How I Find PROFITABLE Software Ideas (with AI / no experience)

0:00What's going on, guys? This is Oliver, formerly from Response AI and a few other softwares that I've since exited. In this video, I'm just going to get straight into it. I'm talking about how to find profitable software ideas. So, how to find ideas online, how to validate them, how to choose the right ideas to spend your time on, and then how to make those ideas profitable and hopefully sell your company. So, the challenge for founders is not a scarcity of ideas, right? There's plenty of ideas. It's the noise of these unprofitable, misaligned, bad ideas, stupid ideas, ideas that you think sound good but aren't. The romanticized

0:35narrative of this sort of eureka moment like the next Facebook, that kind of thing. It's a myth, right? It keeps you broke. It suggests that great software apps and great SAS, they're born from these flashes of inspiration when really you can use a system to find, you know, consistently good ideas. Every single one of my ideas I've ever built has made me money. And it's about creating a system that finds you those ideas. This video shows you every strategy that I know. So calibrating your compass. So before seeking external signals like you know stuff online or Twitter or Reddit, whatever, you've got to perform an internal audit. So I know this sounds

1:14really boring, but this is known as founder idea fit, right? And it's not about passion. It's about possessing this earned secret or an unfair advantage or a drive in a specific domain. So a strong fit creates this symbiosis in other words like a relationship with the problem. Um so if you are into the gym or you are into marketing or you are into sales or you love cold calling or whatever it may be if you love making YouTube videos that the challenges of building a company will be much easier if you understand the problem and if you have some kind of relationship to it. So uh this is a kai

1:52um the Japanese concept which is reason for being that kind of thing. I'm not going to get too deep but for entrepreneurs it's this sort of practical road map for identifying business problems and the framework can be distilled into these four questions. So what do you love? So the problems that you are motivated to solve. So let's continue with the sales thing. You love cold calling. Passion is the fuel that sustains a founder through these inevitable difficulties and people telling you no and people telling you to f off and that kind of thing. You've got to love that thing that you are trying to sell. What you're good at. So again,

2:26let's let's assume that you're good at sales or you're good at cold calling. What the world needs. So, I don't think the world needs more cold callers. But let's assume that what the world of sales needs um you know is software that finds you better leads through cold calling or makes you better at cold calling. You know what you can be paid for. Again, there's companies around the world that will buy software to help them sell better and do better cold outreach and cold calling, that kind of thing. So that eig eye which is a very deep concept has just been applied to a very unde a very shallow thing which is

3:01cold calling. But you see what I mean? You've got to try and match up those things with what you're good at, what um you love, what the world needs or what the what the market needs is a better way of saying and then what will actually pay you money to solve. Now founders who possess that domain expertise they have unique insights and if you even better even if you don't want to come up with your own idea you'll be able to look at an idea I can look at an idea that's a marketing idea and I'll immediately be like that sucks or I'll be like oh I I find that really

3:32interesting that that's a cool problem to solve. This intimate sort of like you know deep dive understanding allows for this creation of a more precise solution instead of um you know spending loads of time trying to figure out what you're going to build. It shortens that product development feedback loop because you can act as user zero. So every tool I've

3:53ever built guys I've wanted it myself. Um and people say like how do you figure that out? How do you find out what you want yourself? You just got to do work. So if you're a designer, just design and design and design and just figure out what annoys you and then build solutions around it. But I understand guys that that's kind of like hard to understand, hard to like if you don't have that, then where do you go? This is what the video is about. I'm going to show you how to find ideas, steal ideas, everything, right? But ideally, you have some kind of connection to the problem

4:23so that you can persevere through that trough of sorrow when your business isn't doing very well because inevitably you won't be up up forever. Um, this is the founder idea fit that you can copy from the bio. I won't read it out, but it effectively gives you software ideas based off of your passions, interests, what you're good at, what annoys you in life, um, you know, your innate skills like public speaking or organizing information or making videos or, you know, um, just random things, dating or um, you know, running for example, anything, designing um, websites, code, um, you know, building chairs, like it doesn't matter. It'll give you software

