Book Summary: Zero to Sold by Arvid Kahl

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Before starting the summary, I want to emphasize that summaries might be incomplete or focus on aspects that I find particularly useful. I recommend reading the entire book. You can get the book on Amazon.com* and find details and reviews there.

Rating: 10/10

My Notes

Preparation Stage:

Find your audience - discover your niche and solve their problems. Niche inhabitants are similar and talk to each other. Once you can sell to one, you can sell to many of them.

JTBD - Jobs-to-be-done: people use tech to get a job done. They are result-driven.

Validate everything: audience, size of the audience, their problems, their critical problems, your planned solution. Go deep when researching. Invest the time here to save it tenfold later.

Also, validate features when the MVP exists. Build the most challenging features that create the most value and impact most customers. Focus on improving "hot paths "(most used parts of App) l. Remove unused features.

Remove pain or create value. Areas:

• efficiency
• Effectiveness
• Financials
• Reputation
• Empowerment
• Accomplishment
• Advancement (career)

Talk to your prospective customer - a lot. (Should have skin in the game). Let them talk and understand their workflow and their problems. Make sure to talk to the right people.

Get to the critical problems. Do one thing very well. Be the chef's knife, not the Swiss Army knife.

Build as little as possible by yourself. Focus on your core value features. Leave Authentication, Payment and Invoicing to others. Use Saas where possible for higher automation - focus on stable Saas, so it doesn't suddenly shut down. In case of uncertainty: compare risks between building and buying.

The MVP is just that. Minimum but viable.

Following features should be included (eventually, not necessarily from the beginning), not more:

• Auth
• Payment
• Basic Core-Functionality
• Monitoring (also Client-side to get info about client-side errors)
• Communication channel for the customer (Chat, simple form)

Lean on battle-tested technology (PostgreSQL, docker, k8s, big cloud companies). Use what you know - either build a business or learn something new. Just use new technology if it is a perfect fit and multiple orders of magnitudes better than your current one.

Create a highly automated deployment workflow that allows for easy rollbacks (incl. Migrations). Also, release early and often.

Don't just build a product; build a business system:

• repeatable: customer acquisition process simple and repeatable, Subscription makes repeatable revenue
• reliable: maximum availability and performance
• resilient: adaptive to vendor failure, quick switches/backups
• (repeatable processes, SOPs, etc) -> EOS (Entrepreneurial Operating System)

You will price wrongly. Pricing too high is better than too low. Lower prices attract nitty-gritty customers. Price also communicates perceived value.

Found with a cofounder if possible. Make sure you are aligned on the important things, and you can Communicate well. He has to be enthusiastic about the business.

Be aligned on:

• contribution expectations
• Wealth asymmetry (profitability expectations)
• Share Distribution
• Vesting expectations
• Future of business (bootstrapping vs VC)

Hire or automate if possible to alleviate tasks you don't like to Free up capacity for core features.

Increase the sellability of your business even if you don't intend to sell. It makes everything better for you as well. Document well, automate a lot, streamline processes.

Your product is never finished, so launch early and often. Don't go down rabbit holes with features.

Survival Stage

Mental Health - Watch out for big bad guns

• perfectionism
• Impostor syndrome
• Doing everything by yourself and alone
• Hustle porn
• Perfect business and wanting to solve all problems

Build the right things

Focus on essential features that bring the most value - say no to lots of feature requests.

Prioritize Features with a framework. Use little time for this, but do it. Decide for one and stick to it:

• RICE
• DIE
• KANO

Optimize the Hot paths discover them with tools like HotJar, CrazyEgg, Amplitude, Heap, Pendo. Improve features that are used by a lot of people to turn early supporters into evangelists. Test interesting new features with mock buttons. Release early with imperfect UI; keep UI simple.

Build the things right

Use abstractions a lot. Abstract all third party services in modules to make a switch easy. Keep necessary info in your database (like emails) to be able to contact your customers if all services are down. Definitely abstract these:

• payment
• Authorization & OAuth
• Email
• Chat Integration
• Logging
• Metric collection
• DB

Create a flexible architecture. Containerize your software. Use cache data stores (redid, Memcached) to share data between containers. Use MQs (rabbit, Kafka) to distribute work. Don't overanalyze. Time is your most precious resource (initially). Make a decision quickly. Every decision works toward 2 out of the 3: high flexibility, high performance and low complexity.

