Bootstrapped SaaS Growth: Fix Freemium, Funnels, Plateaus

A lot of bootstrapped founders quietly run the same experiment: “If I make it free, users will come… and then they’ll upgrade.” The first half often works. The second half often doesn’t.

That gap—between signups and revenue—is where real businesses are made or broken. It’s also where AI is starting to matter in a practical way for U.S. startups: not as a magical differentiator, but as an accelerant for shipping, onboarding, and marketing operations.

This post is part of our series “How AI Is Powering Technology and Digital Services in the United States.” It builds on listener Q&A from Rob Walling (Startups for the Rest of Us, Episode 754) and expands it into a field guide for founders who want growth without VC: fix a broken freemium, tighten your conversion funnel, avoid platform risk, and understand why SaaS plateaus happen (and how to prevent them).

Broken freemium is usually a pricing problem, not a marketing problem

If you have “many free signups but not many paid conversions,” assume your free tier is doing its job too well. In other words: your product is delivering enough value at $0 that upgrading feels optional.

Rob’s stance is blunt and I agree with it: freemium is a default “no” for most bootstrapped SaaS. Not because freemium never works, but because it requires a lot of volume, careful product design, and a business model that can survive low conversion rates.

A commonly cited benchmark is that freemium conversion rates can be low single digits over long time windows (Dropbox historically talked about ~3% converting after a year). If you’re bootstrapping, you typically don’t have the margin—or patience—for that.

Three ways freemium breaks (and how to tell which one you have)

1) Your value metric is mispriced.
Your free plan limits the wrong thing. Users get the core value without hitting a meaningful constraint.

Signals:

• Heavy usage on free accounts with little urgency to upgrade
• Users saying “We love it” while staying free forever

Fix: Move the paywall to the point where ongoing value is created. If your product saves time weekly, charge for the weekly workflow—not for a feature users can bypass.

2) You’re attracting the wrong users.
Freemium can become an SEO or virality magnet for people who were never going to pay.

Signals:

• Lots of signups with low activation (they never reach “aha”)
• Support load grows while revenue doesn’t

Fix: Narrow your acquisition message and add qualifying friction: clearer positioning, stronger use-case pages, and onboarding that forces commitment to a specific job-to-be-done.

3) You’re using freemium to avoid charging.
This happens more than founders admit. It feels safer than pricing conversations.

Signals:

• No crisp paid tier rationale (“It’s just more stuff”)
• Uncertainty about who the buyer is

Fix: Interview 10 paying-equivalent prospects. Ask what the product is worth if it works. Then price a tier around that outcome.

If you already removed freemium, you may need to remove it for existing users too

A common halfway move is: “We removed the free plan for new signups, but we kept legacy free users.” Sometimes that’s fine. Often it’s a drag.

If you have hundreds or thousands of free users who don’t convert, you’re carrying:

• ongoing support and infrastructure costs,
• product decisions biased toward non-buyers,
• a false sense of traction.

The pragmatic approach I’ve seen work (and Rob has seen it too): sunset the free plan, keep a short list of exceptions for true champions (the people who drive referrals or credibility), and convert the product to a time-based trial.

A free plan is forever. A free trial creates a decision.

Free trial not converting? Stop guessing and map the funnel like a mechanic

When founders say “trial-to-paid conversion is bad,” they often jump to tactics: add a discount, shorten the trial, require a credit card, rewrite the homepage.

That’s not a strategy. That’s panic.

Funnels are mechanical. Treat them that way:

1. Measure where users drop off (analytics).
2. Learn why they drop off (conversations).
3. Fix the highest-impact bottleneck (product + messaging).

The minimum funnel you should track (even pre-VC, even tiny)

If you want sustainable organic growth, track these four stages:

1. Signup → Activation (did they reach the first meaningful outcome?)
2. Activation → Habit (did they return and repeat the value?)
3. Habit → Trial end (did they hit a natural “I need this” moment?)
4. Trial end → Paid (did the pricing + purchase flow make sense?)

A useful definition: Activation is one specific event that proves value, not “they logged in.” Example: “invited a teammate,” “connected data source,” “sent first campaign,” “published first report.”

Where AI helps in the funnel (without pretending it’s the product)

In the U.S. SaaS market, AI is increasingly used to accelerate funnel improvements:

• Onboarding personalization: generate tailored setup checklists based on role/industry
• In-app guidance: AI-assisted help widgets that answer “how do I…?” quickly
• Lifecycle emails: faster experimentation with onboarding sequences and subject lines
• Support deflection: summarizing tickets, drafting replies, and spotting patterns

The key is the stance Rob takes: AI is an accelerant, not a differentiator. If it helps you ship onboarding improvements in 2 days instead of 2 weeks, you win. If you slap “AI” onto a weak value proposition, you lose.

