Kortex: The Genius Way Dan Koe Leverages His Audience To Launch A SaaS

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Backstory

When he got started, Dan didn’t realize how complex and costly building software can be and many non-technical founders fall in this trap after investing 2-3x more than the initial budget they planned or were told.

For example, Kortex is technically just a note-taking app.

But one of the challenges is finding ways to reference multiple pieces of content you either wrote in the past or did some research on.

There are so many ways you could do something like this and you have to go through several rounds of ideation and iteration to come up with the best UX you can.

Dan realized how most of us are taking the simple apps we use every day for granted.

Unless you understand the inner workings, you just wouldn’t know.

Even so, he decided not to go the no-code route (which is the right choice because even if you can start fast, you won’t be able to innovate as much).

That puts his burn rate at about $30,000/week (roughly $1.5 million/year).

For most of us, this is a huge investment, but it’s how much you can expect to pay for a world-class team and it’s why founders go after VC money.

It’s the opposite of a Micro SaaS, of course.

Costs could definitely be much lower if Dan didn’t recruit top talent and chose to go the usual route of launching an MVP he’s not proud of, but he doesn’t exactly want to blindly follow other people’s paths.

It actually makes perfect sense in his case and you’ll see exactly why because this is pure genius.

In the process, Dan Koe learned a few important lessons.

Hire “high-agency“ individuals

If you’re non-technical, it’s very important to get an A-player Co-Founder that has product management experience.

This person will be able to attract the right specialists on your team.

A very important aspect is experience in a startup environment because it’s very different from big tech.

Another point is to make sure your Co-Founder is passionate about the problem you’re solving and ideally has lots of domain experience as this will improve your chances of building the right product.

Dan’s Co-Founder, Matt, ticked all the boxes because he was trying to build a second-brain by trying apps like Logseq, Obsidian, Notion, Rome, and so on, but none felt quite right because of the required workarounds.

This is actually a great sign: when people are going out of their way to build workarounds for problems, means they want it solved.

Specifically on this second-brain topic, I even purchased a Notion template from Thomas Frank, but I can definitely agree with Matt that it’s still awkward when it comes to referencing collected knowledge easily.

Matt and Dan met and while talking, found out they were both trying to solve this problem and decided to build Kortex together.

But for this endeavor, they needed a team and not just made up of highly intelligent individuals, but “high-agency“.

This is important because building complex software is an infinite set of design and technical challenges that you need to solve one by one.

You can’t go in with an employee mindset and expect someone to give you tasks because the problems aren’t even defined yet: you have to figure out what to solve first!

So if someone on the team is a cog in the machine, it’s not going to work. They are the ones designing the machine and one person just can’t handle it all.

It’s possible for small SaaS products, but not for something as complex as Kortex. Be ready for that if you’re looking to innovate in an existing category or create a new one instead of just building a slightly different competitor.

Be a team player

Dan Koe always used to work by himself, so this was a challenge in the beginning.

But it wasn’t much different for the team because they’re all “one-person businesses“ pretty much.

This impacts everything: from how you make decisions to how code is written and reviewed.

One challenge is communication and another is making sure what you’re doing is clear to your teammates. I can relate because I’ve had situations in the past when 2 people worked on the same exact task because communication was lacking, so this resulted in wasted time. Never a good thing.

Though as long as every member of the team wants the product to succeed, you’ll get through all the challenges that come up.

Building from scratch takes longer

Large companies have lots of building blocks prepared, but at a startup, you have to spend time building your foundation. This is work that doesn’t go directly into the product features.

Nothing is handed over to you.

But what’s important is to have fund doing it or you won’t make it.

Build your audience

Most founders don’t think about social media when starting a software business when in reality it’s the biggest shortcut to success.

Social media is how you can test ideas quickly. This turns into marketing and products that you can sell without spending money.

Because Dan Koe wrote 40,000 tweets, hundreds of newsletters and videos, he now has a bunch of data.

Writing and posting on social media gives you the privilege to skip ahead of most other businesses!

Here are the steps you can take to gain the same advantage as Dan Koe.

1. Create a topic tree

Write down your list of interests, skills, and ideas you want to talk about.

No need to be specific, but has to be relatable. Make sure you don’t niche down too far yet because you want to go broad and make your content applicable to most people.

Dan’s example is when talking about operations for founders (being a better operator in the business), you can frame it to target almost everyone because people like learning something new.

Here’s how you can position this example: if you ever plan to start a business at some point in your life, you’ll have to learn operations.

This hook allows you to reach more people and a bigger following while also hitting your target audience, the founders.

Applying this to my case: I’m writing content to help solo founders build a 6-figure SaaS, but I should frame my posts to also interest those who are not building a SaaS yet.

When writing narrow to your niche, everyone who’s not part of it will ignore your content.

But going broad and attracting people who are not in your audience gives you better distribution because they can refer you to people who do fit within your target.

If you struggle to figure out what to write, here are some examples:

• self-improvement

• health & fitness

• social dynamics

• skill acquisition

• career advice

• business

• etc.

Social media is pretty random and that’s why targeting a certain audience doesn’t work: you can’t guarantee your message will reach the right people.

The algorithm doesn’t work in your favor most of the time, so don’t rely on it.

Also when you attract a broad audience, they can become a customer down the road! That’s because people become interested in new things.

If your interest isn’t interesting to them, it’s because you’re not making it so.

2. Make noise and focus on signal

When writing content, think of it as testing ideas: the more you put out, the more data points you have.

Talk broad and allow the market to tell you what they want based on engagement. Then double-down and focus on what is performing well.

As you repeat the process over time, you can start to assume that those ideas will perform well as a digital product and/or coaching (the easy route), which you can then turn into software (the hard route) because at that point you’ll already know it’s a good idea since it’s been validated beforehand by the people who paid you money already.

