Udit Goenka is on a mission to disrupt the SaaS industry by decreasing its high failure rate and increasing the number of successful businesses in the field. Udit has a wealth of experience and knowledge to share about the ins and outs of the SaaS industry, as well as the challenges and opportunities it presents for entrepreneurs.
With over 14 years in the industry, he has built a strong understanding of what it takes for a SaaS company to succeed and is dedicated to helping others do the same through LittleSaaS.
In this interview with Yellow Chapter, Udit discusses his career trajectory, the current state of the SaaS market, and his tips and insights for aspiring founders looking to make their mark in the industry.
From the importance of finding the right ICP to the benefits of bootstrapping, Udit’s insights are not to be missed.
YC- Udit, welcome to the Yellow Chapter. The idea of the interview is to get to know you. I’ll take you back to your childhood. Where were you born, and what were your parents like? What were their expectations?
Udit- Sure, I was born in Mumbai, Maharashtra, to a Marwadi family. My entire family is involved in business. My father is a loom manufacturer. Being a Marwadi, entrepreneurship comes very naturally to me.
I grew up watching people do business. I have seen my father working really hard. I learned one thing quite early: Entrepreneurship = Hard Work.
My mother is, without a doubt, the most beautiful person I know. I’m pretty close to her. When I was 8, she broke her fixed deposit to buy me a laptop. That is most certainly her best investment to date 💻💻.
My younger sister – Aishwarya Goenka, works as Chief Content Officer at PitchGround.
I was never pressured as a child to become a doctor, engineer, or businessman. My parents encouraged me to experiment and explore. “Enjoy what you’re doing, and everything else will fall into place, was all they had said.”
I started working as a graphic designer when I was 17. I was into gaming, and that piqued my interest in design. This led me to explore and learn Adobe Photoshop. I also got into web development later.
YC- You were working as a computer engineer but graduated in commerce; why?
Udit- I messed up my board exams. I spent almost all my time on the internet, either working on projects or gaming. I could have gotten better grades. It crushed my engineering dreams.
So for my bachelor’s degree, I chose accounting and finance. Being a Marwadi, getting into the commerce stream was relatively easy. Since childhood, I used to sit next to my father while he worked in accounting. As a result, I was familiar with balance sheets and profit and loss statements.
Throughout college, I pursued my passion for building apps. I also learned the basics of engineering by referring to the books taught to my BTech friends.
After graduation, I worked as a freelancer, building apps for a year.
2012: I joined – Masters in Computer Application @Vivekananda Institute of Technology
It was my dream college. Unfortunately, I had previously covered everything taught in college. I was, in fact, much ahead in my life and career. So, I dropped out of the course in 2013.
In 2013, I flew to the USA.
YC – Why the U.S.?
Udit – Let me take you back to when I was a freelancer and met Oscar Hernandez, my first co-founder. For nearly a year, we communicated via Google Hangouts and Skype.
We created a WordPress security plugin. Within a month of launching the product, I made about $350,000. This had a significant impact on my life.
Oscar asked me to fly to the United States. The plan was to build a hosting company. We knew we had to be physically present in the data centre. It cannot be done virtually.
2013: I built my first company, @Power Up Hosting – A professional hosting provider with high-performance hosting products and the necessary infrastructure to operate websites efficiently.
1. Move out of your comfort zone – I was an introvert. But now that I was running a company, I had to communicate and network with many individuals. I was forced to move out of my comfort zone.
2. Exiting at the right time: You must always enter at the right time. But far more importantly, exit at the right time. This would determine your growth.
3. Grab opportunities during the early stages of your career. As a fresher, you only have a few responsibilities, and you get to learn a lot!
4. Work hard: Invest time in learning new skills.
5. Network: Spend more time networking and meeting with the right people. I’d never meet folks my age. Instead, I preferred those who were doing better than me. I shaped my attitude by associating with the right people. Young people’s minds are like clay.
It is easier to progress in the right direction if you surround yourself with people with a growth mindset. When you see someone succeed, it inspires you to do the same. However, you will eventually become mediocre if you surround yourself with average people.
