In less than 4 years, I turned a $1,000 investment into 10 million dollars.
And today, I’m going to share the exact playbook I used.
Back in 2018, I was broke and decided to take a leap of faith and invest all the money I had into one idea: a SaaS business.
In one year, I reached two hundred and fifty thousand dollars in ARR.
Then $1M in 2 years.
And $10M in less than four years.
At 29, a few years into building my company, I decided to sell 20% of it and became a multi-millionaire.
As I’m seeing a lot of misleading content out there on how to make money, I wanted to make this one to share with you how to really become a millionaire in your 20s.
The difference with all of the other ones?
I’m not talking about how to reach $1M in revenue with e-commerce or drop shipping without making any profit because you’re spending everything on ads…
In this article, I’m going to explain to you how I was able to get multi-millions of dollars in my personal bank account and become a millionaire before 30 years old.
And more importantly, I’ll present you how I’d do it if I had to start all over again.
How I became a multi-millionaire in my 20s?
The biggest misconceptions of the SaaS business model
Before we dive deep into the subject, let’s debunk a few misconceptions:
1- “You need a lot of money to start a business”
Even if 99% of people will tell you to raise money when starting your business venture - they’re wrong.
In 2018, I started my company with $1,000 and didn’t raise funds.
Everyone told me that I wouldn’t succeed in growing my company without money.
In 5 years, I grew to $20M in ARR, sold 20% of my company for $30M at a $150M valuation, and acquired 2 other SaaS.
Having no money at first will force you to focus on what matters the most: the success of your customer and the financial profit you’re making.
The reality is that many startups are using the money they raised without making any profit and end up bankrupt.
2- “Building a SaaS costs a lot of money”
In reality, building a SaaS costs almost nothing.
For less than 100 bucks with tools like Bubble, Airtable, or Webflow, you can create a SaaS company easily.
And, over the last few years, the SaaS market has made a lot of millionaires who self-founded their companies.
3- “Raising $1M makes you a millionaire.”
A lot of people think that when they raise $1M pre-revenue, they become millionaires.
But that’s not the case.
Let me explain:
The money you raise is not your company’s revenue or value.
It’s money investors will give you to fuel the growth of your company because they believe you can make them more money.
Meaning: they expect a return anywhere between 2 to 100 times what they gave you.
So if you raise $1M, investors expect you to grow your company and sell it so they can get between $2M and $100M of cash return.
And whether or not you succeed in making them more money, they’ll be the first to get their money back.
Basically, they’ll call for the “preferred shares”, which means that if the company is sold, they’ll get the total of the money they invested first.
Let’s say they invested $1M for 20% of your company. If you sell for $1M, the investors will call for the preferred shares to get back the initial $1M they invested.
Even though they only had 20% of your business and you had 80%, they’ll still get their $1M and… you’ll get $0.
That’s why not raising funds will give you full freedom and ownership of your business. And if you own 100% shares of a profitable SaaS at $500k in ARR, you can become a millionaire.
How can you make a million dollars with a SaaS?
There’s a rule of thumb that says that profitable SaaS businesses of that size are sold between 2 and 4 times their ARR.
And since most people will tell you that your ARR is equal to 12 times your MRR, if you’re generating $40k in monthly recurring revenue, your annual recurring revenue will be $480k.
Meaning that you’ll be able to sell your SaaS between $1M and $2M.
And since you don’t have any investors, you’ll get 100% of the money (minus taxes 😅.)
But keep in mind that the numbers I gave you are based on some industry standards and that the price of a SaaS depends on multiple factors such as:
- the revenue
- the yearly growth rate
- the industry and market
- the retention and churn
- the average customer value
- etc, etc.
So you’re probably wondering how exactly you can sell your SaaS company, well, keep reading... 👇
My secret playbook to become a millionaire in your 20s
1- Pick a crowded market
It might be counterintuitive to pick a crowded market when everyone is telling you to pick an empty market, also called “blue ocean”…
But here’s the thing:
When I started lemlist in 2018, I picked the saturated market of cold emailing.
Everyone I met told me this was a stupid move.
Most founders who start their business think they need to reinvent the wheel because the competition is too fierce in the existing ones.
In reality, picking a new market is sometimes more risky.
Because a crowded one means that there is a high-demand problem to solve.
And if you’re able to offer a solution to solve the problem in a unique and very efficient way… you basically have a million-dollar opportunity in your hands.
If you plan to start a SaaS and don’t know the best market you could pick, I listed a few for you:
- Social Media Marketing
- Email Marketing
- Project Management
- ATS (Applicant tracking system)
2- Build vertically in the market
Building a SaaS “vertically” means that you’ll solve a specific problem for a specific type of person.
And why should you do that instead of targeting everyone?
Well… it’s way easier to focus on a specific type of customer than on everyone.
Let me give you an example:
Let’s say that you’re an entrepreneur and you have to choose between 2 banks.
Bank A is the bank for entrepreneurs.
