Growth October 31, 2020

How not to SaaS

Hammad @hammadh

Hey all,

They say there is no one path to success, and I believe that. However, there are always the same mistakes one can make. Over the last 2 years of me trying to build a SaaS business (with a lot of pivots doing $3k in MRR now), I've learned some key things about how not to build a SaaS business.

  1. Don't get into a space that you don't know of. Solve a problem in a domain that you are aware of so you know what value you provide and who the target customers are. It's a very painful feeling to not know how valuable or not valuable your solution is when a customer subscribes. If you don't know the value you'll find it extremely difficult to market and sell the product and will be in fear as to when the customers might cancel.

  2. Make sure you build for the right type of people. In other words, choose your customers carefully because this matters more than you think. I recently watched @patio11's microconf talk (https://www.youtube.com/watch?v=PtmUJye7t4c) and one of the things that resonated with me the most is he says - build for people who you enjoy having conversations with and who can afford to spend on your solution. In our case building a product for indie writers and small businesses was a mistake because 1. we didn't know anything about them, we were not writers, and 2. we didn't know about their budget constraints. So, unless you are really helping their business grow, you'll have a hard time charging them money. Aim to build products for customers who have the capacity to spend eg; folks at companies who have budgets and don't mind paying a $50, $100 or more to products because they are not spending out of their own pockets, they are spending from the company's budget.

  3. Don't build nice to have products. You need to deliver solid business value to build a long term sustainable business. When we started out, we provided a solution where writers, publishers and content businesses could create and add audio versions of their blog posts so their audience can listen. This was a nice to have option, and although we got paying customers there was a lot of churn as providing "listens" is not really a business value. Look at products like Canny, Convertkit, SimpleAnalytics - these products provide real business value. Aim to build such products.

  4. Do not start building without research. I can't emphasize this enough. If you are even remotely interested in building a real SaaS business then do the research before starting to build. What does research include? It's mostly commonsense things like - check for keywords on Google Adwords to get an idea of the demand, make a google search for the product you want to build and see what results show up (I use a VPN and switch countries to see different results), have a look at the products, their pricing, what type of customers are using it, look for reviews on Capterra and Trustpilot, etc. search Twitter, and most importantly talk to potential buyers about the idea and you'll learn a lot by just discussing it.

  5. Don't start a SaaS business just for making money. I made this mistake and I deeply realize how important it is to set your motivations right. If you only build for the money you'll spend an awfully long time being anxious and frustrated and you'll not be satisfied. The thing I've come to learn is there's a different level of satisfaction that you get when you know your solution actually helps people and you know that the money they've spent on your product is totally worth for them. Initially, I was too focused on getting subscribers. And since I never related to the problem myself, I never thought about making those subscribers successful with the product. This always made me anxious about getting more subscribers and when any one of them canceled I doubted the product.

  6. Don't build a business that "seems" like a good business. This goes to my #4 point. I used to think that a business needs to be unique - a solution that nobody's ever built it. This is a fantasy and can cause you a lot of painful time and wasted effort if you have this mindset. The reality is, there is nothing new under the sun. The products and businesses out there exist for a reason - people need them. There is a demand for them. And it's okay (in fact it's good) to build products in an existing space than to build something entirely new because building in an existing space guarantees that the problem exists and there is a market for it. Another problem with building something new is that if your solution is indeed new and novel that if people see they'll purchase it, then you are going to have a hard time educating the market first rather than making sales. That's going to cost you a long time. So, build for a market that exists.

  7. Don't think of the product first, think of the market. We all know of the term - product-market fit, that makes think of the product first, which is wrong especially for us builders. We like to build. We just need an idea to get all pumped up and start building. This is wrong. Instead of product-market fit, think about it as 'market-product fit'. Putting the market before the product forces you to think the same way. Always start with the market (problem). Your product is only a means to solve that problem. In his post, Brian Balfour talks about how using they built a multi-million dollar product (with funds) at HubSpot using the market-product mindset - https://brianbalfour.com/essays/market-product-fit

  8. Spend more time marketing, less time building. You are going to hate me for this but the reality I've come to learn is, you as a founder, cannot keep your head down building things. To be successful you need to make money. And for that, you need to sell. Your product is not going to sell itself. You are the one who needs to do it. So what do I mean by marketing and selling? This is what I do - run paid ads and learn how they perform. Reach out to prospects and pitch them the solution. Come up with ways of using the product itself to drive traffic. Write content. Reach out for partnerships. Prepare launches, etc. If you spend your time building, you need someone to do the other things that I just mentioned, and I believe the only person who can do these things best is you, the founder.