6. Find good people to work with, and if you do, keep them for the rest of your life. During different phases of my career, I was fortunate to meet Oscar and Lukas Liesis, co-founders of PitchGround.
Oscar has been my mentor, guide, and co-founder for the last 11 years. We have collaborated on every project, failing, succeeding, and exiting together.
Mistakes we made @Powerhosting
1. Lack of research: When we bought the servers, we expected to start making money a few months after the customer had paid them off. But we were wrong. The shelf life of a server is 18 to 24 months, as it’s being used 24/7. The SSD would fail in 6 to 12 months in a fast-paced setting.
However, the hardware has improved significantly in the last decade. This was our worst mistake and perhaps our most important lesson.
2. Need for more marketing efforts: Most of our efforts were on outreach. Social media platforms were not that popular then, and we didn’t explore other options much.
A Model Career Trajectory for Engineering Students
Today, the average age of a successful entrepreneur is 40. Because of the media frenzy surrounding start-ups, most engineering students are desperate to start early. However, no one discusses the failures. We are drawn to that one success story more than the 999,000 failing businesses.
Young graduates should not even think about entrepreneurship. I would instead ask them to follow this trajectory:
a)18-22 Years: Work for a Bootstrap StartUp: This will teach you how to optimise your business. Don’t chase money during the first three years of your career, Chase opportunities and knowledge. You’ll work directly under a CTO, and many also hire interns.
b) 22–25 Years: Work for a Funded Start-Up: You would learn how to grow because the funds go into the company’s growth.
c) 25–30 Years: Work for a Corporate Company: Work for a corporate until 30. This would allow you to make enterprise-level connections. At an enterprise, you may also find your future co-founder.
They may be seeking the next step in their career. They know what to do at the right time because they’ve already gathered around ten years of experience. They’ve also detected potential problems.
d) 30-32 Years — Build your own company: You already have 10+ years of experience. So, it’s time that you build your own company.
If you embark on this journey, you will succeed. There are three reasons for this:
- You’ll have enough money in your bank. There is no need to chase a VC.
- You might have built your connections. You may pursue your contacts, sell them your product, and raise funds.
- It is easier to raise capital: You have the proper connection, the right portfolio, and the right team to attract the interest of Venture Capitalists.
Tips for your first job
- Look for a tech company/startup where you can directly work under the CTO.
- Don’t begin your career in a big service company. You’ll be either sitting on a bench or handling small projects. This would hamper your growth + exposure.
- Reach out to companies through social media platforms, like Remoteok or LinkedIn. Reaching out to people has become so much easier; leverage it. Contact the CTOs or top leadership for job opportunities.
Find individuals and businesses from which you can learn. Simply get in touch with them and let them know you want to learn from them. Say that you are prepared to put forth your best efforts. Make it clear to them that you are prepared to learn and contribute all your time and energy. Volunteer as an intern. Pursue knowledge.
YC- Many engineers, especially those beginning their careers, are confused about programming languages. Should they work on multiple languages or pick one and go deep into it?
- You can manipulate the JS code to build things that would otherwise be impossible.
2018: Founder, CEO @Little SaaS Inc
Little SaaS is the holding company of PitchGround and FirstSales.io. So, I was building Funnel Break before this, and it tanked severely. I lost about $200,000. It was a significant turning point in my life.
When I was building that project, every decision I took, from hiring to building, went wrong. I went into clinical depression for nine months. Finally, I decided to come out of it and move forward.
So I started pondering what went wrong. Around that time, I came across the TEDx talk by Simon Sinek – How to discover your “why” in difficult times. And that changed my perspective.
I realised I was asking the wrong question. Instead of asking what went wrong, I should have asked, “Why did it go wrong?”
A quick tip: Often, people do not get the answer because they are asking the wrong questions. So, if you are not getting answers to your questions, just step back and think, “Am I asking the right questions?”
Coming back to my story, while figuring out the reasons for my failure, I also read an article by Lighter Capital, one of the most prominent SaaS VCs in the US. The report said that 92% of SaaS companies fail. And that’s when I realised, “This is me.”. I then started finding answers.