Bank B is the bank for everyone.
Which bank would you choose?
I guess you’ll go for Bank A because you would automatically believe that they are solving specific problems for entrepreneurs.
When you focus on a specific niche, you’ll be able to create unique and valuable features to help them solve a problem.
3- Create a community
When I started lemlist, I decided not to raise funds and bootstrap my business.
So I had one priority: making profit as fast as possible… or else my business would die (and my girlfriend would kill me…)
If you want to know more about why bootstrapping is the best way to grow a profitable business, check out this video I did on the subject:
What did I do?
Well, since I didn’t have paid ads or influencers to promote my product, I built a community around sales automation.
The advantages of a community?
- you bring people with the same expertise together and push them to help each other
- you establish yourself as a thought leader in a specific field
- you get tons of potential beta testers and clients for your products
- it becomes a defensible asset because people can’t copy or steal a community.
- and… it’s free
That’s how, in just a few years, I gathered 20,000 cold emailing experts, and potential customers for my product, in one single place.
Now, let’s see how you can build it 👇
Building a community is based on building trust with people.
And to build trust, you follow this very simple framework:
Let me give you an example with the lemlist family I created back in 2018:
First, I saw that a lot of people had very bad reply rates to their cold emails.
Since I knew that they needed help crafting better emails that would help them generate more revenue, I offered solutions to their problems based on my own experience.
Then, I showcased how my products could help them solve their problems even more efficiently.
Thanks to the community I created, I identified that people had low open rates on their campaigns because they struggled to get their emails delivered.
I wanted to find a solution to help people reach the inbox. That’s why I created the very first email warmup tool on the market, lemwarm.
And because of the expertise I had demonstrated in the community, people trusted me with this new tool - and even showed a lot of support:
4- Grow to $40k MRR
Based on the example I shared with you earlier, you need to get to $40k in MRR if you want to sell your SaaS anywhere between $1M and $2M.
So now, how do you get to $40k in MRR?
Let’s say that to use your product, each user has to pay $20 per month.
To get to $40k per month, you’ll need 2,000 users.
But let’s say that you discounted your product in the early days (something a lot of founders do), I’ll add 25% more users for precaution to the final count and say you need 2,500 customers.
Okay great - we’ve got the numbers of users you need… but how do you actually find them?
The first thing you can do is to create your personal brand using the trust framework I talked about before.
Let me give you an example of a great personal branding strategy that follows the trust framework:
Justin Welsh is a solopreneur posting content on LinkedIn.
First, who is he targeting?
he’s targeting other solopreneurs who want to grow on LinkedIn and grow their businesses.
Second, how does he convey his message?
He’s showing how he’s building his 1-person business to $5M in revenue (basically the dream every solopreneur out there wants to reach.)
Third, how does he establish his credibility?
He’s using his strong following and showing the world how he’s making money through his personal brand and his course.
Once you’ve built trust by sharing content that solves a specific problem, then and only then you’ll be able to sell something to your audience.
You can also start on Twitter like Tibo, YouTube like Ali Abdaal or Alex Hormozi, Instagram like Sahil Bloom…
But keep in mind that LinkedIn is the best place for SaaS business founders.
The second hack is to be featured on podcasts.
Podcasts are basically free marketing channels… but it takes a lot of time to create one.
How do you reach a larger audience through other people without losing much time, then?
Well… you reverse the process by trying to appear on others’ podcasts that have an audience of at least 100 people.
This is a great way to reach a larger audience and improve your SEO ranking, as you’ll get some backlinks to your website.
Why only a hundred?
Because it’s useless to try to reach huge names like Joe Rogan or My First Million when you don’t have much credibility or a huge following yet.
You need to follow the stairs tactic: picture a stair - each step corresponds to an influence stage.
The first step is people who don’t have much influence yet (people who haven’t started building their audience or business.)
As you go up the stairs, you’ll find people with larger and larger influence (because they have big audiences and businesses.)
And the highest step is where you have the most successful people out there (think of Elon Musk, Jeff Bezos, Bill Gates, etc.)
You can only reach out to people who are more or less at the same step as you - otherwise, you probably won’t get an answer.
And as you’ll grow, you’ll be able to reach bigger and bigger names.
Here’s how I was able to get featured on other people’s podcasts in the early days of lemlist.
I was sending this email template:
Here’s why it worked: I used the value equation to write my email.
The dream outcome was stated in the subject line: a new interesting story to tell to his audience.
Then, I built trust using the trust framework:
1- This starts with the targeting. I identified a common problem podcast creators encounter: the difficulty of finding new guests and new stories to share in their episodes.
I used this pain to trigger his attention through an intriguing subject line: “I’ve got a story for you.”
And I made sure to explain myself later on in the email.
2- This brings me to the messaging: I showcased the value I could bring to his podcast by detailing my journey in building my company.
I showed him that I had listened to his podcast by talking about a previous episode with Shawn Finder.
