The Bootstrapped Founder

Arvid: 00:00

Welcome to the Bootstrap founder. Let's talk about money. In fact, a little building public update before I get started actually talking about the topic I wanted to talk about today. I have my first customers for PodScan dot f m. It's been a really, really cool week.

Arvid: 00:16

And 2 out of 3 of these customers, I have 3 customers at this point, have paid for yearly subscription to the business. I'm over the moon. It's amazing. I'm so happy. And these are all people that I talked to over the last couple weeks that have helped me make the product better, and they purchased it, which is great validation and it's amazing to see that now I could just really put more effort into marketing, put more effort into putting the product out there.

Arvid: 00:43

I think PodScan now is over a 120 users that are on most of them are on that trial. It is just a wonderful situation to be in and it's nice to see revenue come in. It's not profitable yet. Obviously, a couple $100 in the first couple weeks won't make this profitable, not with the expenses that I have in GPUs and all these cloud servers that I need for the product to work, but we'll get there. I just wanted to share that we are getting there.

Arvid: 01:09

There is movement that, you know, helps me when and it's really cool. I'm really, really happy about all of this. I'm really enjoying just interacting with people around this, learning a lot from them, and just seeing money coming into the account. That's great. So let's talk about money.

Arvid: 01:23

Making money is hard. Like, it took me a while to get to this point. Obviously, not just a couple weeks, couple of years before that too, to even get to the point where I could get to the point, but money is hard. Making money is hard. And for solo founders, I think even taking money is hard.

Arvid: 01:37

So let's look at how to best handle payments today. This episode is sponsored by acquire.com, and we will talk about the impact of payment providers on your acquisition during this conversation today as well. Let's dive into the selection of the brai payment system for solopreneurs. And I wanna have a focus on those of us who are building software products. There are a lot of payment solutions for e commerce and info products out there, but I wanna 0 in on SaaS payments.

Arvid: 02:03

Because that's something that I've recently had to make a choice about. And because I hate artificial suspense, here's what I chose, paddle.com. Very easy choice. I I guess I could've let you wait for another 15 minutes to get to the point, but I thought maybe I'm just gonna give it to you right now. Let me explain why.

Arvid: 02:19

Whether you're a technically skilled founder or someone who's leveraging no code tools, it really doesn't matter. You'll need to find a payment system that suits a low head count mostly bootstrap business. Because that's as indie hackers, indie founders, that's what we do. Right? We have our own money.

Arvid: 02:33

We don't have much money from other people, and we don't really have many people. Most of us are solopreneurs. And the world of payment gateways is quite diverse. There are a lot of companies that try to make money by allowing you to make money, because it's always easy to take a percentage. And the major players in our little community, I guess, are Stripe and Paddle, they're leading the way.

Arvid: 02:53

And then there are newcomers like Lemon Squeezy out there as well, and specialized platform like Gumroad for creators and e commerce, that kind of stuff. There are also enterprise solutions out there, and you will find them when you search for payment providers and platforms. So this is not a warning. It's just, you know, a fact. These companies are out there, and they will reach out to you when they see you look for payment providers, FastSpring, Recurly, or Chargebee.

Arvid: 03:14

But in my experience, those are very upmarket and they're hesitant to embrace solo founders. They try to get you into a sales call that happens quite a lot. They want to, you know, book a demo or something, nothing wrong with this. But for somebody starting out, it's a bit much. And there tends to be a setup fee and then you know ongoing expenses which for a bigger company are not a problem, but might be for you if you have no budget for these kind of things.

Arvid: 03:38

So I'll keep my selection to Stripe and Paddle and Lemon Squeezy here today. Stripe is the big name in payment, at least in the indie hacker world. It's unsurprising, I guess, because they were, funding the indie hackers podcast for the longest time. So, you know, they are very involved in the in the hacker world too. And they have been a cornerstone in the developer focused payment integration space.

Arvid: 04:01

They literally were called slash dev slash payments before they rebranded to Stripe. That's how nerdy they were. They got their developer experience really locked in. They they understand the people that they're serving, right? Obviously, they're serving businesses, but they're serving the developers of the businesses and they understand this.

Arvid: 04:19

The APIs and their integration capabilities are incredible and you will find libraries across almost all programming languages and platforms, like even esoteric ones. I come from the Elixir functional programming background and even in this rather small now growing I guess, but still very small language community there are Stripe libraries. That was the the first ever payment library in there was probably called like Stripity Stripe or something, and Stripe is supported by these platforms. That's just how it works. And Stripe acts as a payment gateway.

Arvid: 04:52

It's important to understand this, which is why I'm saying it. They handle all the sensitive information of your customers so you don't have to, so that you cannot have to think about compliance. They do this for you, and they're pretty much passing the money along. Right? Your customers pay you.

Arvid: 05:07

Stripe kinda facilitates it. Their direct competitor, Paddle, however, operates differently. They are acting as a merchant of record. And that's important, the difference here to understand. Because it means that they actually sell your products for you.

