Building Your Castle in Someone Else's Kingdom — The Bootstrapped Founder 350


Dear founder,

We SaaS founders find ourselves in a peculiar position.

We're simultaneously tenants and landlords, renting the tools we need while offering our own services for a subscription.

It's a world where true ownership seems increasingly elusive, yet understanding its nature is crucial for building lasting value.

🎧 Listen to this on my podcast.

The Rental Economy of SaaS

Nearly every component of our businesses is rented. From virtual servers to error tracking software, we're constantly paying for access to tools and infrastructure we don't truly own. Even our domain names are essentially leased from ICANN.

This rental model is about risk delegation. When a podcast summarization tool builds on top of Podscan, they're offloading the complexities of podcast ingestion, transcription, and data extraction. Many of my customers do exactly this. They observe 10, 20, or even hundreds of niche podcasts, extract relevant information, and then sell that information to their clients in various professional fields.

And guess what? I do the same thing. I don't want to manage physical servers or worry about power supplies and fireproof housing. So I rent those services from someone else. It's a chain of risk delegation, each link passing some burden to the next.

The Paradox of Value in a Rental World

This reality raises a challenging question: In a world where we're both renters and landlords, what constitutes true value? What can we, as software business owners, actually sell when so much of what we use is rented?

The answer lies in what can't be easily replicated or rented: relationships and expertise.

Consider the current state of AI, a field I'm deeply involved with through Podscan. The quality of rentable AI systems has become so high and so similar between major players that it's hard to argue any one company has a significant edge.

I've seen this firsthand in the AI space. After OpenAI came to the forefront, many companies essentially took over their playbook. The "secret sauce" is more about configuration and experimentation than some great intellectual breakthrough.

What's not easily replicable? Brand perception. The trust customers place in a company. The relationships built over years of service.

The Power of Customer Relationships

When you sell a software business, you're not just selling code or infrastructure – you're selling existing customer relationships. You're selling revenue streams that come from trust built over time.

The relationships I've built with customers who use our platform for their data needs – these are the real assets. They trust us to handle the complex world of podcast data so they can focus on their core business.

In our current digital landscape, anyone can present themselves however they want. There are no gatekeepers to say, "This is a product you can trust." As a result, trust becomes rare and hard to establish.

I've experienced this firsthand in building Podscan. In the early days, convincing potential customers to trust us with their podcast data was a significant challenge. We had to prove ourselves not just through the quality of our product, but through consistent communication, transparency, and reliability.

The Means of Communication: Your True Asset

While we may rent servers, software, and services, what we must own are the means of communication. Can you reach your customers? Will they listen when you have something to say? Will prospects give you the benefit of the doubt because they've heard good things about your business?

My most valuable asset isn't our AI algorithms or our data processing capabilities – it's our ability to understand and communicate with our customers. When we launch a new feature or need to address an issue, the strength of our customer relationships determines how well we can navigate those situations.

These priorities shift as businesses mature.

Take, for example, the recent moves by companies like Basecamp. They've chosen to move off the cloud and onto their own infrastructure, running their own servers. When you stop renting and start owning physical infrastructure, you're also taking on new risks and responsibilities.

For most of us starting out in the SaaS world, this level of ownership isn't feasible or desirable. We can't afford to buy thousands of dollars worth of hardware just to run a software business with no customers. We all start on other people's rented land.

The AI Revolution and Its Impact on Ownership

The AI revolution is dramatically reshaping our understanding of ownership and value in the SaaS world. In my work with Podscan, I've had a front-row seat to this transformation. We use AI extensively for podcast transcription and analysis, and I've watched as the technology has rapidly commoditized.

This commoditization has led to intense price pressure. I've seen the cost of using GPT models drop by 95% in just two years. This trend shows no signs of stopping, with extreme price pressure coming from companies with similarly well-trained models.

At Podscan, we've taken this lesson to heart. While we use cloud services, we've made sure that our core AI systems are set up in a way that we can easily move between providers. This approach gives us more control and reduces our platform risk.

Redefining Ownership in SaaS

As we navigate this world of digital rentals and subscriptions, we need to shift our understanding of ownership. True ownership in entrepreneurship today has less to do with the means of production and more to do with the means of communication.

I've learned that the true value of our business isn't in the code we write or the servers we rent. It's in the trust our customers place in us to handle their podcast data reliably and efficiently. It's in the relationships we've built with podcast analyzers, medical information services, and other businesses that rely on our infrastructure.

So, as you build your SaaS business, focus on owning what truly matters. Build strong, trust-based relationships with your customers. Cultivate a brand that stands for reliability and expertise in your niche. Create content and foster conversations that demonstrate your value.

In the end, while we may rent the tools to build our digital kingdoms, the true value lies in the trust and connections we forge with our customers. That's the real estate of the digital age – and it's something worth owning.

If you want to track your brand mentions on podcasts, please check out podscan.fm — and tell your friends!

Thank you for reading this week’s essay edition of The Bootstrapped Founder. Did you enjoy it? If so, please spread the word and ​share this issue on Twitter.

If you want to reach tens of thousands of creators, makers, and dreamers, you can ​apply to sponsor ​an episode of this newsletter. Or just reply to this email!

To make sure you keep getting your weekly dose of Bootstrapped Founder, please add arvid@thebootstrappedfounder.com to your address book or whitelist us.

Did someone forward you this issue of The Bootstrapped Founder? ​You can subscribe to it here!​

Want to change which emails you get from The Bootstrapped Founder or unsubscribe for good? No worries, just click this link: ​change email preferences​ or ​unsubscribe​​.

Our postal address: 113 Cherry St #92768, Seattle, WA 98104-2205

Opt-out of preference-based advertising

Arvid Kahl

Being your own boss isn't easy, but it's worth it. Learn how to build a legacy while being kind and authentic. I want to empower as many entrepreneurs as possible to help themselves (and those they choose to serve).

Read more from Arvid Kahl
Bootstrapped Founder Logo

Podcast, YouTube, Blog Dear founder, As I sit here writing this newsletter, I should probably be doing something else. Something more impactful. Something that actually moves my business forward. But here’s the thing about being a solopreneur: nobody’s going to tell you what to do or in what order to do it. If I don’t keep myself accountable, nothing will happen. 🎧 Listen to this on my podcast. Being your own boss both means having no boss and having to be … a boss. To yourself. I’ll be...

Bootstrapped Founder Logo

Podcast, YouTube, Blog Dear founder, I want new prospects to receive the maximum possible value the moment they register for Podscan, so I treat them as customers before they even come to the page for the very first time.Here's the Podscan Dream Customer strategy — from idea to execution. 🎧 Listen to this on my podcast. A few months ago, I started thinking about preparing data on Podscan for people who would be ideal customers for what the product currently is — a social listening tool. The...

Bootstrapped Founder Logo

Podcast, YouTube, Blog Dear founder, Yesterday, I shrunk the size of my production database from four terabytes to just under one terabyte. Still ginormous, but very impactful for Podscan, in several ways. Something interesting happened last weekend that made me realize I needed to change how I think about scale. 🎧 Listen to this on my podcast. While checking my monitoring dashboards, I noticed a pattern in Podscan’s data ingestion that would significantly change how I approach orchestrating...