Startups How to Build a SaaS Product in 5 Steps |
- How to Build a SaaS Product in 5 Steps
- How many employees does the average Series A/B/C startup onboard monthly?
- Unicorns are great but Mustangs and Brumbies are real
- I want to learn how to setup an ETL Pipeline for Marketing
- How to get and maintain a steady stream of early product users outside of my network (bootstrapped company)
- How to setup annual budget as tech co-founder.
- Job offers as a failed founder?
- Acquisitions
- Besides Paul Graham, who's writing/essays do you read?
- Financial modeling - SaaS startup
- External sales team wants to join the startup in exchange of equity… what should be the terms?
- As I read through different articles discussing what Venture Capitalist look for in startup, I find it interesting that many place emphasis on having a strong team of advisors over the product. Why do VCs find it so important for amateur entrepreneurs to find advisors prior to funding discussion?
- Is it normal for a supplier to not reveal OEM costs until you make an order?
- Which is more important to hire for an early-stage app? Designer or Developer?
| How to Build a SaaS Product in 5 Steps Posted: 16 Feb 2022 08:58 AM PST The SaaS industry is now worth over $145B worldwide – which is no surprise, considering 99% of global organisations use at least one SaaS product. With the popularity of SaaS increasing, I wanted to share the exact framework we use at Altar to help the entrepreneurs we work with build SaaS products. Let's get right into it with the first step, finding your SaaS product's value proposition. Step One: Your SaaS Product's Value Proposition There's no point building something nobody wants. Therefore, before writing a line of code you need to define what value your SaaS product will bring to the market. We've developed a structured process to answer this question and ensure you build an innovative, user-centric solution:
The first step is to identify the problem you're trying to solve. After all, how do you know what value you're bringing if you don't first know the problem behind your SaaS product?
Once you've identified what you intend to solve, you need to know who you're solving it for. This may seem obvious, but actively identifying your users is a critical step in ensuring your SaaS product is valuable. You should get to know them in terms of demographics, psychology and observed behaviour. You will eventually have to build UX Personas, so any research you do now will certainly help you down the road.
Without a doubt, there is some kind of solution in your market already, even if the competitor behind that solution is an indirect one. For example, Henry Ford created the world's first mass-produced car – putting the "world on wheels". It would be easy to say that he had no competition. However, people were solving the problem of getting from A to B before the Model T hit the market. They were using horses. So as indirect as it may be, there was still competition in Ford's market. Most likely, your target market already has a way to solve the problem you intend to tackle. It's important to know both how they're solving it and who is solving it for them.
Now you know how the problem you're tackling is being solved, and who is solving it, it's vital to outline how your product is better than those solutions.
You're going to be asking your market to drop their current solution to adopt yours – so you need to be able to give them a reason to do so.
The last stage in preparing your SaaS product for development is to sum up your value proposition in an easy-to-digest elevator pitch. Here's a template to help you get started: [Name of your SaaS product] has been created for [your target stakeholders] who [state the problem they face]. [Name of your SaaS product] is a [statement of its key value]. Unlike current solutions we [explain what differentiates you from the alternatives]. Your elevator pitch should be simple, stupid and crystal clear. The person reading or hearing this elevator pitch should instantly know what your value is and why your SaaS product is worth adopting. Once you have that, you're ready for step two: setting the assumptions you need to validate with your SaaS product. Step Two: Set the Main Assumptions You Need to Validate The next step is to assess the assumptions you're making about your target market and the problems they face. For example, Slack assumed that businesses wanted an all-in-one online platform for workplace communication when they first developed their SaaS product. Create a list of all the assumptions you have surrounding your product. Once you've done this, it's time to validate them. Start by researching the current solutions to find the assumptions that have already been validated. To go back to the Slack example, they already knew that people were looking for a solution to communicate online because of email providers and file transfer solutions such as dropbox. Once you've identified the "pre-validated" assumptions, check them off the list. Next, you need to define which assumptions can only be tested/validated through building a SaaS product. For example, Slack needed to prove that there was a demand for a hub that allowed teams to not just communicate but collaborate online. Once you've defined which assumptions need to be validated with a product, you should also identify the KPIs to measure whether or not your assumptions are true. This could be adoption rates, retention ratio, etc. With this information in hand, you're ready for the next step: build something that validates those assumptions as quickly as possible. Step Three: Validate Your Assumptions As Quickly As Possible With your list of assumptions and elevator pitch in hand, it's time to create the list of features to build into the first version of your SaaS product. Going down your list of assumptions, define what feature(s) are needed to validate them. Then cross-reference this with your elevator pitch to ensure that those features showcase your value proposition. Leave any features that do not validate your assumptions or showcase your value proposition for later iterations. For example, Slack needed to give users the ability to send direct messages, group messages, share links