Arvid: 05:22

They sell your stuff in your name, but they sell it. Your customers are actually their customers. Paddle is handling all the customer interactions and refunds and that kind of stuff and managing taxes, and that significantly reduces the administrative burden on solopreneurs. It's actually great. They charge all the taxes required at the locations that they need to be charged at, and they report them to the proper places.

Arvid: 05:48

Anything that's left over after they take their cut and pay all the taxes and stuff gets reversed invoice to you. And recently, Lemon Squeezy has emerged as a fresh contender and also a merchant of record. They're catering particularly to creators selling digital products, but they have a solid subscription feature too. I recommend you check it out. It's really cool and they're involved in our community too.

Arvid: 06:09

They have a podcast that has indie founders and creators on. They're pretty much doing now in our creator economy world what Stripe was doing in the in the software founder world, like, 5 or 6 years ago. It's really cool to see. And between Stripe and Paddle and Lemon Squeezy and maybe Gumroad, we solopreneurs have a pretty solid range of options to choose from. That really depending on our business model and the tech stack that we might use for that kind of stuff.

Arvid: 06:36

But one thing remains, we have to juggle everything as entrepreneurs or as small founders. Right? Coding, operations, reporting, marketing. So we need a payment system that doesn't add more things onto our plates, but one that actually removes some. And a crucial aspect for indie hackers and bootstrappers is choosing something that handles compliance issues.

Arvid: 06:55

Customer financial information like PII, their personal identifiable information, secrets, their credit card numbers, that stuff, and tax management, right? That needs to be handled effectively for us. And this is where these merchant of record platforms like Paddle and Lemon Squeezy really stand out. They take care of those complexities, which then allows us founders to focus more on our products and the business growth, the stuff we actually can impact. Because we can't impact what regulations, what financial regulations exist in other countries.

Arvid: 07:24

Right? Taxes, well, can't really do much about this. What we can do is build a better business. So that also means that it costs a little bit more. I mean, Peddle and Lemon Squeezy both stand at like 5% of a fee, while Stripe sits at like 2.9%.

Arvid: 07:41

Which is significant. Right? 5 versus 3, there's there's a 2.1% difference. And it sounds like a lot, but I believe they're definitely justified. Otherwise, I wouldn't have taken Paddle over Stripe in this situation.

Arvid: 07:54

Because consider having a 100 paying customers on a monthly subscription plan. With Stripe, that's 1200 invoices and 1200 potential sales tax or VAT or GST or HSD reporting cases per year. With a merchant of record, you issue 0 invoices. That's all the merchant of record. They sell for you.

Arvid: 08:15

Right? So they have those invoices. They have to deal with taxes, whatever. What you have, what you get, is 12 payouts a year. And that's all you have to report.

Arvid: 08:25

12 reverse invoices from a single vendor, and that was a massive difference. And if you're starting a business today, the choice between these platforms really depends on your needs, right? Obviously, there are benefits to using Stripe, even if you have a lot of customers because they have unparalleled API documentation and integration support, a lot of plugins in their space, and there are tools out there like Carderno that deal with your tax compliance if you need to. But it's it's all kind of mix and match. It's very developy.

Arvid: 08:55

Right? It's very very engineering style. You have to pick all the tools and and cobble them together and build your own little thing. If you like that, if you're one of those people who prioritize technical control and compatibility and integration, well, you can't beat Stripe there. But paddles all in one approach and LemonSqueeze's approach too, to handling sales taxes and just customer interactions, that makes it quite the attractive option, particularly for solopreneurs.

Arvid: 09:20

For those of us who wanna minimize anything outside working on the business and the product. And for those of us leading to more of a modern creative platform, I think lemon squeezes your solution. Particularly, if you also sell digital products. And if you're more in a the kind of course world or in the the ebook world or whatever, that is kinda the platform you probably wanna look into. My personal recommendation for solopreneurs who start a SaaS business today leans towards Paddle, because of its super simple setup and the account management, particularly regarding tax handling.

Arvid: 09:53

But if you value integration, technical control, Stripe remains a strong contender. They're also the quite the inspiration if you're building an API. Let's kinda look at this flick from the developer lens a little bit. I really recommend looking into their blog post about API design, especially the one about versioning. That one blew my mind when I read it a couple years ago.

Arvid: 10:13

And Just to understand the concepts like it's it's spectacular engineering. It will educate you even just by looking at the code and by looking at the explanations that they have about the frameworks that they use and the ideas behind it. It's really really cool. Paddle has recently massively improved their developer experience. And you could argue that all of these companies are pretty much on the same level now.

Arvid: 10:43

You get a sandbox where you can test your integration with, like, test credit cards and that kind of stuff. You get webhooks for events like card declines or expirations or renewals. It's mostly the same. What's not the same is how easy it will be for you to sign up. Because paddle and lemon squeezy are merchants of record, they have to be absolutely sure that what you offer is something that they can sell.

Arvid: 11:05

And for that reason, those companies have an extensive validation and verification process, which can take a while depending on what they need to know about you and your business, and it can occasionally lead to declined applications. It's much easier to open an account on Stripe than it is on Paddle. I remember doing this recently and I didn't have anything to show for PodScan just yet because PodScan was an idea. But I wanted to set up an account for it because I wanted to start building it and for me like user authentication and payment are one of the first things that I built. And that kind of put me in a catch 22 because I needed to have a website where I would show what the product was gonna be.

