Founders are overwhelmingly trending towards validating before launch

Last week, MicroConf released its annual report on independent SaaS companies. Some of the most surprising trends were found in relation to pricing and idea formation.

Validation is up significantly from last year

The background: MicroConf is a popular community geared towards non-venture track startup founders. Its annual report covers industry-wide stats, and the major increase in validation from 2019 to 2020 immediately stands out.

MicroConf found that 84% of SaaS founders validated their business idea before building. This is a ~30% increase from the total in last year's report, showing that validation has caught on in a major way within the startup community.

What this means: As founders have shared information on the benefits of validation, it has become adopted more frequently. By far, the top method of validation was building a prototype or MVP. The second most popular approach to validation was asking the existing audience. The once-popular landing page/strong call-to-action method was used by only 4% of founders this year, which is a surprising figure as well.

What's missing: Validation can be a tricky area for founders, and many don't know where to start. Although this report highlights that founders are seeing the importance of validation, it doesn't provide information on what actually garners the strongest results. Methods of validation, and the results produced, would have been a great area for the report to explore further. MicroConf founder Rob Walling mentioned running deeper analysis on validation approaches, so we may see an addendum released on this specific topic soon.

Bottom line: Founders are increasingly joining communities and using platforms to share information. Years ago, many companies intentionally kept information under wraps, and the free exchange of ideas was not very common. However, from building in public to popular conferences, the dissemination of information is now highly encouraged. Startup communities have jumpstarted this trend of openness in business, and it has strengthened the startup landscape overall.

Interesting findings

Other interesting findings from the report include:

• ~90% of founders developed their product ideas from a problem that they personally experienced, or one that someone they knew (relative, friend, client) had experienced. This shows that you often don't need to look far to find a viable startup idea or fill a niche in a particular market.
• Free trials are on the rise: 71% of companies were found to be offering them this year, up from 64% in last year's report.
• While free trials are rising, 36% of companies that offer a free trial don't know their visitor-to-trial conversion rate. It's likely that people believe that a free trial is a guaranteed benefit, but for some companies, the free trial could be hurting more than helping. For others, there may be no effect at all. It would be interesting to delve more into this particular subset and gather further learnings.
• Founders worked fewer hours per week this year. This could be attributed to many things, including COVID-19 effects and/or pivoting business models.

You can read the full report here. What findings stood out most to you? Which ones do you think founders should focus on this year?