and upload/download files to showcase their value proposition. They didn't, however, need to give users the ability to integrate with other apps such as Trello or Google Drive. While the ability to integrate third-party apps is undoubtedly useful, they don't prove or disprove the key assumptions behind Slack's value proposition. Therefore, Slack built them later, after they'd proven that people wanted their product. This step should leave you with a concise set of features that put solving your users' problems first. Once you have them, you're ready to move on to the first stage of developing your SaaS product: choosing the right tech stack. Step Four: Choosing Your SaaS Product's Tech Stack There are several popular technologies that are used in many SaaS products. For the frontend, modern Javascript frameworks such as React, Angular or Vue.js are commonly used. In terms of backend development, it's normal to see Node.js or Django. These have risen in popularity as they're lightweight, allow for high performance at a lower cost and set the company up to scale with more ease. The next addition to your tech stack will be a database. These hold all the necessary information for your SaaS product. Popular databases include PostgreSQL, MySQL, MongoDB, to name but a few. Finally, you will need a SaaS hosting provider. Any reliable cloud provider will do the trick here. Amazon Web Services (AWS), Google and Microsoft are all popular due to their reliability, flexibility and, critically, security. With these being the most popular stacks for SaaS products, most likely the talent pools within them will be larger. This means, if you choose one of the above stacks, you'll probably have an easier time onboarding talent vs. the less popular stacks. To make a more informed decision on the specific stack you should use, I would first recommend learning the basics of tech before having these conversations to ensure you are able to make the decision from an educated perspective. Remember, technical decisions at this stage are also business decisions. Then, I recommended doing some further research by looking at your competitors. If they're already succeeding in your chosen industry, most likely they're using the correct tech stack for the job. On top of that, ask any technical Jedi contacts you have what stack they would recommend. You can even reach out to a software development company to ask them what they would propose building it in. Most reputable agencies will happily do this free of charge. Just keep in mind that anyone you ask may have their biases (especially if they want to work with you). Once you've identified the tech stack you think is right for you, it's time to find some top talent developers to help you build it. Step Five: Building Your SaaS Product Development Team When it comes to finding the right technical stakeholders to build your SaaS product, you have three options. You can:
In short, my advice here is that: If you're able to find the right CTO/Technical Co-Founder from day one, then you should onboard them and never look back. Having a senior tech stakeholder on your team to deal with both building your SaaS product and growing your technical team is, undoubtedly, invaluable. That being said, the process to find the right person for the job can take a long time. I've seen founders spend months looking for a CTO/Technical Co-Founder only to come up empty-handed. With time-to-market always being a concern, many entrepreneurs will instead choose to build the first version of their product with freelance developers or a software development agency. My Co-Founder recently sat down with CTO & Startup Advisor Nelly Yusupova to discuss this exact problem. With nearly two decades of experience in the tech industry, she shared her thoughts on the topic and the notion of earning a technical co-founder. "What you do is you build the first version of your product and build a community around your idea. This not only shows off your marketing skills, it proves you're not just an idea person but you can actually sell and market the product. To build the product itself, you're going to want to go with an agency or a team of freelance developers. This is the fastest way to actually get your idea into the market so that you can get traction and essentially de-risk the opportunity for a potential technical co-founder. By showing them you're more than just an idea person, it changes the conversation from "I need you!" to "Here's a great opportunity!" If you go down this route, just make sure you know what you're getting yourself into with both options. Should you decide to work with freelancers, just keep in mind that you will be responsible for managing the team. This can be a massive challenge for a non-technical entrepreneur – especially when you have all of the business aspects of your startup to take into account. More than that, it's vital to ensure that the technical stakeholders you onboard follow the best working practices. If the partner you work with doesn't follow the industry standard, you could face problems down the road with user experience, scalability, security and reliability to name a few. This also applies if you choose to work with a software development company. With over 15,000 software agencies listed online, the main challenge here is separating the wheat from the chaff. Choose the wrong partner, and things can go bad very quickly, something I've seen first hand. I've worked with entrepreneurs who worked with bad agencies before coming to us to help them build their products. In the worst cases, we've had to scrap their entire codebase (sometimes months of work) and start again. This is simply due to the fact that the agency they worked with didn't use the best working practices. Our team simply couldn't untangle the spaghetti of code they had written and it had to be trashed. This mistake is costly both in terms of time and money – and not all entrepreneurs have the luxury of affording a second chance. That's not to say you can't build a successful SaaS product with an agency. You just have to make sure you do your due diligence and choose the right partner for the job. Aside from ensuring that the technical stakeholder you choose follows the best