Build a lasting relationship with your customers, especially as a subscription SaaS. Use tools like intercom if affordable. Create a knowledge base to let the customers help themselves. Use pictures and videos. The goal is to help the customer reach their goal.

Revalidate audience, problem, solution and product-fit.

Keeping a customer should be your highest goal as it's much cheaper than acquiring a new one. Find out why some leave. Fix problems and reduce churn. Use customer feedback tools (canny.io) and consider a public roadmap. Show them the value you provide.

Don't price too low. What's the intention of the pricing? Look at your prices regularly. Keep it simple - maximum 3 tiers. If offering a free tier, make sure users reaching their limits convert and not switch to another tool. Base tiers on reasonable decisions.

When discontinuing an old plan, either move the customers up (inform them early! Also trial users) or grandfather them (keep in the old plan, but disable plan for new subscribers). Think about allowing them one more year if they upgrade to yearly. Give customers who cancelled a discount (~1 month) to win them back.

Offer a yearly plan from the start. It proves a higher level of validation and ensures cash flow. Discount it to give an incentive and make it non-refundable.

Beware of freemium and lifetime memberships. They might increase your costs without providing revenue. Lifetime might provide value initially but often becomes a burden later on.

Consider a referral system. Create a win-win-win scenario: discounted referrer revenue + discounted new user revenue > normal user revenue; the system grows your revenue. Tracking referrals is the most important thing for insights. Consider extending it to onboarding (referrer sees new user journey via milestones) to reduce customer support. Make sure your product is shareable! Don't use this too early. The product has to be very stable and proven. No regular changes to existing features. Services: referralCandy, ReferralRock, SaaSquatch, Ambassador.

For a recession, have savings (3-6mo), Focus on sales, cut costs and communicate clearly.

Become part of a tribe or even lead it. Tribes make great customer groups. Find the water cooler for your tribe (social media, Reddit, etc.). Create valuable content and succinctly mention your product, don't use shameless promotion. Generate word-of-mouth with easy-to-consume and easy-to-share content. Build a community (circle.so, tribe.so) and strengthen your tribe. Facilitate communication and exchange. Produce valuable content.

Many individual customers leave you your inference, while a few large ones have a much bigger influence.

Use your small size as an advantage.

Leverage skin in the game by:

• making people understand that you're a bootstrapper
• Using early adopter language
• Sharing your journey publicly

Leverage having nothing to lose by:

• sharing your products Evolution publicly
• Celebrating features, pivots and improvements

Leverage having everything to lose by:

• sharing and celebrating your challenges
• Sharing struggles and growth as an entrepreneur

Leverage being a laser-focused expert by:

• sharing and showing your expertise by writing
• Giving interviews on podcasts

Leverage steering the ship by:

• being present and empathetic in every encounter
• Following through on promises given

Leverage relatability by:

• prominently showing the person behind the business (landing or about page)
• Sharing the origin story of the business yourself and via other media outlets
• Using your real picture for interactions with customers

Be transparent but not fully. Give regular updates with stripe verified MRR numbers and give context. Numbers without context might be misleading.

The Stability Stage

Customer Support Must scale at this stage. Lean heavily on self-help and turn communication mostly asynchronous. Hire support if possible (even if not full time).

Continuously validate with customer calls. Incentivize to get live walkthroughs, preferably unbiased. Ask for their pains, for alternative tools and for missing critical features. Repeat 1 day every 2 months, where you talk to 3-4 customers.

Customer retention becomes key. Reduce churn, show the customer the value they have already accumulated by using the product. Find customers at risk of leaving and reengage those that just left. Take actions to increase retention:

• stay in touch with customers
• Improve onboarding
• Do things that don't scale (meetups, postcards, etc.)
• Get testimonials from them

Continuously validate. Use the check with the Eisenhower-Matrix. Revalidate that the problem still exists and is critical, and is being solved adequately. Also, check your alignment with the business and working habits.

Have an internal roadmap with all the details, not only Spanning the product but also other aspects of the business. Show the public a reduced roadmap. Think about feature voting to kick off new ideas.

Make your business built-to-sell. Lean on automation and documentation. Have a focused product. Make it run without you - this makes your life easier already while running the business.