5:01ideas and app ideas based on these skills and it'll help you match them to your skills. So, this query forces the AI to cross reference your skills. I would use Perplexity or GPT or Gemini or Claude and pop that into um the the generator and it'll give you some ideas. Now, let's assume we don't want to do any of that. Let's assume we just want to steal someone's idea or find out, you know, what's selling and what people are buying. Strategy one is mine indie communities for ground truth revenue. So the building public movement has created an unprecedented opportunity to observe the birth of micro startups and

5:39softwares in real time. Now this transparency allows founders to bypass speculation of their tools and focus on ideas with ver verifiable revenue. So in other words, you can steal ideas from people who are literally showing you in broad daylight that they are making money with them. This involves mining online communities for founders who are sharing their financial metrics. Now the most fertile ground for this research uh platforms like indie hackers, Reddit um you know subreddits like SAS and Micros discuss milestones u you know brag about their revenue start a story which is like a big database and there's loads of YouTube videos explaining how people have made loads of money and you can

6:23also search on X or formerly what it's called Twitter for keywords like Mr and revenue and specific revenue figures like 1K MRR and the word churn and things like that to surface posts from founders sharing their progress and within minutes you can find loads of ideas and put them in a spreadsheet that are actually right now generating revenue. A prime example of this transparency and people sharing their ideas is Mark Luvian. He's an awesome guy. I've talked about him before. Um and he's known for building in public his projects like data fast. He's publicly reported that this tool is making $8,000 a month or, you know, even

7:01more. Now, now this level of transparency makes his projects ideal candidates for analysis, replication, things like that. And someone like Mark is totally happy uh for other people to take inspiration and take those ideas. I personally haven't built any tools that Mark has built, but the idea is that he knows people are going to replicate those. but are they going to replicate his marketing and his style and how cool the app is and how pretty it looks and

7:25how well it um how well it does the job. He knows that he's pretty good. So, it's it's hard to replicate. But the idea is that you can take that as inspiration and this level of transparency again it's validated elsewhere. So, Pali, which is a social media management tool um by a guy called Tim Bento, he's also a legend in the space. He grew it to, you know, a million or so a year, I believe. Now, Benetto, this is based off, they could be based off old information, but he is making at least 50 to $100,000 a month. Now, Benetto um Bento initially entered this sort of

8:02analytics market and then after observing this low usage of his core sharing feature um and high demand for scheduling tweets and scheduling posts, he just pivoted and made a scheduleuler. And this adapt adaptation led to a 100% increase in MMR MR. And then it demonstrated this path from this initial idea to product market fit based on what people were saying. Now a critical distinction guys, this is so important when analyzing these big names with these public metrics. High initial MR from a founder with a large audience which is pre-existing it is often a signal of distribution strength but not always product value. Right? So, so let

8:45me explain. The audience might purchase a product out of loyalty to the creator rather than genuine need for the solution. This can lead to impressive launch day sales and people saying, you know, I've made loads of money, but it's ultimately a leaky bucket that is fundamentally unstustainable because people are just buying because they like you. The true signal of a validated idea in this context is evidence of low churn. So Jack Ficks, one of my favorite people on Twitter, he's talking about how he's getting his churn down with his social media scheduleuler from 24% to 15%. And he even talks about I highly recommend you you follow him. He talks

9:22about how he did this. So, it signifies that customers who are initially attracted by the founders's brand because Jack Frics has thousands of followers, they're now being retained by the product's actual value. Because people might love you, but they don't love you enough to pay you every single month for the next 2 years. But Jack is seeing that although he gets some traction from his account and from being an influencer, people actually still genuinely buy the tool and keep subscribing. So the businesses transition from being audienceled to productled and that's the importance of taking a good idea. An audience helps but you need to have low churn. So the

9:59actionable takeaway is to prioritize evidence of retention over these raw figures. So it's just it's just as it's just great to say ah I made $100,000 this month but how many of those uh customers are sticking around? And um is it is it about you know the more reliable signal of a good idea um rather than a celebrity founder sort of flashy launch numbers. Now strategy two deconstructing venture capital investments. So another great way of finding ideas top tier venture firms like Y Combinator Seiko Capital they invest millions of dollars in due diligence to identify these emerging problem spaces. Now solo founders can leverage this research for free right so