working practices, there is one final element to take into account: It's critical that the technical stakeholder you choose aligns with your product and business vision. This applies to CTOs, freelancers and agencies alike. For sure you're never going to agree with your technical stakeholder 100% of the time. However, you need to align on the big picture. There's no point in onboarding someone to help you build your SaaS product if they don't align on it's being built. Once you've found the right technical stakeholders, built and rigorously tested your SaaS product, it's time to move on to the next step – the launch. Wrapping Up If you're setting out to develop a SaaS product, this guide will give you all the tools you need to get started. I will leave you with the advice I give all the entrepreneurs I work with and advice when they set out to build their startup products. Before writing a line of code, ensure that your product is truly valuable to the market you intend to tackle. Then, once you've defined the blueprint for your SaaS product in a way that puts the user first, ensure you get talented people to build it. Whether you choose a CTO, a team of freelance developers, or an agency, make sure they follow the best working practices. More importantly, ensure they align with your product and business vision and get behind the "why" of your SaaS product. Thanks for reading and good luck!! [link] [comments] |
| How many employees does the average Series A/B/C startup onboard monthly? Posted: 16 Feb 2022 08:18 PM PST Hi! I'm a college student doing research on startups, and trying to find a figure or estimate for how many employees on average monthly the different stages of startups will onboard (e.g. how different is Series A, from B, from C, etc. with numerical data or at least estimates). I can't really find anything online after quite a bit of looking, and was wondering if anyone here had any insight into this? Thanks! [link] [comments] |
| Unicorns are great but Mustangs and Brumbies are real Posted: 17 Feb 2022 02:59 AM PST What if we could hear more stories from the full spectrum of Founders in our niche? Failed, succeeded, hanging on, exited and the unicorned. A platform like Y-Combinator, Startmate, Antler etc. for Founders wanting to publish, share and monetise written content throughout their journey as an entrepreneur. Think , a Hashnode-Antler mixed breed. While the above-mentioned platforms offer a pathway to meeting peers, a co-founder and/or funding, all that amazing knowledge and information typically remains insulated within the platforms nuances and not open for general viewing. Additionally, I feel like the 'acceleration' process has ironically slowed down over the past few years, which I'm sure is largely due the mass surge of creators and entrepreneurs. The journey to unicorn land is fraught with pain and suffering as it is, what if early-stage Founders (like me) could share quality content with peers, the public and lurking investors? In the process, I'd make money, gain validation of my vision and deliver alternative visibility of my ideas potential to the sharks. [link] [comments] |
| I want to learn how to setup an ETL Pipeline for Marketing Posted: 16 Feb 2022 05:28 PM PST Aspiring Entrepeneur/ Data Scientist specialized on Marketing ML (beginner)... I want to be able to track and measure marketing channels, campaigns, and perform experiments on all marketing efforts but I don't even know where to start or what should I know to start collecting and processing the data. I kind of know in theory what is needed, but I want to know in practice and to be able to implement:
I hope is not a lot to ask, but I feel a little bit lost with all this type of implementation. [link] [comments] |
| Posted: 16 Feb 2022 05:59 AM PST Hi, something that we all talk about in theory but that I'm struggling with in reality as a bootstrapped company is how to get and maintain a steady stream of early product users outside of my network. I'll put a few more details on the product below but essentially my question is - what are effective tactical things you have done to drive qualified leads and conversions (meaning sign ups of early users for a free trial). It seems to be an accepted "playbook" that in order to find problem / market fit (or even better product / market fit) at some sort of scale that companies raise and pump massive amounts of funding into advertising and I am really looking for a different approach (if there is one). More on the product: My co-founder and I are experienced product people and over several years of doing product and design services work we have iteratively discovered a need for and built a software tool for founders and product managers that codifies our methodology for setting development and research priorities with a consistent framework designed to be revisited quarterly (or multiple times a quarter). We have good interest in our network but we are realizing we aren't experienced 0-1 product *marketers* and we are looking to develop the muscle for effectively reaching beyond our network without needing tons of capital (to spray and pray the internet). [link] [comments] |
| How to setup annual budget as tech co-founder. Posted: 15 Feb 2022 06:32 PM PST Background: CEO - 85% equity. No salary but doing business operation. Technical Co-founder (me, part-time but able to deliver on time) : 10%, $6000/month in speculative shares for 2022. Succesful MVP and now scaling the app, doing QA, DevOps, Data Eng, and Tech Lead. We have a grant of $50,000 last Oct 2021 (company is 1 year now). Outsourced 1 mid level full stack($2000/month) UI/UX front end person ($2000/month) Infra cost $500/month (pipeline/staging/prod). Question: In the long run, say we get some revenue of $2,000,000 and thinking about budget, do I just say hey this is the budget needed for engineering salary, infra cost? Do I also include my salary there? How do you do it? [link] [comments] |
| Job offers as a failed founder? Posted: 15 Feb 2022 03:52 PM PST I have heard people make comments before that failed founders who have "proved themselves" often get job offers such as PM at big tech companies. However, I have never heard people go into more detail about this subject.