You can also use all the content that resonated into marketing materials that will work better than just trying random messages through paid ads out of nowhere.

By building an audience, you have a user base from the very start.

It’s exactly how you fund your startup before building it: test ideas on social media based around the startup you want!

Dan is building Kortex for writers and creators, so he needs to test ideas related to writing, content creation, online business, etc., and that’s exactly the brand he’s been building for a while.

Create a value ladder

You want cash flow before investing money.

Best way is to come up with a high-ticket offer first: coaching or consulting where you work 1:1 with people, so you can charge thousands of dollars.

This gives you money without needing a large audience from the start.

Then productize down into a cheaper product, which is no longer 1:1, to free up more time while making more money.

As you get results and iterate on the product and create a system along the way, it’s time to create a digital product (a course), which can become hyper profitable because it helps a lot of people with proven results.

The impact of value ladder:

1. Your audience grows

2. More people can afford what you sell

3. Creates a cash flowing business at extremely high profit margins

Last step is turning that system into software that you’ll be confident you can sell from day 1 because it’s based on the pre-validated ideas and you have results to prove it.

You use the cash flow you build to fund the startup and at the same time you have a user base ready to sign up!

This way you avoid the biggest mistake that all founders make: not having traffic to get to the product they spent so much time developing.

How to fund your complex startup

Dan basically used the audience and the value ladder techniques to build Kortex and I’ll explain exactly how.

He’s got 9 people on the product and 6 creators working with him, so the first priority was generating cash flow to avoid taking on external investors or burning personal money (although he did invest $500,000 of own money as a safeguard).

At the time of writing this, the social media & email list for Kortex sits at around 10,000 people as that’s the first thing he started doing.

Sure, he’s got this shortcut because he’s built his personal brand beforehand, but that’s exactly the point.

You’re going to start from scratch anyway, so might as well follow this process if you want to ensure your success.

Kortex just wouldn’t be possible if Dan Koe didn’t stick it out with his personal brand before thinking of creating this software. Going through the whole process allowed him to be confident and have the money to get the software build started.

Digital products cost very little to build and distribute, so because Dan has built multiple under his brand, he now has the skills to replicate this for Kortex.

What he’s doing is launching an education arm of Kortex that teaches writing since the software is essentially a second-brain app for writes and creators to help write better.

Oh, and when starting out, it’s best to do this first under your personal brand rather than company brand, so here’s the full process.

Step 1: Write Content, Build a Program, and Do Client Work

You need cash flow.

When building your personal brand and testing idea with content, you’ll understand what you can help people with.

Of course, you need to get good at something before you can help others and charge money for it.

Come up with a system to guide people 1:1 with weekly calls, worksheets, and tasks to get results. Since you don’t have a large audience, it doesn’t make sense to sell a digital product yet.

You also have the option to skip client work and just focus on building an audience if you don’t need to monetize early.

For the high-ticket service, charge between $1,000-5,000 per client, depending on the value you provide, your skillset, and ability to get results.

Step 2: Get Results, Grow Your Audience, and Productize Your Offer

With a bigger audience, you now have more leverage.

Your full-time job is to improve results for the people going through your program because it’s what will lead to more customers and a profitable startup idea.

Since your audience is built around it, you don’t have to worry much about getting initial users.

Once you get enough results, turn the program into a standalone digital product at a lower price point - many people will be willing to pay the lower price for various reasons.

There are 2 routes here:

1. A cohort-based course with live calls to help guide people through the program. You’ll be able to charge a higher price for this and launch every 1-3 months.

2. A regular course where you sell the program as a pre-recorded course. The upside is you don’t spend any extra time and the downside is you launch only once and charge a lower price.

That’s where the 2-Hour Writer course falls in and it’s been iterated so much that it’s a top-selling course that does really well because it gets results and is also a great skill to learn.

With 15,000+ students in the course, it made sense to turn the system taught there into some kind of software to continue making money off of that idea.

Step 3: Build Your Startup and Repeat The Process

Here’s what you have so far if you’ve followed the previous steps:

1. social media posts to pull data from on what works

2. dozens of clients you personally helped to get better at what you do

3. hundreds or thousands of students who can benefit from your startup idea

4. a hyper-profitable digital product business with enough cash flow to fund your software and team

Congratulations! You’ve already solved the problem that most founders never do: lining up customers for your upcoming great product.

That’s exactly what Dan Koe and the Kortex team did to generate almost $760,000 under the Kortex brand before the product was even built.

Kortex University is the consulting/tutoring/coaching - the high-ticket offer - that generated this revenue!

Next up is Kortex Bootcamp, which is the cohort-based, mid-ticket offer.

Eventually, there will also be a digital product under the Kortex brand.

So this education branch is monetizing the startup before even building the software product.

It just wouldn’t be possible without first creating your own audience and no matter how long it takes, it’s truly the only way to guarantee success.

It’s happening right before our eyes.

After this deep dive, I can confidently say that Kortex has the potential to become a >$1 billion SaaS in 5-7 years if that’s where Dan Koe wants to take it. He’s got all the building blocks ready for this.

This the genius way that he’s launching his SaaS.

That’s all for today. See you next week!

When you’re ready, here’s how I can help you:

1. Roast My SaaS: I'll record a 15-minute video audit where I show you how you can turn more trials or free users into paid customers by following my PLG Playbook.

2. Starlab Zone: Get production-ready features for your app at 10x the speed of traditional software teams no matter if it's no-code or yes-code. Subscription-based or per project.

3. Fractional CTO: Guiding your product team to focus on revenue-generating work while also paying off accumulated technical debt in the process.