  9. Measure the right metrics. I'm not talking about vanity metrics such as likes and shares assuming you know you shouldn't be caring for them much. I'm talking about business metrics - the metrics that matter, which if increased will make you successful. The reason I say this is it's easy to focus on the wrong metrics and fool yourself that things will work out. In our product, we used to focus on 'listens' and the number of people 'adding audio' to their blog posts. We thought, if more people add audio, we'd get more listens and if we get to a point where we'd have hundreds and thousands of listens per day we'd be able to monetize the product. Seemed plausible, but it didn't work out.

  10. When building the product get the basics right and don't make it complex. When I say get the basics right I mean follow standard practices. People are used to purchasing Saas products and they expect a standard procedure. For example, send a welcome email upon sign up, provide ways to reset email/password, if you offer a trial, make sure people can unsubscribe or change their payment details. Add an FAQ section. These things will build trust and make the product look professional. Don't reinvent things, use existing solutions wherever possible. And keep your product simple. Don't over-engineer stuff. A lot of the things can be done/communicated manually to users early on so don't build things that are not critical. Remember, simple software = fewer bugs = easy to maintain == less customer support === huge time saving.

Good luck with your SaaS!

  1. 4

    Thanks for the share. #2 "unless you are really helping their business grow, you'll have a hard time charging them money" and target those "who have the capacity to spend" are the core messages for entrepreneurs.

    Just for food of thought, I think your listen button addon would have sold well for large corporations who want to aim for compliance with people with disabilities in mind. Audio capacity fits well and is must-have for them.

  2. 3

    Pretty solid points, I only take issue with the money part. I think many people here de-emphasizes it to not appear greedy, materialistic, etc. The cold truth is that money is one hell of motivator. Most of the big and not so big companies were created by people who wanted to make money, there is nothing wrong with that. What you do with that money is an entirely different problem.

    1. 1

      i think you should first focus on the growth, and the money will come later.
      when launching the product, ask the users to pay just the amount that covers the running/maintaining the SaaS fees.
      and when the graphs shows a huge increase of incoming visitor/new users, rise the price so that you start making pure revenue

  3. 2

    I have recently realised the importance of the point number 8. Marketing is more important and requires more attention as well.

  4. 2

    Dang! This is gold! I can't agree more. Thanks a lot for writing this!!

    What I like about this post is I really feel you're writing this from your heart, as if you're writing this to yourself in the past!!

  5. 2

    Great writeup
    about section 4
    how do i do :
    "keywords on Google Adwords to get an idea of the demand" ?
    Also how do i use
    Capterra and Trustpilot efficiently for market resource Beyond looking at the bad reviews ?
    also twitter ? for me its just big flow of data ..how to filter and research that ?
    Thanks

  6. 2

    All of these are quite true across the board. I work with people building SaaS companies as a coach and these are all things we stress they should avoid / do / not do from the wisdom of others. Client don't always hear the advice as things go - but these are all very good points for anyone looking to get into SaaS.

  7. 2

    You’r totally right! We assume if it is well done then it will sell by them self, but it is not.
    We need to think like a business man not as a developer-builder.

    1. 1

      Exactly - "build and they'll come" is such a false statement!

  8. 1

    Oh wow! This is so good, as I am reading your points I'm nodding my head because that's exactly what I learned in my 18 months hustling as a first-time founder.

    If I have to pick, #6 #7 #8 hit me the hardest.

    I'm currently working on an eBook about How to Fail as a First-Time Founder, and under each chapter there is a section for key lessons etc. I wonder if I can get you to share a bit of insights somewhere in there!

  9. 1

    Damn, this post is surprisingly good.

    Appreciare your sharing, Hammad.

  10. 1

    When you said you use a VPN and switch countries to see different results

    do you think there is a product idea there, to search google from different countries?

  11. 1

    Great post, tons of learnings for new and existing founders!

    I built https://versoly.com/founder-bingo to basically remind me of all the mistakes we make as founders.

  12. 1

    Great read. Thanks

  13. 1

    Good stuff. #1 & 4 resonated.
    Thanks!

  14. 1

    Great advice - thanks for taking the time to go in-depth!

  15. 1

    Nice write up. #8 and #9 all day long. Both are not always obvious to builders who follow the ‘if I built it they will come’ mantra, but they are a must.

  16. 1

    Totally agree with the main points. I also think building a product for indie hackers is tough - either you offer a free tier and grow with them or you bring immediate (monetizable) value.

  17. 1

    Thanks for sharing!

    1. 1

      You're welcome! :)

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