to summit challenging peaks without ever having climbed even a small hill.
Too many founders think that they have to imitate unicorn startups to be a real founder. But this approach involves significantly more risk. If trying to everest your first business fails, you stand to lose all your time and money investment and have nothing to fall back on.
That “forever business” might come at some point, but it’s much less risky to build a few temporary projects before that to get there. These early entrepreneurial experiments will teach you a lot about how markets work, the revenue from these products will be the catalyst for your bigger aspirations, and you will end up building assets that are quite sellable to other founders once you outgrow these projects.
That definitely is more valuable than trying to do it all from the start.
Changing Seasons
I’m often surprised to see how little reflection goes into projecting the inner workings of the traditional business world onto the digital realm that most software businesses and creator enterprises operate in.
For most businesses of the Internet age, “longevity” means being operational for more than five years. Compare that to the world’s oldest company, Kongō Gumi, a Japanese construction company that was founded in 578 AD.
It’s not the age difference I care about here. It’s the difference in speed. The construction industry certainly has seen a few changes over the last 1500 years, but we’re still building dwellings for humans in roughly the same ways.
Compare that to the most recent Cambrian Explosion of artificial intelligence products. A foundational technology that —in human terms— hasn’t even reached the Toddler age has empowered founders to create software businesses that were unthinkable a few years ago. These things just pop up.
And then, they tend to vanish again.
A few years ago, “concierge email” was all the rage as Superhuman found success in the startup world and beyond. Remember the QR code hype? Or how everyone tried to stuff a blockchain into their processes?
In the digital business world, these trends come and go extremely quickly. The window to exploit them is severely time-limited. If you were trying to build a “forever business” on generating QR codes, you are now looking at a world that moved on from this idea. Doesn’t mean it wasn’t a good idea back then, but you’ll struggle to find new customers today.
Century-old construction companies don’t have to reconsider their approach to doing their core job every few months. For these businesses, the big paradigm-shifting inventions have been power tools and the introduction of reinforced concrete. Most things outside of these quantum leaps are pretty reliable.
That’s what you get in a traditional kind of business. But not on the internet.
Knowing when to pivot your efforts into new technologies becomes a central part of digital entrepreneurship. And that puts an expiration date on many businesses.
Monetizing Emerging Technologies
It’s not just the trends themselves, either. As indie founders, we should keep a close eye on the incumbents in the industries we serve.
Pieter Levels is raking in $80k+ in monthly recurring revenue running businesses on top of generative AI projects that are less than a year old. But the niche is so much bigger, and bigger companies in the space have noticed. An app called Lensa implemented the same features Pieter and his fellow indie hacker frenemy Danny Postma had built for their AI avatar products. And that app quickly made $1M per day by just having massive distribution and pre-existing access to the phones and photos of their customers.
Distribution matters, and it creates a ticking time bomb for indie hackers who don’t have it.
You can’t go up against Adobe and similarly sized tech companies forever. Particularly when they allocate whole teams of product and development people to build a competitor to your solopreneur business.
Most tech businesses have no moat when it comes to the underlying technology. But indie hackers have speed on their side, which makes a formidable argument for building time-limited businesses capitalizing on your speed and the sluggish responses from incumbents.
When you build on top of a novel technology, consider that you’re racing against the clock and structure your business accordingly. The business you’re building isn’t meant to be generational; it solves a problem that exists here and now.
Projects like this often need to be monetized with one-time upfront payments or a limited-time subscription, because recurring revenue can become hard to generate as incumbents start offering similar features for free or at a lower cost.
This might be surprising in a world where every software business expert tells you to charge subscriptions. But the longer I’m in the game of SaaS, the more I believe that recurring revenue is more like the QR code wave than reinforced concrete: it’s a long-term trend. A good one, but still a trend. Customers are experiencing subscription fatigue, and it’s no silver bullet (anymore.)
It’s particularly problematic in intentionally time-limited businesses that exploit the short time window between technology emergency and incumbent response. So charge upfront and stair-step your way into a business that is strong enough to serve its customer niche to defend itself against big competitor moves.
A business doesn’t have to last forever; it just has to do what it needs to do to serve its customers and its owners. Generational businesses are great, but we shouldn’t ignore temporary businesses along the way. An entrepreneurial journey with many different milestones is a more interesting trip, anyway.
