7 ms·

Evaluating Modest SaaS Business Ideas

365 points by DanHulton 6y ago

1cvmask 6y ago
All seem like reasonable points. But the real test is the ability to survive the first couple of years and get paying customers.
- DanHulton 6y ago
  Oh absolutely. These are questions to hopefully find an idea that lets you do that, or at least exclude ones that don't.
searchableguy 6y ago
This is a good list of questions to evaluate. I am currently struggling with finding customers for something I hacked together to solve my personal problem. A discord bot which warns users when they share links to pirated site and remove it. (I moderate a small discord server). I extracted the API part and put it on rapid API to see if there is any interest because I have little idea where to look for customers and how to talk to them. https://rapidapi.com/searchableland-no-piracy-team/api/piracy https://rapidapi.com/searchableland-no-piracy-team/api/pirac... I have also been looking for alternatives. I searched for them before but nothing came up so I had to build a list and heuristics myself. Maybe there isn't much of a need otherwise I would find a product.
- luto 6y ago
  Does discord punish servers, which share pirated content?
- kayhi 6y ago
  How much time, money or reputation does it contribute to a channel?
- DanHulton 6y ago
  Yeah, if you don't find any competition, that's usually not a great thing. The world being as big as it is, you're _probably_ not the first person to think of this particular idea, and it's _usually_ that there's not a market for it. That said, maybe this is an idea you can niche _up_ with? Instead of just one form of moderation, could you take the basic tech and use it to moderate a whole bunch of nasties that admins don't want to waste time dealing with? You'll want to make sure that the a _paying_ market exists for such tools first, obviously, but it's a potential option.
  - mpoteat 6y ago
    Agree. A one off tool that detects pirated links seems odd to pay for. Either a monolithic tool for handling moderation automation in general seems good, or better yet a marketplace where I can buy automation plugins for Discord in general, both for moderation as well as other administrative or entertainment tasks.
  - fbelzile 6y ago
    It's easy nowadays to throw up a quick slash page with some SEO friendly pages to gauge market demand. Have an email wait list and if it gets large, you'll conveniently have the email of your first clients.
    - rubatuga 6y ago
      How often has this worked in your experience?
- 1123581321 6y ago
  Maybe you could get an MPAA grant to develop it further. :) Most problems with links on Discord are solved with a gradual expansion of new user permissions.
cloudking 6y ago
These are good questions to evaluate, as the author points out there is no "right" way to do this. Making sure your idea solves real customers problems that align with your personal values and goals makes sense to me. Another tool I like to use in this phase is the Business Model Canvas, it makes you think about the business side, giving you a clear overview of your idea and the avenues to turn it into a real business https://en.wikipedia.org/wiki/Business_Model_Canvas https://en.wikipedia.org/wiki/Business_Model_Canvas
lpolovets 6y ago
This is an excellent list. FWIW these questions overlap a lot with questions VCs will ask if you decide to go the venture-backed route. (Source: I'm a VC.) A product can still find success even if there isn't a great answer to "is there a moat?" or "is the person who benefits also the one who pays?" -- but the road is a lot harder.
- algo_trader 6y ago
  What is your typical "moat perception" of a Uber-for-X SaaS pitch. Yes, brand and reputation and credit card details and scale advantages and first mover. But are these a "moat" or just "stickiness" factors?
  - lpolovets 6y ago
    I view those more as stickiness than as moats. They help you retain existing customers but don't make the product more valuable for new customers. Scale advantages are the exception. If the costs of your product or service drop dramatically with scale, then you can lower prices to a level where you still make a profit but competitors can't compete. The complicated most is the logistics network. That is definitely a moat against new entrants, but not against large existing logistics networks like Uber or DoorDash.
senko 6y ago
> Is downtime a life-or-death emergency? This is a big one, after you get your project off the ground. In my last startup, downtime of a few minutes led to torrents of emails and customer complaints, as the service was time sensitive. This was easily the most stressful part of the job.
- tonyedgecombe 6y ago
  To be honest this puts me off the whole SaaS thing. The worst I can get right now is some Microsoft update impacting my software and that has happened once but even then that only impacted a small minority of my customers and was easy to resolve. I can't imagine worrying about my service going down whilst I'm on top of a mountain in the middle of Wales.
yoshyosh 6y ago
This is a really good post, how long have you been doing this for Dan? Look forward to seeing what you make next
- DanHulton 6y ago
  Thanks! I've been building Nodewood in my spare time for the past couple years, but I've been keeping my hand in the bootstrapping community for about a decade now. I have a pretty solid history of _not_ considering these questions before launching something that seemed like a fun idea, so I figured I may as well share this and see if I can help others learn from my mistakes. =)
figbert 6y ago
> Alternatively, if you run an Internet Of Things company that locks and unlocks doors over an API, if that API goes down, people could be locked out of their houses during emergencies! Alternatively, don't develop an IoT door lock that will lock people out of their houses if the intern accidentally fucks up in production.
- sokoloff 6y ago
  But how else could we make it LaaS (locks as a service) with a monthly subscription?
  - fy20 6y ago
    Don't forget selling users a new $300 device after 2 years when you decide to end support for the old version for absolutely no reason!
macando 6y ago
The most important part: Finding a customer category that regularly spends money on the kind of software you're intending to build can make it signficantly easier to actually sell them software. Go to Capterra or G2 and read what actual paying customers say about your competitors and other SaaS products. It's eye-opening.
