11 Years Building SaaS Products: How We Got Here?
5 months ago, my two friends and I quit our jobs to start a new startup. In this newsletter series, I write about our journey, from brainstorming and validating product ideas without raising funds (yet) to hopefully building something big. I'll try to cover our methods, the way we run all parts of building a startup from 0 to 1, key lessons, wins and general updates, along with the latest tech breakthroughs in AI and SaaS that could inspire new startups.
How we met & our early days
I met Lukas in primary school when we were seven years old. Ringaudas was a smart kid who participated in informatics, mathematics, and physics olympiads - science competitions for high school students. He met Lukas at one of these events when they were 12. We’ve been friends and co-founders for 12+ years already.
As a curious kid, I quickly got bored of gaming and started exploring the internet. At the age of 12, I discovered local internet business forum Uzdarbis.lt, which was very popular in Lithuania at the time. It opened my eyes, I realized there are so many interesting things on the internet besides gaming and I can even make money there! I started experimenting with different ways to make money, some of which were quite successful, especially for a kid.
In 2010, I got into e-commerce, using Alibaba and Tradekey as my main platforms. I started by selling various products sourced from China on local online marketplaces. Lukas, intrigued by my hobby-hustle, was building websites and Minecraft servers at the time. We soon decided to start Getpower, a direct-to-consumer brand selling powerbanks and phone accessories.
We had lots of enthusiasm but no experience in building an e-commerce business. Despite this, we managed to sell over 800 powerbanks, work with Instagram influencers before they were called that, build our own e-commerce platform, and run all operations with just the two of us. Although we didn't lose our invested savings (around $2000 at that time), we also didn’t grow the business into something more serious.
SearchNode
In June 2013, while networking in the startup community event, I met 3 guys who had an idea for SearchNode but lacked the time and enthusiasm to work on it. They suggested us to work on it if we liked the idea. At 16, Lukas and I saw this as an opportunity to build a serious software product. But we knew we needed help with the complex tech, so Lukas suggested bringing in Ringaudas, his friend at the time and a super smart programmer. He was right. Ringaudas joined us, and we started working on SearchNode, which was acquired by Nosto eight years later after a crazy journey.
I’m proud that after 11 years, SearchNode remains a successful, growing, and profitable business. We started with the idea of creating an easily implementable search engine for online stores to enhance the search experience for shoppers. Over eight years, we refined our value proposition and positioning multiple times, built a solid product, and became one of the best solutions for mid to lower enterprise-size e-commerce businesses in the market.
The first four years saw slower growth as we learned a lot about SaaS business, go-to-market strategies and methods, experimenting and failing multiple times. The next four years were our growth stage. We found product-market fit in our niche, landed big clients, and grew the team to 20 people at its peak while staying profitable. We bootstrapped the business to over 1M in ARR, had lots of fun, made friends for life, learned a ton, and most importantly, became even hungrier. We felt we could build a business 100 times larger.
In 2021, we experimented with different sales and marketing strategies to scale the business to 10M ARR. Our sales cycle was long, taking 6-12 months to close deals worth 50k-100k annually per client. We evaluated our growth experiments by how many new deals entered the pipeline, but pipeline isn’t revenue, and it takes time to close deals. Our brand became well-known in the market, and we saw potential to build a 10M+ ARR bootstrapped SaaS business. It would just take time and new bets.
Acquisition
Around the same time, we started getting attention from large enterprises, competitors, and PE funds interested in M&A opportunities. We were curious and talked to most of them, but we didn’t intend to sell SearchNode. However, Nosto was straightforward - they were looking to acquire a search company and were ready to make an offer soon.
We quickly found a great fit: they needed a search product and a strong team behind, and we needed a growth machine and a way to enter the US market. The potential merger idea offered growth opportunities for our team, a wider product offering for our clients, and a chance to capture a large share of the search market with Nosto. Plus, we were curious to work elsewhere for the first time and gain valuable experience for our next startups. Negotiating the valuation and conditions took some time, but we didn’t have much to lose if we didn’t sell and could stick to our desired expectations.
We spent two great years at Nosto, met wonderful people, and accomplished a lot. We integrated teams, products, and businesses, and launched Nosto Search, which became the fastest-growing new product within a company. But our entrepreneurial spirits didn’t fade - they grew stronger.
Our new journey in the era of Gen AI
The decision to leave Nosto (and SearchNode) and start something new wasn’t difficult. Our team at Nosto was doing well, and we had full confidence in their ability to continue without us. We felt self-confident and hungry to build new companies. Breakthroughs in LLMs opened many new opportunities, especially given our experience with search and language models. We had also saved enough money to live on for a while and self-fund the beginning of our next venture. Most importantly, we felt it was our time to shine and prove we could build something truly big. The next Lithuanian unicorn? At the very least, a profitable 10M+ ARR business.
We know finding product-market fit is tough, and startups often fail. But we’re still the same brave, hungry, and ambitious guys who started a business at 16 without any experience. We’ll adapt to uncertainty and embrace being out of our comfort zone. The biggest risk is not taking any risks. Our meaningful mission and having each other by our sides give us the courage to go all in.
Next article
In the next article, I’ll cover our method of building from 0 to 1. How we generate product ideas, tactics we use for their validation, what we prioritize and sacrifice in this stage. I’ll even share our custom built Google Sheets templates and photos from our office's whiteboard with the some processes we use.
Currently planned articles schedule:
Our story and how we got here ✔️
Our method and principles of building from 0 to 1 (—> coming out early next week)
Building Flowtest.ai - our current product idea we are working on
2 ideas that we have already validated but decided not to continue
I’d love to hear your thoughts and questions in the comments.