I transformed myself from a developer to a full-stack growth marketer and salesperson.
When a founder fails, they usually write about their journey on Medium.com, Twitter, etc. I started reaching out to them. I would ask them why they failed. This offered me a lot of perspective on why companies fail. There are three major reasons:
- Lack of distribution.
- Lack of finance.
- Poor product.
Now, you can’t do anything about a poor product. But the first two can be solved. This thought led me to build PitchGround – A SaaS MarketPlace.
Steve Jobs once said, “You can’t connect the dots looking forward. You can only connect them by looking backwards. So you must trust that the dots will somehow connect in your future.”
At 30, you have lived almost 40% of your life. Now is the time to start connecting the dots. That’s what happened to me.
I could connect the dots backwards. My 14 years of experience have come down to building PitchGround. PitchGround, for me, is a combination of everything that I did throughout my journey (Graphic designer→ UX UI designer → Developer → Marketing→Sales.)
Interacting with many founders, I realised that selling SaaS is a mass problem. It cannot be solved by working individually with one or two startups. Hence, we took the marketplace approach.
When you are building a marketplace, you have to solve two problems; You have to do demand generation for Buyers and Sellers.
And that’s when I also realised that many small companies could not afford to buy software like HubSpot, Salesforce, etc. Their revenue is much smaller than what these companies charge annually.
Then, I asked these early-stage companies to give a lot of discounts. For early-stage companies, it is not about making money. It’s about someone adopting their software at a rapid pace. If you use software, you are most likely to talk about it with others. Thus, you start enabling word-of-mouth marketing.
I decided to tap into this vast market. It was also a golden opportunity for everyone to connect and do things.
I was able to get the demand integration working on this. It was during this journey that I met my second co-founder Lukas. He’s my current CTO. I told him the story of Funnel Break about my failure. And Lukas told me just one thing: “When the time is right, we will rebuild it.”
This year, 2022, was that time. And that’s how FirstSales.io happened. It is a fantastic product and a fantastic platform. We have crossed half a million dollars in ARR in just five months since our launch.
YC- Which is the hottest-selling category on PitchGround?
Udit– The categories keep changing. There is a constant trend shift in the SaaS industry. This year, the trend is AI tools. All tools will use AI for better results in the next five years.
The beauty of the SaaS industry is that an inexistent market/category can become very large in a matter of months. It’s unpredictable.
Under this, there are two major categories:
- AI writing tools: They are seeing an insane boom. This market, which did not exist two years ago, is now worth $100 billion.
- Conversion-related AI tools: People have realised the importance of sales, as marketing alone won’t work. So sales tech tools are gaining traction.
So we classify LittleSaaS as a sales-tech company with two products – PitchGround and FirstSales.io.
YC- Let’s talk about some typical SaaS numbers.
ARR: PitchGround is currently on a runway of $5 million annually. FirstSales is on a runway of almost $500k ARR. For FirstSales, we expect $2 to $2.5 million in ARR by the end of next year.
For LittleSaaS, we aim to hit $8 to $10 million in ARR by the end of 2023, provided the market scenario is acceptable.
Customer Base: 70% of our customers are from the US. And the rest, 30%, is from India. Our focus has always been the US market.
Competition: Little Saas, as a company, has no competition, but the individual products do. One of the main competitors for PitchGround is AppSumo: Stop Overpaying for Software. I admire its founder, Noah Kagan. I’ve been following him for the last ten years.
In the Indian scenario, there are no competitors for PitchGround. For FirstSale, OutPlay is a competitor. They raised about $5 or $6 million very recently from Sequoia.
Goal: PitchGround and FirstSales are two brands under LittleSaaS. We are going to build more products. Every year we plan to launch at least one sales-tech product. That’s our current goal. We will keep expanding our product line. Again, we are 100% Bootstrap. So far, we have not received a single round of funding from anywhere or anyone. So that’s what we’re doing at the moment.
Targets for the next two quarters for Little SaaS –
Because it’s Black Friday, the fourth quarter is always the best for us. People buy a lot of stuff during Black Friday.