Does proving yourself mean raising series a? Or is it something like hitting 1 million in revenue? I guess the broader question I'm asking is what is considered a "successful" failed founder? Success defined by other people looking at you in a positive way and you have career opportunities. [link] [comments] |
| Posted: 16 Feb 2022 03:58 AM PST Does every acquisition need board approval? Coming out of the pandemic I want to go back into a more structured environment to catch my breath and work as an employee alongside other smart people and remove the stress of being a founder for a little, while giving me some time to find a co-founder for my next venture. I'm meeting with the founder of a competitor (they have VC funding) and would love to have them acquire us so that I can include this experience on my resume as a successful exit. Is this feasible or do all VC startups need board approval and the whole 9 to complete the acquisition. Are there any other savvy ways to frame this experience as a success? [link] [comments] |
| Besides Paul Graham, who's writing/essays do you read? Posted: 15 Feb 2022 05:34 PM PST Paul Graham is notorious for his essays and writings on Startups. If you haven't read his stuff, I encourage you to give them a read. Some of the insights are timeless. Who else do you look to for quality writing, thoughts, or insights in the industry? [link] [comments] |
| Financial modeling - SaaS startup Posted: 15 Feb 2022 08:38 PM PST How can I use CAC payback to calculate future bookings? The CAC payback must be variable. For example if we have 16 months CAC payback the bookings would be "x" and if we have 20 months CAC payback, the revenue would be "y". I need this to build out a model that supports three options of bookings values. I'm struggling with this part of the model [link] [comments] |
| External sales team wants to join the startup in exchange of equity… what should be the terms? Posted: 15 Feb 2022 09:17 PM PST So we have a B2B startup with a product already launched, so far we have only a free plan (once we get customers and users, we will launch additional paid plans). We have found very few customers so far, and one of those has shown interest in being part of the company. They offer to find more customers in exchange of equity, basically the equity will be based on goals reached: 1% for 10 new customer (actively using the platform for a specific period of time) Once they get 20% (200 customers) they will get 1% for each 60 additional new customers. So total Max equity possible for them is 25% (500 active customers) Is this an acceptable deal? These conditions only applies for the market they will be focus (one specific country). [link] [comments] |
| Posted: 15 Feb 2022 05:05 PM PST I assume it has to do with access to various networks and industry experience that allow them to be flexible. Are they looking for advisors that have industry experience in your startup sector or just experience in business operations as a whole? Furthermore, what are ways that you guys went about contacting and finding appropriate advisors for your startup? Lastly, how do startups generally compensate these advisors? [link] [comments] |
| Is it normal for a supplier to not reveal OEM costs until you make an order? Posted: 15 Feb 2022 04:48 PM PST I'm evaluating the business model for my startup and looking for ways to raise my margins. There is an electric part that I am required to put into each product I sell. I figured I could probably get a discount by buying it in bulk so I contacted the manufacturer. To my surprise, they said they couldn't tell me the OEM cost of the part until after I made an order. What I'm wondering is if it's normal for suppliers to not disclose their OEM cost until you're ready to make a purchase? Is there a sneaky way I can get them to reveal the price they're going to charge me before I actually start this business / fund R&D? [link] [comments] |
| Which is more important to hire for an early-stage app? Designer or Developer? Posted: 15 Feb 2022 12:43 PM PST I'm looking for a co-founder to start a MVP in hopes of building a bit of traffic and prepare for launch in the next 6 months. Some context:
My own background is Management + Technology Consulting and a bit of Product Management. I absolutely cannot code and I'm not planning on learning this. I've dabbled in product design but realistically would want an experienced designer to execute my vision here instead so I could focus on strategizing the high-level roadmap, talking to customers, getting funding and setting up partnerships as the app will require a bit of 'growing the supply' work. I've heard that design is usually a luxury at early-stage but I think for my venture its going to be very valuable due to the customer segmentation. Or am I looking at this the wrong way? Should I just completely outsource the development for now for the sake of MVP and worry about it later? Thanks in advance. [link] [comments] |
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