Use Standard Operating Procedures (SOPs) to document processes to be able to hand them over so anybody can perform the task. They should contain every info needed to perform the task. They make your process more reliable, faster and more effective. They also help to uncover automation potential. Don't forget to update these documents with changes in the process. Use a collaborative Google Doc in the beginning and later elaborate tools like Notion, SweetProcess or Trainual. To get started: Create an SOP for a representative process in different forms (flowchart, checklist, text) and choose the form most appealing to you. Use that as a standard for all compatible processes. Check all SOPs once a year for validity.

Consider integrations for your product. Which input/output formats make sense? What about browser extensions? Or maybe providing an API makes sense. Consider integrating third-party tools.

Remove unused, distracting, overcomplex, over expensive features to slim down the product. Communication (before and after) is key. Think about soft-removal (configuration switch?). Don't build features for the wrong reasons (wanting to build it, convert a big customer, trend-following).

Hire late, but not too late. Don't waste too much time that could be spent on your product. Consider part-time jobs. Onboarding with extensive documentation and SOPs is easy. Hire for positions which tasks you don't enjoy. Hire from expert communities or customers.

Build a brand by supporting your tribe. Create valuable content a become a valued member. Be in there for the long game.

Position your product correctly. Compare to Competitive-alternatives (competitors but also excel etc.). Create a customer journey with storytelling. (Talk from Andy Raskin)

Make sure the company has one tone of voice when growing. Create a vision and mission document as a source of truth for the company. Distribute to everyone in the company. Understand the customer's language - talk to them how they would talk with each other.

The Growth Stage

You have now the choice to sell your company or keep growing it, turning it into a larger company with hierarchies.

Selling

Besides individual personal reasons, there are 3 main reasons:

• You hit a skill-ceiling
• Reduce risk
• Move to the next project

There are 4 reasons for potential buyers to acquire your business:

• financial (grow the business further)
• Strategical (get access to customer base and tech, etc.)
• Acquihire (hire the staff of the business)
• Nuke (buy to shut down competition)

Prepare the business for sale from day 1. Store documents in secure cloud storage. (Google Drive). Have separate bank Accounts. Have extra service accounts for the company. Document everything.

Due diligence needs to be done before the buying process starts. Have an accurate but not too detailed Profit&Loss Sheet ready. Internal metrics should be taken and ready to share. Tools for this: BareMetrics, ProfitWell. Also include forecasts. Tools: Summit. Be aware of legal liabilities and disclose ongoing and past lawsuits immediately. Prepare to hand over the secret knowledge, but only when the buy has happened. This is a process of trust-building, so guide your potential buyer through everything. Make sure no secrets and customer data is exposed, as malicious buyers exist that just want to spy.

Do your part of due diligence concerning the buyer. You don't need a lawyer before any documents get signed, and make sure to have them sign an NDA when they want to see real data. Research the company and the person. Research the portfolio and historical acquisitions. Request a list of references. Make Due diligence calls, first with the founders that didn't appear on their list, but on yours. Watch out for red flags:

• no public info is available
• After being asked for a specific reference, they ignore it
• Extensive NDAs on their part
• Demanding access to very sensitive data
• Want to see real data (not just reports)
• Decline to sign your NDA
• No cultural fit

Beware of earn-outs. They come with strings attached. Listen to built to sell radio from John Warrillow. Try to evade earn-outs. Make sure to get the majority of your money upfront. See the rest as a bonus.

Growing

Keep growing, hire more to alleviate your impact on the operational running of your business. Look early for a CEO to replace you. He needs to share your vision and replace you as manager, leader and source of truth. They need to care about customers and about the business similarly.

Beyond Bootstrapping

Stay away from bank loans. The impact you personally and often don't get authorized. Banks don't get SaaS businesses. Consider joining an incubator/accelerator specifically for SaaS businesses like TinySeed. Stay away from traditional ones as they prepare you for VC funding.

Consider that your business model/ funding strategy does not have to stay the same forever. Starting bootstrapped and switching to VC is a viable option. Just get acquainted with the pros and cons.

Closing Remarks

Ask yourself the following two questions in the context of your entrepreneurial ideas to validate your path:

What life do I want to lead 5 years from now?

• Visualize it in detail
• Daily Routine, what you do, where you are, how you feel, who and what you are surrounded by

Looking at the choice in front of you, ask: What will give me traction toward this future state?

• if it will get you there, start today. Otherwise, find something else and start with that.
• The journey starts with choice and action.

I recommend reading the entire book. You can get the book on Amazon.com* and find details and reviews there.