For the next quarter, we’re focusing on product development. We won’t be giving the revenue side much attention. Because unless you have a spectacular product, you cannot enable product-led growth.
We are growing sustainably at a 42% CAGR and are pretty happy with it. We don’t want to push it to 200% or 300% because, as a bootstrap company, we also have to manage our customer support. Simply growing without managing the customer base won’t work in the long run. I would rather grow sustainably.
YC- Any plan on raising external funds as of now?
Udit– No, we want to build a bootstrap slowly. Raising external funds is outside our pipeline for the next three years. There are three primary reasons for this:
- I chose entrepreneurship because of the freedom it offers. I don’t want a boss above me directing what to do.
- The thing about this industry is that you have to make fast decisions. With external funds, you will have to spend a lot of time at board meetings to get approvals. A decision for something basic that can be made within a meeting would take months.
- We’re profitable and cash-flow positive. We work with many revenue-based financing companies. We depend on them whenever we have to inject cash into the business.
We do not intend to dilute our equity or raise capital on equity. If I set up a new company in the future, I might take that route based on my experience. Right now or in the immediate future, there are no such plans.
YC- SaaS founders have three big challenges: product-market fit, sales, and marketing. What is your take on each?
Udit – Sure.
First, PMF—Sell more, build less: Many companies, especially those built by engineers, are obsessed with adding new features. But then, if you can’t sell your current solution to 1,000 customers, how do you expect to onboard 10,000 customers for 400 solutions?
That isn’t how it works. Focus on one solution, sell more, and build less. Improve what you’ve been building for a few months so that it’s scalable. Only then should you turn your attention to the next solution.
In the four-year journey of LittleSaaS, we have built just two products. FirstSales is still an early-stage product. We still have a lot of solutions to develop. But we are not doing it right now.
If we cannot sell the existing solution to 5000 customers, how can we add more solutions, expecting to sell more? So, we don’t build unless 200 leads ask us to build a particular feature. It only makes sense to invest money to build a solution if you know in advance that 200 people will buy it. You can start making profits right here.
Second, Sales :
- Start outreaching: Typically, the cost per lead for a highly qualified lead will be at most $5 or $6 if you outreach. If you don’t have an email, even the phone companies don’t allow you to do anything. So emails are going to remain the number one channel to reach out to people. Don’t spam them. There is a difference between reaching out to someone and spamming them. So understand the difference and reach out.
Third, Marketing :
1. Start building publicly: When you start building in public, two things happen:
(a) Emotional connect: A lot of emotion organically gets attached to your venture. There are a lot of other people who need help to do it. But when they see you doing it, they live their dream through you. They get very excited about your growth. They will start talking about you and your product.
Focus on LinkedIn. The content on LinkedIn boomed so much last year. I took my account from 1500 followers to almost 25,000+ followers in just six months. I’ve built everything in public so far.
(b) Learning: It will take less than a minute to tweet about what you did today. You can tell people about the channels that helped you, the strategies you used on your journey, how you did things differently, and so on. People who read this become familiar with your product and automatically become your enablers. Enablers are crucial as they facilitate word-of-mouth marketing. It is essential to keep your brand in the public eye constantly.
2. Focus on storytelling: Storytelling is the biggest secret hack because it triggers emotions.
Most engineers I know don’t know how to tell a story. But there are a lot of options today. Hire a copywriter who has done storytelling, branding, and communication. I have built a perfect audience on Twitter. I use it to validate and test out ideas.
3. Blogging and SEO – I wouldn’t recommend either in the initial stages. Content marketing and SEO will take a long time and a lot of effort to yield results. In the initial three years, you make a misstep and fail.
In the first year, focus on building the product and selling as much as possible. Once you have the money in the bank, you can invest it in content. You can then do SEO. SEO is like a mutual fund. It would take you up to a year and a half to see results with SEO, especially if you are a new startup.
Once you have enough capital in the bank, start investing in SEO. By then, your brand would be recognisable, making it simpler to purchase backlinks.
