2025-05-04
The Perfect Business
Fairy Tales
If you were going to start a company, what qualities would you look for in an ideal business model? Running your own company has a lot of downsides, so what would help ease those pain points? Let's take a look at the qualities of the perfect business:
- No investment requirements. If you run a business, many of them require capital. A perfect business could be started in a garage, or better yet, a studio apartment. Garages are pretty hard to come by nowadays.
- No board of directors. Running a business is about freedom; you don't want to trade your 9-5 boss for multiple 24-7 bosses.
- No employees. Managing people is an entire profession of its own. You want to manage a business and not be distracted by petty social disputes.
- No overhead costs. Managing your supply chain takes time. Managing your expenses takes time. You should be able to run your business without needing to rely on others.
- A flexible schedule. You should be able to take a week off if you need to, and not have to put out fires when you return.
- Fixed labor costs. There should not be a direct correlation between the amount of labor involved in running the business to the amount of revenue it brings in.
- A large market. You should have such a large pool of potential customers that competition will not bother you or your competitors.
These requirements might sound unrealistic, but surprisingly, a few types of business models come pretty close to fulfilling them. There’s one type of business, however, that checks every box, and is increasingly more relevant in the current economic landscape.
One-Man Software Companies
You might have already guessed where I was going with the introduction, but I believe that solo software developers are powerfully and uniquely positioned as potential entrepreneurs. Anyone who knows how to code can build a "Perfect Business", and the meaning of "knows how to code" is getting fuzzier every day thanks to LLMs. Let's take a look at how single-employee software companies fit these requirements:
No investment requirements
You can build a software product with a $500 laptop which you probably already own. As long as you can afford food and housing during the time it takes to build the product, you're good to go. Some might argue this still counts as investment, but it’s minimal compared to traditional businesses. I would recommend having a regular job while you're in this phase to offset your living expenses.
No board of directors
If you're not taking investment, you don't need to give away board seats!
No employees
This really depends on the type of software you decide to build. If this factor is important to you, make sure to choose a product that doesn't require a lot of customer service. Something that is self-service and well-documented would be ideal.
No overhead costs
Unless you're selling software that runs locally or on-prem, you will probably need to pay for servers. However, the costs of servers scale with the amount of customers you have, so when you have no customers, you pay almost nothing per month. When server costs go up, so do profits!
A flexible schedule
Once you have an application that is online and runs relatively smoothly, software requires very little day-to-day maintenance. You will get bugs, but unless you're relying heavily on LLMs to write your entire application, critical bugs should be an uncommon occurrence. This should leave you with time for vacations or personal emergencies, and even if something critical does come up, it usually can be solved remotely.
Fixed labor costs
I would estimate that 80% of the labor involved in creating a software company is tied to building the product. This is all front-loaded labor, which is frustrating to do when you have no customers yet. However, once the product is essentially completed, the work turns into marketing, bug fixes, and customer support. None of these are critical to the functioning of the company, and some developers will even let their product go into "zombie mode", where they stop spending any time on it at all, but where it's functional enough for customers to continue to use it.
A large market
Like the "no employees" rule, this also depends on what you decide to build. However, I would recommend a large market because it means that there's a lot of demand for whatever you make, and it's easier to differentiate your product from others on the market. You're not trying to be Mark Zuckerberg here; you're just trying to make a living.
Nothing New Under The Sun
If you're familiar with the term "Indie Hacking", you'll know that this is not some revolutionary idea. Plenty of developers are already doing this, from Pieter Levels, to Mark Lou, and many others. To be fair, those examples are what I would consider "Classic" indie hackers, who used the idea of a one-man software company when it was still fresh to surf the wave of virality to the island of profitability.
What I am proposing is something much less glamorous. You don’t need followers or fame to start. Pick something simple. Solve a problem. Let people know about it. This is what every other company in existence is doing already, but you can do it faster and more effectively, because you are one person, unburdened by bureaucracy. And you can start today.
Why Now?
Software developers have always been able to build software; that's what they do. So why is now the perfect time for these developers to try their hand at starting their own companies?
First, the tech industry has never been less stable for the average employee. In the past, when compared to entrepreneurship, the 9-5 job has always had the advantage of stability, but that's no longer the case. In fact, the bigger the company you work at as a developer, the more likely you are to get swept up in a mass layoff in an effort to appease the aforementioned board of directors. If the risk is the same either way, why not go for the bigger reward?
Second, LLMs have made it incredibly easy to build software, and fill in the gaps in the knowledge required to run a business as well as build a product. You can have AI generate boilerplate code, ad copy, or even do a bit of customer service!
Third, the approach or onset of an economic recession is making existing tech companies tighten their belts. They're less able to give away free products paid for by VC investment money; the classic tech business model of undercutting existing competition with subsidized products to capture the market is no longer possible. We're slowly moving towards free-market capitalism in the tech industry again, and this gives smaller tech companies a fighting chance to compete. So if you have the skills and the drive, get out there and start fighting!