10:46it doesn't cost them anything doesn't cost them millions doesn't cost them anything um and analyze the public portfolios but a crucial filter must be applied here guys the process involves browsing the public portfolio of these firms and the objective is to ignore the complex capital inensive or technical tools that are being built so like AIdriven protein folding or nextgen quantum computing infrastructure or the the DNA splicing, right? We're not going to do any of that because we're looking to just make software in our bedrooms and make money from it, right? And hopefully make millions, but we do not want to try and replicate some, you know, autonomous robot startup from our

11:30bedrooms because we have we're assuming we have no money. We want to build from our bedrooms and build with nothing, right? These are not replicable by solo founders, so ignore them. Instead, the goal is to identify the problem category being addressed by simpler software companies. And ideally, the core idea is something core idea is something that a 10-year-old could understand. For example, an analysis of Seikko's portfolio reveals several companies with understandable and potentially replicable business model. So, Vanta, it automates security and compliance. So, there's something called sock and there's something called ISO. There's multiple ISOs, that kind of thing. And the problem is that complying with um

12:12the legal space of running a software is hard, right? And Vant simpl simplifies it. It keeps all your documents in one place and ranks them and stuff like that. To build this, you need to basically build a dashboard of some sort with upload and export data, managing that data, saving the data, exporting it, that kind of thing. But the idea is that it is just a dashboard and AI stuff on the back end. And you need to understand the all you know the um security and compliance space but that again it's just not an idea that is out

12:44of this world like building satellites. You can create an idea like this and Vanta has made hundreds of millions. The other thing is you can just strategy three for finding ideas is just follow the exits on acquisition marketplaces. Right? So acquisition marketplaces like acquire.com and flipper, they're they're more than just platforms for buying and selling businesses. They're a database of proven ideas that more importantly, people are buying. So they're they're acquiring this. And listen guys, they're not just buying the tool like as in like they're, you know, becoming a subscriber. They're acquiring the company, which is an ultimate ultimate form of validation. confirms that a business has generated real revenue and

13:27an acquirer has deemed its potential future profit stream enough to purchase the business themselves. Founders combine these platforms by filtering for sold listings in the software category or the SAS category, analyzing the data and then creating the idea themselves. analysis of deals on acquire.com um for like you know in 2023 a couple couple of years ago now um reveals that for instance the average profit multiple for SAS businesses under 100k was something like 4x the annual profit right so that's a concrete benchmark for valuation if you can see a tool that has sold for x amount and people were willing to buy this after doing due

14:08diligence then it's an idea that you could steal specific examples of soul business. It they demonstrate this type of validated idea that you can steal. So, an AI photography studio that went viral on Tik Tok with an MR of around 70K sold for $2 million. Um, and a lead generation platform with 100% organic traffic from Google sold with an approximate MR of $50,000 for multiple of that. So, see, let's let's say it's

14:38$200,000. Now, on the right, you'll see that this is um in case you missed it, I'll just like restart the video. So, this is um like a tool um that gets, you know, people to comment things on LinkedIn and Twitter fully automated with AI, right? It's not something I personally use or ever think about building, but it made

14:59$130,000. and then it's now been listed on this platform and you can just look at it and go, "Oh, if it made that revenue, I don't have to think of a new idea out of the blue. I can just create an idea that is already existing and publicly is making revenue." Now, in mining these marketplaces, looking at the final sale price is not enough. A more powerful signal is the exit multiple, which serves as a proxy for business quality and the severity of the problem being solved, but also the churn. So an acquirer is fundamentally purchasing a stream of future profits and a guarantee or a semi- guarantee is still a gamble