Platform risk is real: if you build on Notion (or any platform), plan the escape hatch

When Notion launched Notion Sites, Rob called it what it is: a threat to third-party Notion site builder products.

This is a pattern:

• Shopify adds features that replace apps.
• HubSpot expands into tools that compete with integrations.
• Notion bakes in functionality that used to require a paid add-on.

If your business depends on a platform, you are renting distribution. That can be fine. But don’t pretend it’s permanent.

How to reduce platform risk without abandoning the opportunity

You don’t need to avoid platforms. You need risk containment:

• Specialize hard: be the obvious solution for a specific vertical (not “Notion sites,” but “Notion sites for X”).
• Own a customer relationship: email list, community, templates, education—assets the platform can’t revoke.
• Create portability: export, backups, migration paths, “leave Notion” options.
• Charge for outcomes, not glue code: if your value is only “connect A to B,” the platform will eat you.

Organic marketing matters here more than founders think. Content, community, and partnerships are how you build independent demand so you’re not wiped out by a product announcement.

“Should I spin out a new vertical feature?” Usually no—monetize it inside the house

A listener described an auxiliary feature/vertical getting more attention than expected and asked whether to spin it into its own product.

Spinning out sounds clean. In practice it’s launching a second company:

• new positioning,
• new website,
• new billing paths,
• new support and docs,
• new marketing engine.

Unless you have a clear reason (different buyer, different sales motion, different brand constraints), the default move is:

Put it behind a paywall, then test demand

A simple approach that works well for bootstrappers:

1. Keep one domain and one brand.
2. Add a second paid tier or add-on.
3. Build a landing page aimed at the unexpected vertical.
4. Run a manual outreach test to 20–30 prospects in that vertical.

You’re looking for one thing: will people pay for it without needing the base product?

If yes, you can later split the positioning (even if the codebase stays shared). If no, you just avoided a year-long distraction.

SaaS plateaus aren’t about company size— they’re about math you can control

This is the part most founders get wrong.

Plateaus aren’t reserved for “the $10k MRR stage” or “the $100k MRR stage.” Companies plateau at every level because the underlying equation is simple.

Rob’s plateau formula is the most useful mental model in the episode:

Plateau MRR ≈ New MRR per month ÷ Monthly revenue churn rate

Example:

• You add $3,000 new MRR/month
• Your monthly revenue churn is 5% (0.05)

Plateau ≈ 3000 ÷ 0.05 = $60,000 MRR

Cut churn to 2.5% without changing acquisition? Plateau doubles to $120,000 MRR.

What breaks the plateau (and what doesn’t)

Plateaus are hard to escape because momentum disappears. The fix is conceptually straightforward, but operationally annoying.

You have exactly two levers:

• Increase new MRR per month (more leads, better conversion, higher pricing)
• Decrease churn (better onboarding, better retention, better targeting)

What doesn’t break plateaus reliably:

• random feature shipping
• rebranding
• “posting more on social” with no positioning shift

A bootstrapped playbook for increasing new MRR (without paid ads)

For this campaign—US Startup Marketing Without VC—here’s what I’ve found consistently moves new MRR while staying organic:

1. One channel, one cadence, 90 days. Pick SEO, YouTube, podcast guesting, or partnerships. Commit. No dabbling.
2. Publish for bottom-of-funnel intent. “How to generate SOC 2 evidence automatically” beats “What is compliance?” every time.
3. Create a conversion asset. A template, calculator, or teardown that makes the next step obvious.
4. Use AI to speed the production, not replace the thinking. Draft outlines, repurpose interviews, summarize calls into content—then edit like a human who has standards.
5. Talk to churned users monthly. If you’re not doing this, you’re working with fiction.

What to do this week (a checklist you can actually finish)

If you’re seeing lots of signups but revenue is lagging, do these five things in order:

1. Define activation as one event that proves value.
2. Measure activation rate by channel (organic search vs referrals vs communities).
3. Email 10 trial users who didn’t convert and ask for a 15-minute call.
4. Decide on freemium: tighten it drastically or sunset it.
5. Compute your plateau: new MRR ÷ churn and write the number on a sticky note.

That last step changes your behavior because it forces clarity: you’ll see whether you have a lead problem, a churn problem, or both.

Where AI-powered SaaS growth is going in the U.S.

AI is showing up in U.S. technology and digital services in a very unsexy way: faster iterations, better support workflows, quicker content cycles, and more personalized onboarding. That’s the real advantage.

The founders who win in 2026 won’t be the ones who “added AI.” They’ll be the ones who used AI to ship faster, learn faster, and fix the revenue bottlenecks sooner—especially if they’re growing without venture capital.

If your freemium is broken or you can feel a plateau coming, here’s the forward-looking question worth sitting with: what’s the one number—activation rate, churn, or new MRR—that would change your company this quarter if you improved it by 20%?