How We Built A 7-Figure SaaS Product And Raised $1M+ Through Crowdfunding
Hello! Who are you and what business did you start?
My name is Juho Makkonen. I'm the CEO and one of the co-founders of Sharetribe.
Our SaaS product makes it easy for non-technical founders to create their online marketplace: you can build and launch your marketplace in one day, without coding skills!
Today our software powers more than 1000 marketplaces in 70+ countries.
What's your backstory and how did you come up with the idea?
My co-founder and I launched our first marketplace while working on a research project at a Finnish university. We wrote the code ourselves. We were by no means very experienced developers, but we knew enough to get things going.
Eventually, we spun it off and launched our business. While the marketplace business we initially had in mind never took off in a big way, the experience taught us a lot about how marketplaces should be built.
During this initial period, many other founders reached out to us asking if they could use our technology to build their idea.
When 10+ such founders had reached out to us in a short period despite us working on a completely different idea, we realized this was the market we should be serving: bootstrapping non-technical founders who have a great idea but no technical skills to build their product themselves and no budget to hire developers to do it for them.
At the time there were tools available for starting a blog or an online store without coding. However, nobody else had yet created a solution for building a two-sided marketplace, a website a bit like eBay, Airbnb, or Etsy, without coding. That’s what we set out to do.
Some of our customers have grown to hundreds of thousands of users, processed millions in transactions, and raised millions in venture capital.
Take us through the process of building the first version of your product.
The key moment was when one founder offered to pay us to customize our marketplace software for the specific needs of their idea. This founder became our first customer.
We offered them a cheap rate for the customizations to be able to retain the IP and offer it to our other customers. We started the discussion with them in late 2012 and their marketplace was live in May 2013.
We were able to sustain our operations from this revenue, and this case also allowed us to go to investors and say we had a paying customer with our new idea, which led us to raise our first round of funding (a pre-seed round of 120 000 euros), which we invested mostly in product development by making our first official engineering hire.
We built every feature this first customer wanted generically so it could be applied to many different marketplace types.
Describe the process of launching the business.
Our initial “launch” in August 2013 was a landing page with a prompt to leave your email. Our timing ended up being perfect. Nobody else had a product like ours at the time, and several people were searching Google with the keyword "create a marketplace", for which we quickly started ranking well because of little competition.
At that time, we had a product that only worked for a handful of use cases and required quite a bit of manual customization.
We would talk to each person who left their email on our landing page, show them the product demo, and if it seemed a good fit, set up a marketplace for them.
The customers were coming from all over the world, and we invoiced them manually with a wire transfer, as we had not built a system for them to subscribe to our plans automatically yet.
The first version of our product didn’t allow our customers to customize much of anything. There were a few simple settings we would have to put in place manually for every new customer.
Eventually, when we started getting new customers and getting their feedback, we automated the marketplace-building process, bit by bit.
Our public launch only happened in November 2014, 15 months after we set up the landing page.
By this point, we had built a smooth product that allowed someone from anywhere in the world to create their marketplace website by themselves, without coding skills, and without contacting us.
We raised more than $1M through crowdfunding and used a big part of it to buy back the shares of our original VC investors.
Since launch, what has worked to attract and retain customers?
The best way to retain your customers is to do everything you can to help them succeed. In our case, this is particularly important, as our customers are early-stage founders: if their businesses fail, they will naturally leave us. The more of them we can help succeed, the more successful we are ourselves.
A big factor for us has been making our software solution flexible enough to help our customers scale and build truly unique marketplaces. Because of that, we ended up launching our Sharetribe Flex developer platform in 2018, making it possible for developers to extend the marketplaces of our customers any way they wish, making them unique.
However, we realized early on that the biggest bottleneck for our customers’ success was not technology but all the other skills required to build a successful marketplace business.
These businesses have a unique nature, and if you haven’t built a marketplace before, you often make some basic mistakes. We certainly did ourselves when we launched our first marketplace.
To combat this challenge, we launched a blog called Marketplace Academy in 2015. In the blog, we wrote about everything we had learned during our journey to building successful marketplace businesses.
It turned out that in addition to helping our customers succeed, this content also worked well in attracting new customers.
