How Opportunity Sizing Works
In each newsletter, I break down each opportunity into one of four categories. I do this so you have an easy way to address what type of opportunity is right for you and aligns with your goals, experience, etc.
The different levels are an abstraction on the difficulty of executing on the idea and the amount of potential MRR the idea has (these tend to be correlated). In this quick post I'll walk through all four types so you have an idea of what I mean by each:
Level 1: Micro-SaaS
Micro-SaaS is a term first popularized by Tyler Tringas from The Micro-SaaS eBook. In it, he describes Micro-SaaS as follows:
“Micro” just means small. A SaaS business targeting a niche market, run by one person or a small team, with small costs, a narrow focus, a small but dedicated user base and no outside funding. Hence, Micro-SaaS. I think this is a great definition. A Micro-SaaS company is a SaaS company that niches down so small that there isn't really any competition. To find an opportunity like this normally means that there isn't much money in this niche, relative to much bigger opportunities. This is actually a good thing, because it keeps away big players with lots of money who would otherwise be able to out-compete you.
A typical successful micro-SaaS company can expect their average revenue to fall in the $10k - $20k MRR range. While it certainly doesn't mean that micro-SaaS companies can't go higher than that, that is the average I consider when I list an opportunity as a micro-SaaS opportunity.
In addition, Micro-SaaS products are usually very quick and easy to create. While bigger products revolve around multiple features and integrations, it's often the case that a micro-SaaS is simply an integration that solves a need for a specific group of people.
Level 2: Indie Hacker
The term Indie Hacker, popularized by the indiehackers.com website, is typically a bootstrapper ("indie") who is building a technical product ("hacker"). I like to use the term Indie Hacker to refer to a product opportunity that's larger than a micro-SaaS, but still revolves around finding a deeply unserved niche that bigger players can't or won't directly compete in.
These opportunities typically fall in the $20k - $50k MRR range, and can often extend beyond that into the six-figure range.
Level 3: Bootstrapper
As you probably know, bootstrappers are entrepreneurs who rely on self-funding to build a company. The name itself doesn't imply a niche like micro-SaaS or Indie Hacker does, and a bootstrapper often is willing to take on a challenging project that more directly competes with the bigger names in the market.
While all bootstrapped opportunities will initially rely on leveraging an unserved audience, it's often the case that the opportunity will pit you squarely against the toughest challenges in your market, once you've grown.
I consider a bootstrapper opportunity to be anywhere in the range from $50k MRR all the way up to $1M MRR.
Level 4: Ambitious Bootstrapper
Ambitious bootstrapper opportunities are opportunities where the market itself is stagnant. If the major players are out of date, unable to innovate, and the barrier to entry is low enough, an ambitious bootstrapper can strike with the right combination of good execution and a bit of luck.
I don't often write about Level 4 opportunities, since you'll often be competing immediately with the bigger companies in the market. However, if there seems to be opportunity of innovation, I occasionally am willing to write about these opportunities.
I do not recommend these opportunities to people who haven't already built something before, since you'll need fantastic execution to pull this off.
These opportunities don't have a typical upper bound. MRR can range anywhere from $1M to $20M.