And then, I explained how my story would be a great fit for his podcast - and what I was planning on delivering if I had the chance to be interviewed by him.
I even added more topics I could talk about that I thought could be interesting for his audience.
3- Then, I demonstrated my credibility: I shared my LinkedIn profile and a podcast episode I had already done with a well-known entrepreneur.
And finally, the effort to achieve the dream outcome was very low: welcoming me as a guest on one of his podcast episodes.
Then, I made sure to follow up four days later with a very simple and straight-to-the-point email.
And those two simple emails allowed me to get an answer from them:
My next hack is about finding customers through your competitors’ social.
How does that work?
Well, you go on your competitors’ social media, check out their followers, and send messages to the most relevant ones.
Let me give you an example.
Let’s say you have a SaaS that helps creators send newsletters.
If you check out Mailchimp’s 260k followers, let’s say that a bit more than 1% are creators. That would be 3,000 people.
Now, you’re going to send them this DM:
And around 3% may convert to your tool.
That’s 90 customers.
If you do it with each of your competitors - you can grow a big user base fast.
The fourth hack is to build viral loops by turning your customers into brand ambassadors.
This is basically what Beehiiv does:
They have a free and a paid version.
In the free version, they add a visible link to their tool at the end of each email sent by their users.
In the paid version, they allow people to remove it.
In other words:
- if the users don’t pay, they promote their tool
- if they don’t want to promote, they pay for the tool
it’s a win-win situation for them.
Finally, you can use affiliate marketing to grow your customer base.
Affiliate marketing is about incentivizing influencers to help you scale your business
Basically, you’ll ask people to promote your tool to their audience (that can be through videos, articles, newsletters, social media posts, etc.)
And if they sell, they will get a commission.
It can be some cash per new subscriber, like what Canva is doing.
Or a percentage of the sale, like HubSpot who’s offering either a 15% recurring commission rate for one year, or a 100% flat rate on the first month’s revenue.
Or even… a car, like ClickFunnels.
That’s a great way to push people to promote your tool to a larger audience without paying them upfront.
5- Sell your SaaS
Once you have reached $40k in MRR, you can keep growing your company to make even more money, or you can sell it.
And you have 3 ways of doing so:
The first one is to sell your company by yourself by reaching out to buyers
Here’s how Laura Roeder sold her SaaS for 7-figures with cold emails.
After 6 years, her company was highly profitable, bootstrapped, and making millions in revenue… basically a very good buy for any private equity firm.
She decided to look for micro private equity firms that had previously bought SaaS businesses doing single-digit millions of ARR.
And she sent each of them straight-to-the-point emails declaring she wanted to sell her SaaS.
With that strategy, she got 3 firms to show interest in her company, and she ended up selling it to SureSwift in a seven-figure deal.
The second way is to go through an M&A firm
M&A means mergers and acquisitions. Those kinds of firms are basically third parties helping you find a buyer, and in exchange for their service, they’ll take a percentage of the sale.
That’s exactly what I did when selling my company lempod after growing it for 18 months to $600k in ARR.
While I was traveling in Europe, I met Thomas Smale, the founder of FE International, a SaaS M&A advisor.
And I started talking with him to see if I could sell my company lempod through his firm.
The advantage of a SaaS M&A is that they’ll do both the market research and the due diligence, so when they introduce your SaaS to potential buyers, they have a clear valuation of your business.
The reason I chose to go through the sale with an M&A firm is that:
1- I got help from a firm that already had a network of buyers, and that knew how to close a sale
2- I didn’t want to spend months on the process as I wanted to keep growing my main product lemlist
3- I didn’t take any risk as a business owner since I didn’t have to pay them upfront
Before going through this process with a M&A, I’d advise you to check out the firm you’re selling with, and ask for feedback from other people who sold their companies with them so you don’t have any unpleasant surprises.
The third way is to list your company on a SaaS marketplace.
Here are some examples of marketplaces you can use to sell your SaaS:
- Acquire that was created by Andrew Gazdecki for Saas owners and indie hackers
- Flippa specialized in selling startups and online businesses
- Empireflippers created to sell SaaS and online businesses
- TinyAcquisition for the smaller companies
There are multiple advantages to selling using a marketplace:
1- it’s the best place to sell your company fast when it’s not making millions in ARR yet
2- the process of submitting your company for sale is pretty easy
3- you’ll have some support to go through the sale process
4- you’ll access the marketplace’s database of buyers - which will make the sale faster since you don’t have to look for an investor
Marketplaces already helped thousands of founders sell their SaaS in a few months.
But, to me, the biggest disadvantage of using a marketplace is that the sale is public, meaning that everyone can see that you’re selling your SaaS and at which price.
When you’re going through a private equity or a M&A firm, everything is done behind closed doors.
And there you have it, the perfect plan to become a millionaire in your 20s.
I hope it helped! Don't hesitate to check out other articles to learn how to grow a profitable SaaS 🚀
Peace love & profit 💰