- enraged_camel 6y ago
  Not really. Most of those reviews are paid reviews these days, and you can't tell the real ones from the fake ones. I know because at my previous job the marketing team was responsible for "encouraging" customers to leave positive reviews by offering them various incentives and discounts. Resulting reviews were often times the total opposite of reality.
  - macando 6y ago
    Partially true. It takes some time to learn how to spot genuine reviews. However, even in the "encouraged" reviews you can still discover what problems people solve with certain class of tools and how much money they're ready to pay for them.
    - tiltrus 6y ago
      Doubt it. I've worked for a SAAS company in the past that practices the incentivized review behaviour. Genuine (organic) reviews were indistinguishable from incentivized reviews. Poor reviews, which are the most valuable for this type of research, were always removed.
      - enraged_camel 6y ago
        I was looking at a competitor's reviews just now, out of curiosity. They're so funny. The best one goes like this: Pros: We love everything about this software! Especially A, B, C, D, E, F and G features! Cons: It's always so difficult to wait for the next monthly patch! But it's so worth it!
  - 6y ago
simonbarker87 6y ago
Great list, I’m currently trying to better focus my side project time one things that can be viable businesses so I can het back to running my own thing again and this is getting bookmarked to come back to for every idea.
calltrak 6y ago
I have a call tracking metrics SaaS to determine which ppc marketing campaigns drive incoming sales calls. http://calltrak.io http://calltrak.io SEO is the real struggle !
swyx 6y ago
Extracted the list for people's convenience and reference - Is this an exciting product? - Does this solve a significant enough problem that people will pay for it? - Will customers regularly use and see value from this product? - Does this product provide value to companies at broad stages of their life cycle? - Does this product align with your values? - Do you like your potential customers? - Will you be able to stay motivated to work on this product? - Can you build this product in a reasonable amount of time? - What is your moat? - Is this product easy to distribute? - Is downtime a life-or-death emergency? - Will you spend a lot of time doing customer support? - Will this product be all-consuming? - Does the person who gets the most value out of your product control the credit card that will be used to pay for it? - Do your potential customers regularly pay for products, ideally for this kind of product? - Is your market a large one with a lot of upmarket competition? - Is there demonstrated demand for a downmarket competitor? - Is the market still growing? - Is it easy to reach your audience? - Is there a powerful distribution channel available to reach this market? (i run a paid creators community where we discuss this stuff)
- teh_infallible 6y ago
  This list is quite similar to what Amy Hoy talked about in her 30x500 course
- dt3ft 6y ago
  Can you really answer "Is the market still growing?" with 90+% certainty?
  - ehnto 6y ago
    I think it's something you have to intuit, which means you're going to be wrong sometimes. I wouldn't hesitate on an idea because I couldn't figure it out, I would treat it more like a sniff test for whether or not you're entering a dieing market. Just an example, you're a parts manufacturer and you're deciding between R&D on ICE or Electric, you can't prove that electric motors will be the winner with any amount of data, but it's a pretty obvious intuition that targeting OEM parts contracts for ICE is not a good long game. It can sometimes be very clear when you sit in the right part of the industry or community to have some kind of intuition on the matter. If you are in such a position you may have a fairly decent upper hand, and you could squander it if you wait for data or some Deloite report to tell you you're in a growing market. It's also going to depend on how big your scope is. Are you looking to enter the "Toys" market or the "Specific kind of fidget spinner toy" niche? If it's just toys, then there's probably some general data to go by. If it's a specific niche you're probably going to be flying somewhat blind by necessity as there won't be any data yet.
Jack000 6y ago
Devs should spend a lot more time on research to select the problem they want to solve. This is "top of the funnel" in the sense that it will affect everything else, from product to marketing, and has the highest impact on the ultimate success of the product. > Finding a customer category that regularly spends money on the kind of software you're intending to build can make it signficantly easier to actually sell them software. I want to point out that this applies to the market, and not necessarily the product. An oft-repeated suggestion is to charge more, but free products are great for lead-gen. Case-in-point: indiehackers.com is not a paid product, yet it sold for 7 figures. Traffic from a targeted, lucrative demographic is inherently valuable, and one of the easiest ways to get this traffic is with a free product. When starting out, the biggest risk is 1. making something that no-one wants 2. making something people want, but not being able to reach those people. The easiest way to derisk these categories of mistakes is to simply copy the market (ie. what problem to solve) and acquisition channels of competitors, and differentiate on product. On moats: Markets with moats are typically already dominated by incumbents with moats. For indies it's better to target markets without moats, precisely because you're in the position of a "fast follower"
quickthrower2 6y ago
How important is a moat for a microsaas? Is it ok to do something easy to copy and think of the moat later? My moat would be a lack of interest from other companies to copy me!
- pydry 6y ago
  If you demonstrate some success and a company with some other kind of unfair advantage (e.g. name brand, distribution) can just copy you once they realize.
julianna01k 6y ago
Recently I accidentally found a very cool SaaS project https://audext.com/ https://audext.com/