Arvid: 11:42

Like a landing page with, like, pricing and just making clear to them that this was gonna be a SaaS business for Paddle to be able to verify me so that I could start integrating it into the website that I was gonna build. It's kind of a cyclical thing at that point. So I just threw together a landing page, put it on the domain that I had, and put the domain up for validation. And a couple days later, it was actually validated. But it it takes a bit more effort because on Stripe, you can just go on there.

Arvid: 12:09

You say, I'm gonna do, I don't know, a SaaS. It has to do with, I don't know, podcast maybe. You click create account and then usually you get your account. There might be a verification process in there as well, but it's not as extensive by far as Paddle has been doing it. So that is a thing.

Arvid: 12:26

Right? That is something you need to take care of. And if you sell anything physical, any physical items like a you have a swag shop or whatever, or you sell consulting and that's on the same website as where you wanna offer your SaaS, they might decline it as well. Because in their terms of and conditions, you you really explicitly see these things they will not support. They are for SaaS.

Arvid: 12:47

They are for ongoing subscription, like recurring revenue kind of payment. So you really need to focus your, the website and the offering on that one thing that you wanna put on Paddle and on Lemon Squeezy, if you wanna go there. So it's really important. Right? But once the accounts are open, the efforts to integrate them are the same, and I guess the ongoing effort to deal with payments is much much lower on a merchant of record, because again, you don't need to deal with taxes and that kind of stuff.

Arvid: 13:13

Finally, let's talk about the impact of payment gateway choice, on a potential acquisition of your business. It is potentially frustrating because the country of origin that you choose for your account cannot be changed if you use Stripe. And that makes it surprisingly complicated to transfer the account to somebody who acquires a business or your business from a different country. And this has been my experience selling a business, because migrating Stripe from one country from one account in one country to another account in another country, actually took some engineering. It wasn't just a settings change.

Arvid: 13:52

We needed to build tooling to transfer the account information to the other account. Like the, they would transfer all the secrets, but we had to rewire all the subscriptions, I think. That was that was a surprise and it was not fun. Like, that was really not enjoyable as a process. Honestly, I'm not sure how easy it is to migrate an account from inside a merchant of record.

Arvid: 14:16

I've never done anything within Paddle, but I believe that it's much easier because the relationship between you and the merchant of record has very little to do with your location. Right? The merchant of record will sell your products either way from their location because they are the people who's selling it no matter where you are located or where you're from or who has really access to your account, doesn't really matter to them. So, I mean, that is something I cannot tell you much about because it hasn't happened yet, but logically, it feels like it should be much easier within a merchant of record. Ultimately though, any platform mentioned here will work for you and will allow you to make money.

Arvid: 14:56

Right? The question is how much work you wanna put into integrations and managing your financials and how easily you wanna be able to hand over your payment integration when you sell your business. And with PodScan dotfm, I use Paddle immediately as a payment provider. And I have paying customers already. It was a breeze to set up, so I would recommend the same to you at this point in time.

Arvid: 15:17

And that's it for today. I wanna briefly thank my sponsor, acquire.com. Imagine this, your founder who's built a really solid SaaS product, you acquired a lot of customers, and you're generating really consistent monthly recurring revenue, hopefully, on an easy to hand over payment platform. You're living the SaaS stream. Right?

Arvid: 15:34

Problem though, you're not growing for whatever reason, maybe lack of focus, maybe it's the market, maybe it's lack of skill or just plain lack of interest and you feel stuck with the business. What should you do? Well, the story that I would like to hear is that you buckled down or reignited the fire and really got going, not just working in the business, but working on the business and, you know, all these things like audience building, marketing, sales, outreach, whatever. 6 months down the road, you made a lot of money. You've tripled your revenue, and you have this incredibly successful business.

Arvid: 16:02

But reality, unfortunately, is not as simple as this. And the situation that you might be in yourself right now is very different, and every founder faces this crossword differently. And but too many times, the story ends up being one of inaction or stagnation until the business itself becomes less and less valuable, or worse completely worthless. So if you find yourself here, and you think that your story is likely headed down a similar road, I would consider a third option. And that is selling a business on acquire.com.

Arvid: 16:31

Because capitalizing on the value of your time today, that's a smart move. Right? Why not at least check it out? Acquire.com is free to list. They will help you as they have helped 100 of founders already.

Arvid: 16:43

Go to try. Acquire.com/arvet, and see for yourself if this is the right option for you. It never hurts to be prepared, and it never hurts to see what your options are. Thank you for listening to the Bootstrap founder today. You can find me on Twitter at avitkahl, ervidkahl, and you will find my books and my Twitter core stat too.

Arvid: 17:00

If you wanna support me and the show, please subscribe to my YouTube channel, get the podcast in your player of choice, and leave a rating and a review by going to rate this podcast.com/founder. It makes a massive difference if you show up there because then the podcast will show up in other people's feeds, and that's where I would like it to be. Any of this will help the show. Thank you so much for listening. Have a wonderful day, and bye bye.