15:39that the business will make money, right? So a business with higher customer churn has an unreliable and risky future. So for example, a business generating 5,000 MRR or 60K a year that sells for only 80K, it's likely a higher churn operation. So be careful looking at businesses that have made loads of money. Again, we talked earlier about the problem of having a big audience and making loads of money suddenly and then everyone just cancelling. You've got to understand that if it has a low multiple or it hasn't sold for much, it was

16:11likely a higher risk operation. Conversely, a business with low churn has a predictable and defensible profit stream. The risk is lower and an acquirer will pay a premium for that stability, that constant amount, right? A business also generating 5,000 MR that sells for 250,000 commands that multiple of say 4.1. The this figure aligns perfectly with the market averages from 2023, it signals this high quality sticky product because if it's 5,000 MR and someone has looked at it and gone, that is worth a quarter of a million dollars. It must have been low churn. It must have been a wellplaced bet from the acquirer. Okay, it must have been attractive. So when

16:57analyzing these sold listings, founders should try and calculate the multiple. A higher multiple even on a smaller business is a stronger indicator that that idea is valuable and a problem worth solving. Strategy four for finding ideas, the unbundling play. So solving one problem perfectly. It's the unbundling strategy guys. It involves identifying a single highv value feature within a larger complex platform, a bundle of features and then finding one of those things inside the bundle and creating a standalone product that executes that one function with 10 times better user experience. The underlying user psychology is simple. for a specific urgent task. Users often prefer a simple, fast, elegant tool over this

17:47bloated all-in-one suite that is loads, it costs loads, and it's a pain to actually use. In other words, they'll choose a scalpel over a Swiss army knife. Right now, this is often executed as something called a wedge strategy where a startup uses a focus tool to gain initial foothold and then gradually expands its feature set. It's absolutely fine for you to make a small tool and then later on when you've actually made loads of money, you can build more stuff around it, right? You don't have to build the next Salesforce or the next Zoom um immediately. So, Notion, for example, began as this note-taking application and now it's this like whole

18:27collaborative workspace that you can like build on and run businesses from. Figma started as this focused design tool to help you know help teams collaborate and now it's this whole design ecosystem but the whole point is that you can start as a wedge and then expand into this bundle of tools. A case study for this strategy is the dynamic between the giant Salesforce and this upcoming challenger that's been funded loads of money at Salesforce represents this powerful complex cumbersome you know fat kind of enterprise tool and ATIO came along and it was sexier. It

19:06was it was um uh loo it looked thinner. It looked cooler. It looked it was all these different things. It had it had this sort of like sleek UI. It was very pretty. Now it offers this modern, intuitive, fast experience. It looks really cool. And this this did really well. Atio is doing extremely well. It's got um a 23 million series A, 52 million series B. In other words, they've been given loads of money. And it validates that this there's potential for a product that does the same job as the incumbent tool, this giant tool like Salesforce, but does it in a prettier way, a faster way, an AI assisted way, a

19:45cooler way, and it's more focused on user experience. People love using Atio, and I've never heard anyone say, cuz I've used it myself, I've never heard anyone say they like Salesforce. Now in finance these monolithic these giant ERPs and these giant like finance tools are being unbundled by tools like expensify and ramp which focus solely on expense management. So expensify it could be this giant tool with hundreds of features but instead you can just track your expenses on it. Right? In marketing these cloud these marketing clouds are being unbundled by things like Clavio and Buffer. Buffer literally

20:23just helps you manage your social media. It doesn't it doesn't try and do all these other things. The key is to never mislabel a problem as solved simply because an existing solution is there. If that solution is slow or ugly or difficult to use, a significant opportunity exists for a focused and welldesigned alternative. Finally, strategy five is the verticalization play. So, dominating a niche. So, unlike you know horizontal SAS which offers generic features for a big audience. So Salesforce, you can sell Salesforce to anyone. You can build a vertical SAS which provides a purpose-built solution. So I talk about this all the time. It's the specialization in this is that it leads

21:08to these advantages. You get higher efficiency for users. You get lower acquisition costs because they feel like they're being talked to personally. Um and there's defensibility against these big competitors because there's necessary like domain expertise. So this is linked to founder idea fit because your success is dependent on having this authentic understanding of the target industry. So let's say u you know your your dad owns houses. He he's a landlord, right? And he's always complaining about X or Y problem like he doesn't like his tenants doing X thing or this costs too much money or that problem is whatever it may be. you now have a direct connection to your dad or