365 points by DanHulton 6y ago

All seem like reasonable points. But the real test is the ability to survive the first couple of years and get paying customers.

DanHulton 6y ago
Oh absolutely. These are questions to hopefully find an idea that lets you do that, or at least exclude ones that don't.

searchableguy 6y ago

This is a good list of questions to evaluate. I am currently struggling with finding customers for something I hacked together to solve my personal problem. A discord bot which warns users when they share links to pirated site and remove it. (I moderate a small discord server). I extracted the API part and put it on rapid API to see if there is any interest because I have little idea where to look for customers and how to talk to them. https://rapidapi.com/searchableland-no-piracy-team/api/piracy https://rapidapi.com/searchableland-no-piracy-team/api/pirac... I have also been looking for alternatives. I searched for them before but nothing came up so I had to build a list and heuristics myself. Maybe there isn't much of a need otherwise I would find a product.

luto 6y ago
Does discord punish servers, which share pirated content?
kayhi 6y ago
How much time, money or reputation does it contribute to a channel?
DanHulton 6y ago
Yeah, if you don't find any competition, that's usually not a great thing. The world being as big as it is, you're _probably_ not the first person to think of this particular idea, and it's _usually_ that there's not a market for it. That said, maybe this is an idea you can niche _up_ with? Instead of just one form of moderation, could you take the basic tech and use it to moderate a whole bunch of nasties that admins don't want to waste time dealing with? You'll want to make sure that the a _paying_ market exists for such tools first, obviously, but it's a potential option.
- mpoteat 6y ago
  Agree. A one off tool that detects pirated links seems odd to pay for. Either a monolithic tool for handling moderation automation in general seems good, or better yet a marketplace where I can buy automation plugins for Discord in general, both for moderation as well as other administrative or entertainment tasks.
- fbelzile 6y ago
  It's easy nowadays to throw up a quick slash page with some SEO friendly pages to gauge market demand. Have an email wait list and if it gets large, you'll conveniently have the email of your first clients.
  - rubatuga 6y ago
    How often has this worked in your experience?
1123581321 6y ago
Maybe you could get an MPAA grant to develop it further. :) Most problems with links on Discord are solved with a gradual expansion of new user permissions.