It would cost you $300 to acquire a backlink from a good website. SaaS founders don’t have that kind of money. If you have a lot of backlinks, chances are that you might rank right away. But who’s going to give you backlinks? An established company would get backlinks organically.
You can rank on Google in just 1-2 months. This happens as your domain name ages and you have authority, backlinks, and a good content writer.
Along with generating the content, you also have to rank it. So if you sum up SEO, it boils down to the following:
4. Presence on social media platforms – SEOs critical but only after two years after launch. I had a big debate about this on LinkedIn, and people agreed with my opinion. I would rather spend all my content efforts on LinkedIn than SEO. I have an insane organic reach on Linkedin and can build an audience much faster than via SEO.
5. Short-form content marketing: People’s consumption of content is changing. The number of people reading blog posts has gone down.
Right now, the world is heading towards short-form video content. Twitter is about to bring back Vine, the world’s first short-form video content platform. Elon Musk was running a poll about this a few days ago.
MrBeast, one of the world’s most popular YouTubers, said the same thing in an interview. YouTube will only focus on shorts in 2023 since Tik Tok is causing them financial losses. This means you need to focus on shorts, as these platforms will organically push any creator who focuses on such content.
TikTok has taken over as a $450 billion company today. Every business is going over there.
Google will soon promote short-form video content in its searches. When you search for any sort of keyword, you get answers in the form of short videos. If people get answers in the form of video, who would go and read long-form content?
Every company is focusing on investing in short-form videos. So one has to understand the trend. Don’t follow the crowd.
YC- What should be the standard spend in terms of advertising?
Udit– A company should start their ads once they have figured out the right ICP, messaging, and onboarding. They must figure out how to crack a customer using emails and in-app notifications, not just by getting on the phone. Unless and until one does that, don’t spend any money on ads.
Tips to get to the right ICP: You must research and talk to diverse audiences during the initial stages. This will help you figure out which one is converting the fastest.
For FirstSales, we sold almost 10–15 different ICPs. And we noted down the average selling time (the time taken by ICP to make a particular decision). We took the data for a month and boiled it down to focusing on two specific ICPs:
ICP 1 – SaaS Companies
ICP 2 – Digital Marketing Agencies
We didn’t give any attention to the rest. If anyone else comes and buys, it’s great. But we don’t go out there and sell.
YC- What keeps Udit going in tough times?
Udit – The first thing that gets me going is solving the problem of SaaS companies failing so miserably. I want to bring the failure rate from 92% to 82% or even below that. But we are talking about a $200 billion market. The failure rate depends a lot on probability.
Over the next ten years, I want to bring it down to 82%. This keeps me motivated. I have been on this journey before, and I failed. I remember how much pain it caused me. I was able to recover, but many didn’t.
Many of them gave up on entrepreneurship and returned to regular corporate jobs. I know some founders who built great products but couldn’t succeed because of a lack of distribution and understanding. They later got back to working as project managers. This can have a tremendous psychological impact on a person. Before beginning a project, you will think it through a hundred times.
We need more entrepreneurs in the world. We can only create more job opportunities if we have more entrepreneurs. There are many new, bright ideas out there. The beauty of tech is that it’s open to everyone. It is the only religion that is impartial to the entire world. Anyone can get in, go out, and deliver the good stuff. It’s never too late to get into the tech industry. But if you’re not updated, you might go out of business very soon. So it keeps everyone on their toes. There is no racism or nepotism here. Everyone is welcome as long as they have a laptop, Internet access, and willingness to work.
Book Recommendation 📖📖📖
Predictable Revenue by Aaron Ross: The book has been dubbed the “Sales Bible of Silicon Valley.” Aaron, who previously worked at Salesforce, had helped them set up their sales development function. It tells you how to sell SaaS, which is more important than building one.
In addition, I’d like to recommend to your readers my book, which will be released later this month.
Community Suggestion: We run a Facebook community, PitchGround, with over 17,200 members. It is one place where entrepreneurs can meet passionate early adopters.
Udit, it was a great conversation. Thank you for your time. Yellow Chapter wishes you the best in your future endeavours.