99% of Beginners Don’t Know the Basics of SaaS

0:00Today, I'm going to break down the five critical SAS fundamentals that 99% of beginners get completely wrong. These aren't just theoretical concepts. They're battle tested principles I personally use to build multiple 7-figure businesses and guide thousands of founders through Microcom and Tiny Seed. While YouTube is flooded with hype about how SAS is an easy path to riches or how it can be passive income, very few people talk about the harsh realities of what it actually takes to succeed. I'm not here to sell you a dream. I'm here to give you the unfiltered truth that could save you years of painful mistakes. And if you stick around for fundamental number

0:35five, I'm going to share a counterintuitive truth about SAS profitability that directly contradicts the prevailing wisdom online, but might be the most important factor in deciding whether SAS is right for you. Fundamental number one is that coding isn't the superpower you probably think it is. Since my very first book that I wrote in 2009 and published in 2010, I've been saying product last, marketing first. And what I mean by that is the product and of course the problem you're trying to solve. It's important, but you really need to change your mindset to realize that marketing and sales are what makes or breaks a new product or a

1:11new startup idea. Because as a builder or as a maker, you think that the hard part is building or making the thing. As a former developer myself, I really hold in high regard people who can build software and who can create stuff. But that's not what it takes to build a business. That's what it takes to build a hobby project. If you just want to build for yourself, go start an open source project. Go hack some code

1:32together, vibe code, and build whatever. But if you want to start a business, you need to think long and hard about how to market and or sell your product. And even before AI really came to the forefront with things like cursor and windurf, this was true. And it's only becoming more important and more true as engineers become more efficient at building things. As folks who are not engineers can use no code or can use AI to build MVPs. Marketing and sales are the real superpowers because nothing happens in a business until someone pays you money. Everything you do before then

2:05is just a hobby. It's just wasted time. I mean, it's preparing to get some money from someone. But until a customer pays you money, you don't have a business. You have a hobby. getting someone to pay you and building an MVP or a V1 that solves a real painoint that people are experiencing. It's a lot harder than you think. And marketing and sales are not a

2:23dark art. There are ways to learn them. Check out the marketing chapter of my fourth book, The SAS Playbook as a starting point. Head to sassplaybook.com if you want to pick that up. And just remember, a developer who can also market or sell is extremely dangerous in the best possible way. Product class, marketing first. Coding is not the

2:41superpower you probably think it is. Fundamental number two is if you pick the wrong business model, you're probably screwed before you start. What I mean by this is something I've said many times. B2B is superior to B TOC. The reason B2B is so great is because you get higher average revenue per customer. Let's say $50 a month, $500 a month and up. You get significantly lower turn rates. You get more predictable revenue growth and a wider range of viable marketing channels because since you're making 50 to 500 to 5,000 a month, you have so much more money and so many more options with which to market your product. With B

3:17TOC, you have low average revenue per account. 5 10 15 $20. You can only afford basically free marketing approaches. Significantly higher churn, more support, harder to grow revenue. you need a lot of customers, usually thousands and thousands of customers. And then a third type of business model or funnel is B to both. This is where you're B2B, but you also have some lower-end customers and you have a really wide funnel in that area, in the low priced area. And then you have folks paying you 500, 5,000 a month, and it can create a much more smooth revenue curve so that you're not just waiting for months and months to close a deal to

3:53get that next bump in revenue. So, as I've said before, stick to B2B if you're going to build a SAS app. And if you're finding this video helpful, make sure you hit that subscribe button. We're almost to a 100,000 subscribers, and I'd love your help getting that silver plaque. If you're already subscribed, thank you. Help me out by giving this video a like to help more people discover it. Fundamental three is that you don't need funding. Hopefully, if you're watching this channel, if you've listened to me for any length of time,

4:18you know that funding is just a tool. Shouldn't be anti-funding unless you're anti- hammer or anti- shovel. It's a tool to accomplish a job. But unfortunately, the prevailing narrative is that in order to start any type of startup, much less a tech startup, you should raise buckets of money and you should go big and you can only become a

4:34billion-dollar unic. It's just it's old. It's trait. It's not a narrative that you want to follow. I think around 1% of companies, especially startups, should probably consider raising venture. I think about 90% should bootstrap and around 9% should consider an angel round or alternative funding like Tiny Seed. That's the accelerator that I run. But the problem is is pushing off launching or building and thinking that some big venture capitalist is going to anoint you. And if you just find the right idea, investors will throw a pile of money your way. Well, it's an excuse not to do the work. But that's not how it works. Stop asking for permission. Stop

5:10asking for someone to give you money. Build your business instead of your slide deck. That's the advice I give to founders today. And if you build a great business or you start building a great business, the odds are pretty good that you'll be able to raise funding if you want, but by the time you get there, you may not even need it or want it. And finally, if you decide to raise funding, realize that selling part of your company, and raising funding isn't the finish line. It's actually a brand new starting line. Fundamental number four is that the problem you intend to solve with your product or your startup is so

5:40much more important than almost anything else in your business. These days when a founder approaches me and says, "I have an idea for a startup." I say, "Don't tell me what your idea is. Tell me what problem it solves and for whom." Until you find a problem that needs solving that people probably want to pay for. By people, I mean businesses, of course, cuz we're talking about B2B. You're just guessing what people want. And we did that back in the early 2000s. I guessed and built for months and months, and then I'd launch, and no one wanted it

6:06because I wasn't solving a real problem. So, start with your problem. figure out what audience or what businesses might need that problem solved. Focus on solving that problem really well for a small group and expand from there. In a minute, I'm going to get to fundamental number five. But first, I wanted to let you know about the SAS Launchpad. SAS Launchpad is the best course I have ever created. There's almost 10 hours of video content with all of my knowledge about finding, validating, and going to market with your SAS idea bundled up into one easy to follow curriculum that goes way deeper than I ever could on

6:40YouTube. For example, inside the course, there's a 28minute video that goes into the DNA of a great SAS business. This is literally the list I would use to evaluate a SAS idea before I started coding. You can get access to it now by going to sasaunchpad.co and clicking the start free button. Again, that's sassaunchpad.co. And the fifth and final fundamental point is that SAS might not be for you if you need money fast. SAS companies can be wildly profitable and the exit multiples if you go to sell are second to none. But the reality is that most founders can make more money faster using an entirely different business

7:16model. Starting an agency, being a freelancer, maybe making some info products, maybe starting a productized service or productized consulting. SAS has a long slow ramp of death that may just kill your business before you get to enjoy the fruits of your labor. Because instead of getting say $1,000 upfront to sell one piece of software or $100, $200 an hour to sell your time, you're pacing this out over time. So instead of charging $1,000, maybe you charge $50 a month or $100 a month. So you now have to wait 10 or 20 months to get that same $1,000. And they can cancel at any time. It's an uphill

7:50battle. It's like pushing a snowball up a hill. And while SAS, as I've said, is hugely profitable. And the exit multiples are amazing. They can be incredible businesses. If you want to get to money fast to the point where you can quit your day job, I would think much more about starting productized consulting, freelancing, maybe info products if you have an audience. But SAS takes a lot of expertise, a lot of time, and many, many months, if not

8:14years, to build an incredible business. If after watching this video, you still think SAS is for you, but you aren't sure where to start, check out this next video where I break down the eight steps to starting a SAS business. Make sure you're subscribed for more content like this, and I'll see you next time.