With the rise of ChatGPT, I got really excited to build my own AI business. I was not the only one. As a part-time indie hacker, I faced the daunting challenge of competing against fully dedicated and well-financed competitors eager to capitalize on the emerging AI revolution.
After some time, I realized that it was impossible to continue the business in terms of time. The words of Henry Ford echoed in my mind:
“Failure is simply the opportunity to begin again, this time more intelligently.”
But I couldn’t bear the thought of all my hard work going to waste. Too many side projects have already sunk into oblivion. That’s when I decided to sell the business.
How It Started
Earlier this year, like so many, I was infected by ChatGPT fever.
As a developer, you really couldn’t help but try out the OpenAI API to develop your own product. And it was so easy: Generate an API token at OpenAI, read up a bit on what tokenizers are. Learn how vector databases like Pinecone work, and off you go.
My idea was to create a platform that enables companies to effortlessly design a chatbot customized to their needs. This chatbot would possess comprehensive knowledge regarding their website and give precise answers to any related question. That’s how Clever Chat was born.
Relatively quickly, I had the first prototype on clever-chat.ai and was deeply impressed by the chatbot’s accurate answers when testing it for several websites.
When my initial functional MVP was up and running, March had already arrived. However, those who have published a SaaS product understand that there is still a considerable amount of work that needs to be done, including legal pages, payment providers, and other requirements.
Finally, in May 2023, I was ready to publish my product. Unfortunately, the naive-believed rush for my product failed to materialize…
Why I Decided To Sell
When the first MVP was ready in March, I felt the urgency to launch the product as soon as possible to not miss out on the ChatGPT hype.
Competition
Although I strongly believed in my idea, I knew I couldn’t be the only one with a similar product. In the following months, competitors started emerging, like Chatbase.co or SiteGPT.ai, who essentially built identical products.
As I had hoped for my product, users flocked to these competing products. Within weeks, these services amassed thousands of users. I felt the pressure to release my product as soon as possible.
Given my limited time for this side project alongside my full-time job, it took a while to launch the product by the end of May.
Unfortunately, the anticipated rush for my product never materialized. I lacked the audience and reach to promote it effectively. Moreover, my limited marketing and sales skills hindered its success within such a short timeframe.
Abandonment of other projects
The situation with Clever Chat differed from my other side projects, such as the PDF & Web Highlighter Chrome extension with over 70,000 active users.
With Web Highlights, I had no time constraints, allowing me to design a solid product and implement SEO strategies over a long time. I could work on them whenever I had spare time.
With Clever Chat, I knew I needed early adopters quickly to stay competitive. However, this self-imposed pressure affected my other side projects as well.
Months went by without publishing an article on Medium. The time I used to allocate for writing in the morning was now dedicated to developing the product.
Additionally, development for Web Highlights had to be put on hold temporarily.
This realization became one of the primary reasons for my decision to sell Clever Chat. I am passionate about writing technical articles on Medium and helping others understand web development.
“Success is not the key to happiness. Happiness is the key to success. If you love what you are doing, you will be successful.” — Albert Schweitzer
Furthermore, I have a profitable side project with Web Highlights, which holds significant importance to me and requires constant development. I envision a tremendous potential for Web Highlights and aim to reach the next milestone of 100,000 users, albeit recognizing that such projects require time and nurturing.
Since I decided to sell Clever Chat a few weeks ago, I have found much happiness in having more time for my other projects.
This reassures me that my decision was the right one.
How I Sold
Upon deciding to sell my AI business, a wave of relief washed over me initially. However, it didn’t take long for a series of questions to flood my mind:
Where should I seek potential buyers for my business?
Will there be interested buyers in acquiring a SaaS without revenue?
What is the valuation of Clever Chat?
1. Where should I seek potential buyers for my business?
In the past, I had heard of acquire.com. For me, it looked like they were the market leader in selling SaaS.
Putting my listing out there was easy and didn’t come along with any costs, but it needed to be reviewed by the “curation team.” After only one hour, I received an email stating that my “startup is not a good fit” as it was not generating any revenue from customers.
I was surprised as I had come across similar listings on their website that didn’t generate revenue.
However, instead of challenging their decision, I explored other platforms. That’s when I came across Flippa.com, which appeared to hold promise as it featured numerous smaller SaaS ventures with no revenue generation.
Placing my listing on Flippa was a straightforward process. In contrast to acquire.com, there was a pre-listing fee involved. I had to pay $49 to Flippa to make my listing visible online.
Additionally, Flippa would charge a 5% success fee if you manage to sell your service through their platform.
2. Will there be interested buyers in acquiring a SaaS without revenue?
This question was answered very quickly for me. After my listing was online at Flippa.com, I had several interested parties and inquiries on my listing after only a few hours.
In a short span of time, I accumulated over ten potential buyers, although the seriousness of their interests varied. It’s worth mentioning that I came across a few warnings online about occasional scammers on Flippa.
So be careful.
3. What is the valuation of Clever Chat?
That was probably the hardest part for me. On the one hand, Clever Chat wasn’t generating any revenue yet, but I still wanted to be compensated somewhat for the time I had put into developing the product.
Of course, I had a lot of fun and learned a lot, but I always try to avoid developing projects for weeks without releasing them.
Failing Forward: The Importance of Publishing Your Side Projects
*Developers often take on side projects as a way to explore their passion for programming and learn new technologies…*levelup.gitconnected.com
My goal was to get at least $5,000 for Clever Chat, so I set it online for $7,500.
When you consider the tax deductions, transaction fees, etc. this is a nice amount, but broken down to the hours, it’s not that much.
Nevertheless, I would be content to view my time spent not only as a valuable learning experience but also as a modest financial gain.
How Much I Sold For
After a few conversations with potential buyers, I settled on a purchase price of $6,000 with someone from Chile.
I might have gotten more from other buyers, but the process and chemistry with the buyer were just right. The handover process went very easily due to the harmonious and trusting communication.
We also agreed that I would continue to support him as a freelance developer. These conditions were perfect for me, as I had sold my business and also had the chance to continue to develop it myself.
I am really looking forward to our collaboration, and I am glad to have found such a nice buyer with whom I am in daily contact.
Final Thoughts
The idea of profiting from the AI hype in recent months was held by many. The temptation to quickly set up a B2B and make it big is tempting, but it also takes time.
I have learned a lot while developing Clever Chat. However, at some point, I realized that I didn’t have the time to continue a B2B in terms of sales and marketing.
Now I am extremely happy and also proud to have sold my first SaaS business. Having the opportunity to further to support the buyer as a freelancer in the development makes me happy as well.
Thanks for reading!
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