cloudking 6y ago

These are good questions to evaluate, as the author points out there is no "right" way to do this. Making sure your idea solves real customers problems that align with your personal values and goals makes sense to me. Another tool I like to use in this phase is the Business Model Canvas, it makes you think about the business side, giving you a clear overview of your idea and the avenues to turn it into a real business https://en.wikipedia.org/wiki/Business_Model_Canvas https://en.wikipedia.org/wiki/Business_Model_Canvas

lpolovets 6y ago

This is an excellent list. FWIW these questions overlap a lot with questions VCs will ask if you decide to go the venture-backed route. (Source: I'm a VC.) A product can still find success even if there isn't a great answer to "is there a moat?" or "is the person who benefits also the one who pays?" -- but the road is a lot harder.

algo_trader 6y ago
What is your typical "moat perception" of a Uber-for-X SaaS pitch. Yes, brand and reputation and credit card details and scale advantages and first mover. But are these a "moat" or just "stickiness" factors?
- lpolovets 6y ago
  I view those more as stickiness than as moats. They help you retain existing customers but don't make the product more valuable for new customers. Scale advantages are the exception. If the costs of your product or service drop dramatically with scale, then you can lower prices to a level where you still make a profit but competitors can't compete. The complicated most is the logistics network. That is definitely a moat against new entrants, but not against large existing logistics networks like Uber or DoorDash.

senko 6y ago

> Is downtime a life-or-death emergency? This is a big one, after you get your project off the ground. In my last startup, downtime of a few minutes led to torrents of emails and customer complaints, as the service was time sensitive. This was easily the most stressful part of the job.

tonyedgecombe 6y ago
To be honest this puts me off the whole SaaS thing. The worst I can get right now is some Microsoft update impacting my software and that has happened once but even then that only impacted a small minority of my customers and was easy to resolve. I can't imagine worrying about my service going down whilst I'm on top of a mountain in the middle of Wales.

yoshyosh 6y ago

This is a really good post, how long have you been doing this for Dan? Look forward to seeing what you make next

DanHulton 6y ago
Thanks! I've been building Nodewood in my spare time for the past couple years, but I've been keeping my hand in the bootstrapping community for about a decade now. I have a pretty solid history of _not_ considering these questions before launching something that seemed like a fun idea, so I figured I may as well share this and see if I can help others learn from my mistakes. =)

figbert 6y ago

> Alternatively, if you run an Internet Of Things company that locks and unlocks doors over an API, if that API goes down, people could be locked out of their houses during emergencies! Alternatively, don't develop an IoT door lock that will lock people out of their houses if the intern accidentally fucks up in production.

sokoloff 6y ago
But how else could we make it LaaS (locks as a service) with a monthly subscription?
- fy20 6y ago
  Don't forget selling users a new $300 device after 2 years when you decide to end support for the old version for absolutely no reason!

macando 6y ago

The most important part: Finding a customer category that regularly spends money on the kind of software you're intending to build can make it signficantly easier to actually sell them software. Go to Capterra or G2 and read what actual paying customers say about your competitors and other SaaS products. It's eye-opening.

enraged_camel 6y ago
Not really. Most of those reviews are paid reviews these days, and you can't tell the real ones from the fake ones. I know because at my previous job the marketing team was responsible for "encouraging" customers to leave positive reviews by offering them various incentives and discounts. Resulting reviews were often times the total opposite of reality.
- macando 6y ago
  Partially true. It takes some time to learn how to spot genuine reviews. However, even in the "encouraged" reviews you can still discover what problems people solve with certain class of tools and how much money they're ready to pay for them.
  - tiltrus 6y ago
    Doubt it. I've worked for a SAAS company in the past that practices the incentivized review behaviour. Genuine (organic) reviews were indistinguishable from incentivized reviews. Poor reviews, which are the most valuable for this type of research, were always removed.
    - enraged_camel 6y ago
      I was looking at a competitor's reviews just now, out of curiosity. They're so funny. The best one goes like this: Pros: We love everything about this software! Especially A, B, C, D, E, F and G features! Cons: It's always so difficult to wait for the next monthly patch! But it's so worth it!
- 6y ago

simonbarker87 6y ago

Great list, I’m currently trying to better focus my side project time one things that can be viable businesses so I can het back to running my own thing again and this is getting bookmarked to come back to for every idea.

