The Business Model That's Failing Most Developers

Bgo

6,591 views • 2 days ago

Video Summary

Over 99% of SaaS products built by solo developers fail, a stark contrast to the success stories often highlighted online. The video argues that the prevalent advice to build a SaaS is misleading for most software engineers. Instead, it proposes that service-based businesses are a more effective and faster path to financial and personal freedom. This is because services address the core challenges that cause SaaS ventures to fail, such as market validation, customer acquisition, and product development, by providing immediate feedback and valuable real-world experience.

The core of the argument is that successful SaaS businesses often begin as service-based operations, where developers hone crucial skills like sales, marketing, and customer understanding. By focusing on a service first, developers can leverage their unique advantages—network, experience, and location—to find real problems that businesses will pay to solve. This approach not only generates revenue and provides invaluable market insights but also builds the foundational skills necessary for eventual product success, if that remains the goal. The video emphasizes that the ultimate aim for many developers is freedom, not necessarily a scalable product, and a service business can achieve this more reliably.

A surprising statistic revealed is that the "overnight success" stories of SaaS companies are typically preceded by years of effort, often involving multiple failed products and extensive audience building, a context rarely shared.

Short Highlights

Over 99% of SaaS products built by solo developers fail.
The common advice to build a SaaS is misleading for most software engineers.
Service businesses are presented as a more effective and faster path to financial and personal freedom for developers.
Successful SaaS businesses often start as service-based operations, building essential skills.
Developers can leverage their network, experience, and location to identify viable service business opportunities.

Key Details

The SaaS Trap for Developers [0:00]

Over 99% of SaaS products built by solo developers fail, despite online success stories suggesting it's an easy path to wealth.
Many developers get stuck in the "SaaS trap" because they are skilled at building but lack expertise in marketing, sales, and distribution, which constitute the majority of business success.
The cycle of building, launching, and failing repeats because developers focus on the product (20%) rather than the essential 80% of business success: distribution, marketing, sales, and customer understanding.
"Overnight success" in SaaS is often a myth, with many successes taking years and multiple failed products before the one that works.

"It is not the idea. It is the business model. SAS is an incredibly difficult business model for a solo developer to actually succeed at."

The Power of Service Businesses [6:57]

Service businesses are presented as the alternative model that actually works for most developers, despite not sounding as "sexy" as SaaS.
Contrary to popular belief, services can lead to significant wealth and freedom, as demonstrated by developers who transition from 9-to-5 jobs to running successful service businesses.
Services solve the core problems that cause SaaS businesses to fail: they offer immediate customer feedback, require less market validation, and allow developers to learn what customers truly value by observing them hand over money.
A service business allows developers to go from zero to a paying client in as little as a week, with an immediate feedback loop.

"The developers who escape their 9 to5 and just like how I escape my 9 to5 always build real wealth with service-based businesses, not because services are the end goal, but because services solve all the problems that cause SAS businesses to fail."

Leveraging Unique Advantages for Service Businesses [9:30]

Developers often get stuck when considering service offerings because they believe they need to invent something new or find an untapped market, which is unnecessary.
The key is to leverage unique advantages that stem from one's network (people you know), experience (domain knowledge from your career), and location (local businesses needing tech help).
These advantages provide access to people and problems that will pay for solutions because trust is already established.
By intersecting network, experience, and location, developers can identify opportunities that larger tech companies or VCs overlook.

"Your network is everybody you have ever worked with, gone to school with, or just built relationships with over the years."

Services as a Stepping Stone to Products [13:12]

Service businesses provide invaluable real-world experience, teaching developers what problems customers are willing to pay for and how to deliver value.
Many successful SaaS companies, such as Netflix and Airbnb, started as service-based operations before becoming product-focused.
The skills learned in a service business—finding customers, selling, positioning offers, and delivering value—are directly transferable to building a successful SaaS product later.
Developers who skip the service stage and go straight to product development often build things nobody wants, while those who integrate services first are more likely to succeed.

"Services first, product second. She would have never found that product idea by sitting in her house brainstorming."

Redefining Success and Leverage [16:11]

Financial freedom, location freedom, and time freedom can be achieved without a SaaS product or passive income.
A service business can generate $20,000 to $100,000+ in monthly profit, offering the lifestyle and financial independence many associate with SaaS.
The common narrative that SAS represents high leverage while services trade time for money is a flawed framing that ignores the probability of success.
Service businesses also possess significant leverage through productization, hiring, and system building, often with a higher likelihood of success than a low-probability SaaS venture.

"What you do need is enough money coming in that you are not relying on an employer. And a service business can get you there way faster than a SAS can."

The Path Forward: Services First, Then Product [19:26]

Developers should not build a SaaS solely out of guilt, by seeing others' revenue, or because it's perceived as high leverage.
A SaaS should only be built if there's a genuine market insight, distribution advantage, and runway to achieve product-market fit.
For developers without an audience, savings, or deep expertise, starting with a service business is smarter, enabling faster learning, quicker income, and better preparation for a future product.
The ultimate goal for developers is freedom, and a service-based business offers a faster, more probable path to achieving it.