Lots of early-stage marketplace founders were looking for such content, and there was very little available at the time. Eventually, we turned some of our best content into a book called The Lean Marketplace, which we self-published on Amazon in 2018. As of this writing, the book has sold more than 5000 copies and has excellent reviews.
How are you doing today and what does the future look like?
Today we’re a profitable company of 24 people. While most of our 1000+ customers were simply founders with an idea when they started with us, today, some have grown to hundreds of thousands of users, processed millions in transactions, and raised millions in venture capital.
Still, it feels that we're just getting started. Our mission is to democratize platform ownership. We want to make it possible for anyone to build their online marketplace and launch a successful marketplace business, no matter their skillset or budget.
We don’t want to see a world where only a handful of global marketplace giants like Airbnb, Uber, and Amazon thrive. Instead, we want to see a large ecosystem of smaller, independent, sustainable marketplace businesses thrive.
Through starting the business, have you learned anything particularly helpful or advantageous?
When we launched our business, we thought we wanted to be the next tech startup unicorn.
What we ended up learning is that pursuing that path often means giving up control of your company and jeopardizing its original purpose.
We didn't want that. What we want from our lives is to work on something that feels meaningful and fun and sustains us financially.
As a result of this realization, we made a dramatic shift in 2018: we transitioned into a new kind of company structure called steward-ownership.
As a part of this transition, we raised more than $1M through crowdfunding and used a big part of it to buy back the shares of our original VC investors.
Under our new structure, the company is bound to remain forever 100% in control of its working team. Sharetribe won’t ever be sold or taken public in a traditional sense. The company will remain independent, and its profits will be used to advance its mission.
It’s been nearly 5 years since we made the transition, and I feel it’s the best decision we’ve made during our journey. After it, we felt free and in full control of our destiny.
What platform/tools do you use for your business?
We are a software company, so we built our core software ourselves from scratch. However, there are many core integrations to other SaaS solutions that a solution like ours needs, like:
- Stripe Connect for online payments between buyers and sellers in our customers’ marketplaces.
- Google Maps and Mapbox for geolocation.
- Sendgrid for email notifications.
- Zapier for connecting your marketplace to pretty much any third-party tool in the world.
What have been the most influential books, podcasts, or other resources?
The two books that have impacted our journey the most are Reinventing Organizations by Frederic Laloux, which gave us a different perspective on what a business could be like, and Non-Violent Communication by Marshall Rosenberg, which gives a simple framework for how people should interact with each other that should be taught in every school.
Advice for other entrepreneurs who want to get started or are just starting out?
I encourage you to figure out what is the smallest possible way for you to validate if your idea has wings. Your first approach is rarely the best, and the more you invest in an idea before properly validating it, the more difficult it is to change course.
What you want out of life greatly affects what kind of business you are starting. I encourage you to think about how the way you're approaching the business will support your life goals. They should be aligned.
I encourage you to listen to lots of different advice from lots of different people but don't believe any of it. This applies also to what I wrote above. Ultimately, trust your gut feeling. You are the only person who knows what you want, and because of that, every business is unique.
Where can we go to learn more?
- 4,818 founder case studies
- Access to our founder directory
- Live events, courses and recordings
- 8,628 business ideas
- $1M in software savings
- 4,818 founder case studies
- Access to our founder directory
- Live events, courses and recordings
- 8,628 business ideas
- $1M in software savings
- 4,818 founder case studies
- Access to our founder directory
- Live events, courses and recordings
- 8,628 business ideas
- $1M in software savings
- 4,818 founder case studies
- Access to our founder directory
- Live events, courses and recordings
- 8,628 business ideas
- $1M in software savings
- 4,818 founder case studies
- Access to our founder directory
- Live events, courses and recordings
- 8,628 business ideas
- $1M in software savings
- 4,818 founder case studies
- Access to our founder directory
- Live events, courses and recordings
- 8,628 business ideas
- $1M in software savings
- 4,818 founder case studies
- Access to our founder directory
- Live events, courses and recordings
- 8,628 business ideas
- $1M in software savings
- 4,818 founder case studies
- Access to our founder directory
- Live events, courses and recordings
- 8,628 business ideas
- $1M in software savings