calltrak 6y ago

I have a call tracking metrics SaaS to determine which ppc marketing campaigns drive incoming sales calls. http://calltrak.io http://calltrak.io SEO is the real struggle !

swyx 6y ago

Extracted the list for people's convenience and reference - Is this an exciting product? - Does this solve a significant enough problem that people will pay for it? - Will customers regularly use and see value from this product? - Does this product provide value to companies at broad stages of their life cycle? - Does this product align with your values? - Do you like your potential customers? - Will you be able to stay motivated to work on this product? - Can you build this product in a reasonable amount of time? - What is your moat? - Is this product easy to distribute? - Is downtime a life-or-death emergency? - Will you spend a lot of time doing customer support? - Will this product be all-consuming? - Does the person who gets the most value out of your product control the credit card that will be used to pay for it? - Do your potential customers regularly pay for products, ideally for this kind of product? - Is your market a large one with a lot of upmarket competition? - Is there demonstrated demand for a downmarket competitor? - Is the market still growing? - Is it easy to reach your audience? - Is there a powerful distribution channel available to reach this market? (i run a paid creators community where we discuss this stuff)

teh_infallible 6y ago
This list is quite similar to what Amy Hoy talked about in her 30x500 course
dt3ft 6y ago
Can you really answer "Is the market still growing?" with 90+% certainty?
- ehnto 6y ago
  I think it's something you have to intuit, which means you're going to be wrong sometimes. I wouldn't hesitate on an idea because I couldn't figure it out, I would treat it more like a sniff test for whether or not you're entering a dieing market. Just an example, you're a parts manufacturer and you're deciding between R&D on ICE or Electric, you can't prove that electric motors will be the winner with any amount of data, but it's a pretty obvious intuition that targeting OEM parts contracts for ICE is not a good long game. It can sometimes be very clear when you sit in the right part of the industry or community to have some kind of intuition on the matter. If you are in such a position you may have a fairly decent upper hand, and you could squander it if you wait for data or some Deloite report to tell you you're in a growing market. It's also going to depend on how big your scope is. Are you looking to enter the "Toys" market or the "Specific kind of fidget spinner toy" niche? If it's just toys, then there's probably some general data to go by. If it's a specific niche you're probably going to be flying somewhat blind by necessity as there won't be any data yet.

Jack000 6y ago

Devs should spend a lot more time on research to select the problem they want to solve. This is "top of the funnel" in the sense that it will affect everything else, from product to marketing, and has the highest impact on the ultimate success of the product. > Finding a customer category that regularly spends money on the kind of software you're intending to build can make it signficantly easier to actually sell them software. I want to point out that this applies to the market, and not necessarily the product. An oft-repeated suggestion is to charge more, but free products are great for lead-gen. Case-in-point: indiehackers.com is not a paid product, yet it sold for 7 figures. Traffic from a targeted, lucrative demographic is inherently valuable, and one of the easiest ways to get this traffic is with a free product. When starting out, the biggest risk is 1. making something that no-one wants 2. making something people want, but not being able to reach those people. The easiest way to derisk these categories of mistakes is to simply copy the market (ie. what problem to solve) and acquisition channels of competitors, and differentiate on product. On moats: Markets with moats are typically already dominated by incumbents with moats. For indies it's better to target markets without moats, precisely because you're in the position of a "fast follower"

quickthrower2 6y ago

How important is a moat for a microsaas? Is it ok to do something easy to copy and think of the moat later? My moat would be a lack of interest from other companies to copy me!

pydry 6y ago
If you demonstrate some success and a company with some other kind of unfair advantage (e.g. name brand, distribution) can just copy you once they realize.

julianna01k 6y ago

Recently I accidentally found a very cool SaaS project https://audext.com/ https://audext.com/