21:52to a friend who has these specific problems and you can build around that and you can just build a CRM but you can build a CRM for landlords for example. Now a clear micro SAS example of this is Zenade which is just a CRM guys it just helps you schedule jobs as a maid and a cleaner. Now its value is explicitly stated as being made by maid service owners. So the platform includes these specific features that a generic CRM like Salesforce would never have. You got like cleaner SOS alerts and GPS tracking for the staff and checklists and things like that. By focusing on this single vertical Zenade has made

22:33millions, right? And it's built a profitable business in a space where horizontal CRM they already solve the problem. Why doesn't a maid just buy Salesforce? Because it's ridiculous. It's way too big. It's It costs thousands of dollars a month. I prefer if I'm a maid, I prefer to buy Zenade for $49 a month and it does everything I need for me as a maid. So, that's the whole point of the verticalization piece. And remember, Zen made can be built on Lovable in like a couple of days, right? Cleo raised over 1.29 29 billion with a B in funding and it's valued at $3 billion

23:14and it's built on creating a legal moat. So, it's just an a software to manage expenses and manage your legal firm, but it's just basically a clone of hundreds of other softwares, but because it's talking to law firms and lawyers, it has become the operating system for law firms and it's a dominating force in the legal sector. So just to summarize guys, you've got community mining which is finding microsass ideas from transparent founders. It's best for founders who are these community oriented and want this lowrisk validated idea. And the key risk is mistaking an influencers's audience for product market fit. So don't think that just because they're giants they

23:57have good ideas, but if they have low churn, they do have good ideas. So Mark for example has great ideas that actually have low churn and so does for example Jack Fricks VC deconstruction. So identifying major trends backed by investors like Y combinator and secular capital is best for founders who are a bit more technically proficient can build a simpler version of a complex idea. The problem is misjudging the complexity or resource requirements of an idea like AI powered um satellites, right? So like we're trying to build, like I said,

24:33trying to build software in our rooms. It's not going to be a very good idea to copy these multi-billion dollar ideas from your bedroom following exit. So analyzing sold businesses on places like Flipper or Acquire.com to find profitable ideas. This is focused on building a sellable asset from day one because you're building to sell just like that was sold. The problem may be um you know a low growth ceiling or there's hidden issues with the projects or they were you know um kind of like they were artificially um grown or that kind of thing. We we don't know until you talk to the founders who

25:10are trying to sell their company. Unbundling creating a focused tool that is one part of a big platform better. So it's best for founders who have deep expertise in a specific workflow and they value creating smaller tools and then later on maybe you know branching out. The key risk here is that the incumbent already does it well. We get that. But they might replicate any features that you build later on. The really you know the best case scenario is that they get so annoyed at your existence that they acquire you for millions of dollars which would be really nice. Um, verticalization finally is tailoring a horizontal solution like

25:49a CRM but to a specific industry. So ideally you have some domain expertise or a strong connection to that industry. And if you have a lack of that industry knowledge that is a key risk because you might think that you can build the best CRM for landlords but if you've never spoken to a landlord, you aren't a landlord yourself and none of your friends or family are landlords. How do you know what they want and what they care about? And it's also very hard to get in touch with these people who are very busy and go, can you tell me everything you know and everything that

26:22you hate about your job as a landlord? Like ideally, you can skip all of that. The process begins with an internal audit to establish that founder idea fit. And that just establishes that your unique skills will match up with the software that you're building. When once that's calibrated, you can apply the five external strategies to find ideas. So, mining the communities, deconstructing VC portfolios, following exits, unbundling giant apps and making smaller tools from them, or using the verticalization path to dominate a niche. And each strategy is I've used all five of these to build different tools. And all of them, whether it's small amount of money or a large amount

27:03of money plus an exit, all of these strategies have made me money. So enjoy guys and take care.