- Have one customer pay you lots of money rather than many customers pay little money
- Target businesses, don't serve end consumers directly
- Find a small niche for yourself rather than try and do too much
While all of it is valid advice, I think taken to the extreme it's basically saying – be an employee, not an entrepreneur.
- Don’t work for someone who has one customer that dominates their revenue.
That company will always control the requirements, even if those requirements make the application a chore to get working for other customers. Also if there is ever a problem with how that customer is treating you personally, the company always always has to preserve the revenue from that customer. They will throw you under the bus.
I did two contracting gigs in a row that were unpleasant. The first told me a pack of lies about advanced project management and architecture being their focus. The work was identical to any contract I’ve ever done, but the feeling of betrayal soured the entire experience. If they did anything to advocate for their employees, I didn’t see it. The consequence of that is that it knocked my confidence, and I took an FTE position which was definitely “settling” and I’ve stayed at that position for far too long (though COVID played a role, I can’t fully blame COVID).
It’s probably better if you work someplace that gets less than 30% of its revenue from any one customer, but 75% from its top 4. There are diminishing returns being pulled in many directions at once, yes, but there are serious dangers of being railroaded by an offer you can’t refuse.
You are not an "employee" because you can at-will change your asking price, take on other jobs, flex your hours, and work from wherever you like.
An employee has none of those, while consultants have a bit more of those, and a B2B business probably has the most.
Not really. Only if they are willing to pay more. And only if you have no fixed contract. ass an employee you can also ask for more at-will.
> flex your hours
As an employee you can often flex hours. As a consultant sometimes less as you have to deliver.
> work from wherever you like
Many employees can do that too. Some consultants have to work in the customers office.
I run a one-person business and its advice is spot on.
I'm also more or less done working specifically for others and I'm now pursuing a market that is measured in the 1s or maybe 10s if it's a real success.
Finding a niche problem in B2B is effective if you have the B2B experience.
Technical folks who have consulted are especially in a good spot for this.
Exactly, build a few custom products for clients, then when they’re happy, build a platform to unify them, which will allow you to scale easily.
A lot of companies try to do the platform first, which is harder to iterate and less appealing to client’s who want customisation…
In the end it turned out the goal of the company was to sell it to deep pockets. Having prestigious customers is how you do that. But the employees including some of the salespeople thought we were trying to serve an entire global industry. If that had been the case we should have started with customers about 1 std below median size, and built momentum toward landing large customers.
Because what happened is that we had contracts with the big companies we couldn’t net a profit off of, and they liked to keep paying what they were already paying. If we were solid with mid sized customers first, we could have asked for more from the biggest ones because we were selling a mature product. Instead they bought a fixer upper and wanted to pay the same as we fixed issue and added tons of functionality.
The article is right. Small startups that are bootstrapping succeed via relationships, not scalability. The exception would be if you build a niche product that you can manage and scale yourself better than a well funded team could. That’s rare.
A better approach is to have a solid base of profitable business clients, customize for them, and then unify the use cases & customization later on a single platform, and go big from there once you are on solid footing.
How efficiently that profit is created is up to the individual entrepreneurs.
With 10x multiples being paid for startups like this, it couldn’t be further from being an employee. Those who are not profitable are more in a position of owning a job they can’t quit because they’re so invested in it they can’t breathe or grow because the financial equation wasn’t a high enough priority.
A lot of people get into this stuff because they can't hack it as hum drum employees.
Ideally you'd use your first (few?) customers to create a solution that can be resold to other businesses.
Any niche problem that larger businesses don't see as worth their time.