I Built a SaaS Business for a Year. Here’s What I Learnt
In December 2022, coinciding with the launch of ChatGPT, I embarked on a mission to develop data and AI products that empower others. Since then, I have brainstormed ideas, tried to establish product-market fit, and constructed the product’s back end. This blog shares the learnings I wish I had known before creating a SaaS product. It aims to help aspiring entrepreneurs avoid the obstacles I encountered and accelerate their journey in launching a SaaS business.
Ideation and Market Validation
If you already have a business idea, feel free to jump ahead to Tip #2. But if you’re figuring out where to start, the following advice is for you.
Tip 1: There is No “Million-Dollar” Idea
Finding the perfect problem to solve right off the bat is rare. Many successful startups pivot from their initial idea to something more viable. Instagram began as a location check-in app, while Slack originated from a gaming project named Glitch. The key is to start somewhere. If you’re struggling to identify a problem, consider these two strategies:
- Address a personal pain point, something that you wish were better in your day-to-day life. For instance, I found the process of searching for recipes and buying ingredients time-consuming, but existing meal delivery services like HelloFresh were too costly. This led me to explore alternative solutions.
- Leverage your strengths. My expertise in Data Science and AI directed me towards using these tools to enhance marketing and sales for businesses, which became my focal point. In addition, pay attention to what resonates with your audience, especially if you have ongoing projects or a GitHub repository.
I opted for the second approach to guide my direction, aiming to apply data and AI to boost sales for e-commerce founders. However, don’t stress about nailing the “perfect” problem at the start. Remember, the initial idea is merely a starting point; a launchpad. Your journey will likely involve pivots as you refine your concept.
Tip 2: Define your Initial Customer Persona (ICP) first
Finding the right customer is as important as solving the right problem. If your target audience isn’t aligned, even the best solutions won’t make an impact. ICP helps you pinpoint the precise niche your SaaS product should initially cater to. Your SaaS product should initially address the pain points of your most dedicated users, or your superfans. Once they are happy, you can expand your features to a wider audience. Startups have the advantage of becoming experts in a specific problem area, thereby outmaneuvering established incumbents.
Having an ICP also helps you narrow down the users you should interview. I made the mistake of not having a very specific ICP at the start, as a result, I interviewed a very diverse array of e-commerce founders, wasting valuable time.
How do you figure out your ICP? Be specific. Instead of a broad “Shopify sellers,” target “Beginner Shopify founders with annual revenues under $10K looking to boost customer acquisition through targeted ads.” Here’s a template to kickstart your ICP definition – credits to Lenny’s Newsletter.
Tip 3: Talk to your customers
This is the most important tip. Want to know if you’re solving a real problem? Talk to your potential users. Time is precious, so pick your platforms to reach out to your users wisely. LinkedIn and TikTok are great for reaching B2B and B2C audiences, respectively.
My ICP was ‘Beginner Shopify founders with annual revenues under $10K looking to push ads and attract more customers.’ I reached out to my ICP through my network, Instagram DMs, online forum posts, Facebook groups, and pitches at startup events. This approach helped me connect with over 30 potential users, uncovering their main challenges, which includes:
- Uncertainty about competitors’ marketing performance.
- Lack of knowledge of the most profitable marketing strategies.
- Difficulty identifying the target market or audience for their ads.
Don’t be shy to reach out. The worst response you can get is a no.
Tip 4: How to talk to customers? Mum’s test
The Mum’s Test is a framework for conducting user interviews to get honest feedback. It emphasises the importance of understanding users’ challenges without hinting at solutions and advocates for active listening. Your goal should be finding out their pain points and their current workarounds – basically peeking into their life.
Look for strong emotional signals, such as frustration or eagerness to pay, as these can highlight significant pain points.
Building Your Product
Tip 5: Keep It Simple, Stupid (KISS)
So you’ve validated the problem with your ICP, and you are ready to build your SaaS product. Here’s my advice: focus on building a Minimum Viable Product (MVP) that’s as simple as possible. Resist the temptation to integrate complex technologies, like Blockchain or Snowflake, unless they’re central to your offering. Simplicity means quicker development and a clearer focus on solving your users’ most pressing issues. Sometimes, your MVP can be as basic as a Python script!
For my project, I initially designed an MVP with several features:
- Customer segmentation and analytics
- Recommends platforms for publishing ads
- Publishes ads
- Tracks ad performance
- Creates a feedback loop for better ads
In retrospect, this MVP was overly complex. A better approach would have been to focus on one key feature based on user feedback. It took some time to realize this issue, but I eventually decided to develop a customer segmentation and analytics tool – the first feature on my list.
Tip 6: Talk to your customers (again)
After creating your MVP, demonstrate it to your customers and gather their feedback. Even better, record your demo and share it on LinkedIn – that’s a fast way to spread the word.
After demonstrating my MVP to over 30 users, I have observed three obvious signs that indicate if the user is interested:
- They are willing to pay you money
- They are willing to refer you to their networks
- You start receiving cold inbound inquiries
Here are the key user feedback for my MVP (customer segmentation and analytics tool):
- A desire for customer analytics to not only display data but also provide marketing recommendations.
- Integration with Shopify and/or Google Analytics for data extraction.
- A focus on content creation over customer analytics.
The last piece of feedback was interesting, and I should have paid more attention to it, as I’ll explain in the next tip.
Tip 7: Embrace the Pivot
As a SaaS founder, being receptive to user feedback and ready to iterate your product is essential. Take my experience, for instance. I was testing my MVP with a beta tester—a house furnishing company with an online presence. I provided them with customer segmentation insights through a simple Google Sheets file, nothing too fancy. The feedback I received was pretty tepid; the client didn’t see the value in paying $20/month for insights they felt they already understood well. This lukewarm response was a wake-up call – it drove me to revisit and refine my product. It’s important to remember that it’s rare to get everything perfect on the first try, and that’s perfectly fine. Each iteration is a step closer to success.
Bonus Tip: Join a Community
Building a SaaS product from scratch is tough. There are times when, as a founder, you might feel like giving up and retreating to your comfort zone. However, being part of a community of like-minded individuals can keep you going. Communities offer various benefits. They keep you accountable, provide a platform to exchange ideas and remind you that you’re not alone in this journey.
If you are based in Australia, I highly recommend Next Chapter and The Builders Club.
Conclusion
I’m currently developing a customer segmentation tool for e-commerce entrepreneurs, offering them actionable insights. I plan to launch this tool soon to start building traction. My next blog post will explore the technical architecture, so stay tuned.
Remember, building a startup is a journey, not a destination. Embrace the process and enjoy the adventure 🌱
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