The Save-Money-or-Make-Side-Income Filter
In a downturn, only start businesses that either save companies money or earn individuals side income, and ignore everything that only helps someone grow.
- Difficulty
- Easy
- Time to result
- ~months to results
- Steps
- 5
- Confidence
- 88%
Rief offers this as one general framework people should use when entering bad economic times. His observation is that the buying behaviour has flipped 180 degrees. When capital was abundant, money did not matter to companies and the only question was how you help them grow. Now money matters, so the only two reliable value propositions are helping a company preserve money or helping an individual earn side income. He also inverts the labour trade: people used to trade their money for other people's time, and now they trade time for money. His preferred instantiation is that what is old is new, meaning unglamorous agencies and niche marketplaces come back into vogue. He points at outsourced talent, where he became a co-owner of a business called Oceans that sources talent in Sri Lanka, including people trained at Big Four firms like Ernst and Young and Deloitte, and places them into tech startups. His reasoning is that a company that would have hired a full-time copywriter or marketer in 2021 without thinking probably only needs 25 to 30 hours a week, and is now genuinely questioning every FTE. That gap creates room for niche marketplaces, such as a content marketing marketplace for B2B companies whose stock is down 90 to 95 percent but who still need content. He is explicit that these are not venture-scale, and that the point is to bootstrap them.
Origin
Rief formed the filter while being pitched a stream of marketplace investment opportunities in late 2022 that were profitable but not venture-scale, and while co-owning Oceans, which he watched go from zero to seven figures of ARR in about eight months.
Core principles
- 01Downturn buyers pay to preserve money, not to chase growth
- 02Individuals will pay for or work for side income when jobs feel fragile
- 03What is old is new, so unglamorous agencies and marketplaces come back
- 04Companies now question every full-time hire, which creates fractional demand
- 05Not venture-scale is a feature if you intend to bootstrap
How to run it
- 1
Apply the two-outcome test to every idea
Force each idea to answer whether it saves companies money or earns individuals side income. Rief's position is that in bad times these are the two propositions that reliably get bought, and that growth-only pitches are a leftover from the abundant-capital era.
Watch out Ideas that only make sense when capital is free will keep looking attractive to you long after the market has stopped paying for them.
- 2
Look for the role companies over-buy full-time
Find the function, such as a copywriter or marketer, that companies hired as an FTE in 2021 but genuinely only need for 25 to 30 hours a week. That mismatch between hire size and actual need is the wedge for a fractional or marketplace service.
Pro tip Rief's read is that companies are now questioning FTE headcount in a way they simply did not in 2021, so the conversation is much easier than it used to be.
- 3
Pick one very specific target customer
Rief's stated reason these marketplaces work is that you pick a very specific target customer. His example is a content marketing marketplace for B2B companies whose stock is down 90 to 95 percent and who are cutting FTEs but still need content.
Watch out A generic talent marketplace is impossible to get off the ground. Specificity in the niche is what makes it feel easy from inside the industry.
- 4
Find a sourcing advantage others cannot copy
Oceans sources talent in Sri Lanka, where the presence of Big Four accounting firms means you can poach people trained by Ernst and Young and Deloitte rather than only from local businesses. The moat is in the supply side, not the software.
Pro tip Assess the supply pool by what institutions have already trained the talent, since that is what a buyer is actually paying for.
- 5
Bootstrap it and accept it is not venture-scale
Rief notes he is offered these opportunities constantly and they are just not venture-scaled, so the right structure is to bootstrap the marketplace. Toptal is his reference point, having reached north of $100 million in net revenue on roughly $800,000 to a million raised.
Watch out Raising venture money against a service marketplace imposes a growth curve the business model cannot support.
In the wild
Rief became a co-owner of Oceans, which recruits talent in Sri Lanka, including finance and operations people trained at Big Four accounting firms, and places them with tech startups that would previously have hired a full-time employee for the same work.
→ The business went from zero to seven figures of ARR in about eight months, with both revenue and gross margins at seven figures.
Sam Parr raises Toptal as the model, a developer marketplace that raised only around $800,000 to a million dollars and essentially bootstrapped from there, becoming controversial over the handling of its convertible note.
→ Toptal reached north of $100 million in net revenue, which Rief and Parr treat as evidence that niche marketplaces can be extremely powerful without venture scale.
Common mistakes
Still pitching growth in a cost-cutting market
Rief describes the shift as a 180. Companies that previously only asked how you would help them grow are now asking what you cost, so a growth-only pitch is answering a question the buyer has stopped asking.
Building a generic marketplace with no niche
Rief says marketplaces seem hard to get off the ground but are not that hard if you already work in the industry and the topic is super niche. Skipping the specific target customer removes the exact advantage that makes the idea viable.
Treating a service marketplace as a venture bet
Rief is explicit that the opportunities he sees are not venture-scaled. Funding them like software forces growth targets the unit economics cannot carry, when the honest path is bootstrapping to profit.
Is it for you?
Best for
Bootstrappers picking what to build when capital is expensive and budgets are being cut
Not ideal for
Venture-scale founders chasing markets that require abundant cheap capital to exist
From the transcript
“when you're in shitty economic times like we're going into now I think the framework you should use is you should look to save companies…”
“I think now companies are really questioning FTE right do you need a full-time hire and so you can create these niche marketplaces”
“the one I'm now co-owner in has gone from zero to seven figures of ARR in like eight months right you pick a very specific…”
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Austin Rief